Financial service elimination: CONCLUSIONS

Financial service elimination: CONCLUSIONS

Generalising the results of this exploratory investigation should be treated with caution, although the representative composition of the qualitative sample, within the inherent limitations of non-probability sampling methods, allows for some initial implications to be drawn. The study identified five objectives that financial institutions wanted to meet in eliminating a product (Table 4) and nine problem situations which led to consideration of financial service products as candidates for elimination (Table 5). These findings are in line with previous research and confirm what would have been expected given the current financial services climate. It should be noted that these findings outline the factors identified by the interviewees in making elimination decisions. It is perhaps surprising, given the turbulent environment of the financial services industry, that no mention was made of mergers and acquisitions and little reference was made to technology and e- banking. It is not clear why the interviewed managers omitted to mention these two factors. Clearly, further research, which would quantify and extend these preliminary findings, would need to take these variables into account.

The most significant finding of the empirical work for both academics and practitioners relates to the distinction between objectives and problems. Despite being used interchangeably in the existing body of literature on elimination, this research has identified a meaningful distinction between an objective that financial institutions want to achieve through service elimination, and a problem situation that can make them consider a financial service a candidate for elimination. An objective lies at a more strategic (higher) level than a problem situation. In other words, the research found that service elimination objectives were a target, while problem situations were a step towards the achievement of that target. The literature on managerial decision making provides support to the distinction put forward in this paper. It particular it is stressed that every decision- making process in managerial settings should have clearly defined objectives that will guide the decision makers in the following steps of the process. The evidence reported in this paper also suggests that more than one problem situation can have the same objective as antecedent and that the appropriate action towards the achievement of an objective depends on the developments of the internal and external environment of financial institutions. Thus, the problem situations, namely legislative changes and service obsolescence, can be triggers to the achievement of the objective to keep the service range up to date, while the problem situations, namely declining profitability and declining customer demand, can be triggers to the objective to improve indicators of a financial nature. If, for example, new legislation is introduced, then in order to keep the service range up to date a financial institution would need to examine the future of the non- complying services. Similarly, if technological developments occur, to keep the service range up to date would require a financial institution to examine all technologically obsolete financial services. Knowledge of the reasons why the industry adopts any elimination strategy and the antecedents or conditions that bring about such a strategy is added to by understanding the tactical and strategic responses that companies frequently adopt. Such knowledge will then help companies identify possible targets for service elimination, or ratify decisions already made about the elimination of a service. Perhaps through recognising this distinction the manager quoted at the beginning of this paper will view service elimination as a positive force in his company.


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