Strategic planning processes in a financial institution begin when a bank forms and continue as long as the bank is in operation. The word “strategic” refers to the fact that this is long-range planning. At the outset and all along the way, it is important to establish a direction or vision, mission, values, and long-term goals for the institution. Another important factor is risk appetite - how much risk is the institution willing to take?
After the bank has determined its long-term direction, the next step is identifying and assessing strategic risks. These are the risks that can occur when the bank’s decisions or the way they are implemented don’t support its long-term goals.
These risks can include a lack of due diligence before adding new products or activities or not having procedures in place to properly assess short-term risks. There is always a risk that the return on an investment may be different from what was expected as well, and the bank needs a strategic plan for dealing with that if it happens.
The final step is the implementation of your Strategic Planning Process — this implementation will be ongoing as the institution grows. Strategic plans must be put into place consistently, effectively, and efficiently.
To make this process run more smoothly, a third party may be brought in during the Strategic Planning Process to ensure that the bank is operating its fullest potential. Skilled vendor management must be employed to make sure whomever you call in is familiar with the company policies and can set your institution in the chosen direction.
The Strategic Planning Process is key to a financial institution’s operation. It is important that you never lose sight of your vision, mission, and goals as this will help your institution maintain its identity and customer base while working to increase its profitability and viability. It is crucial to be sure that everyone at the institution is on the same page when it comes to strategic planning to set your institution on the path to success.