Nevertheless, turbulence does present opportunities for savvy players in all regions to out-perform the overall "average" through such means as cost reduction, strategies to gather new deposits and customers, challenging troubled competitors and, where strength exists, targeted M&A activities.

Bain can help financial services firms manage through today's turbulence and strengthen their long-term position in a variety of ways. Here are five examples:

Transforming banks
The downturn has exposed fundamental weaknesses across the banking sector. Indeed, bad-loan losses have put many banks' existence at risk, resulting in government intervention and massive capital injections. We assist such banks to transform their operations and organization to reestablish a secure footing for future growth. We help them:

• Restructure their portfolio of businesses, including disposal of non-core businesses
• Reduce costs and outsource non-critical activities
• Establish mechanisms and processes to manage their impaired loan portfolios, including creation of 'bad banks'
• Redesign risk and capital-management processes to regain control of the balance sheet and manage within agreed risk exposures
• Develop growth plans for the most critical product areas, customer segments or geographic priorities
• Secure needed government or regulatory authority sign-off

Harnessing information technology
To compete successfully, today's financial services firms must have a technology strategy that's both sophisticated and efficient. That requires figuring out how to best source technology, ensure that information technology is aligned with business growth objectives and effectively delivers on its promise. A global American banking group had developed a highly complex IT infrastructure over time, yet service levels were declining. We helped rationalize the group's IT platforms, increasing the sharing of infrastructure and removing redundant applications. Operations were moved to lower-cost locations while keeping critical functions close to customers. IT costs fell more than 20% and responsiveness improved. When another client, an online broker, merged with a major competitor, combining the two IT departments was an extremely complex undertaking. We helped this client successfully integrate the two operations and cut technology costs by 50% - twice as much as planned. We helped one of the global insurance brokers redesign its business model requiring implementation of a new IT platform. It was delivered on time and on budget increasing profits by more than 30%.

Merger integration
Over the coming years, the sector can expect to see an increase in acquisitions as stronger institutions pick up the businesses offloaded by weaker competitors, and as sectors consolidate to achieve benefits of scale and scope. We have worked with financial services firms around the world to integrate acquisitions quickly and accelerate the delivery of expected value. Increasingly, we support clients that absorb acquisitions in the developing growth markets for financial services of Asia, Eastern Europe and Latin America. For example, responding to the pressures for consolidation in the asset-management sector, we helped merge two European groups, developing the new fund portfolio and integrating back office operations. We supported a banking client in Asia with an important merger, running the overall program office, designing the new organization, merging back office operations and helping develop new product offerings. The merger proceeded on schedule; the new offerings have been well accepted by the market and cost reductions were 10% ahead of plan.

Strengthening customer relationships
Retaining the most attractive customers is even more important during periods of economic turbulence, especially as consumer trust in institutions has fallen. As recognized leaders in customer loyalty for more than 20 years, we have worked with banks and insurance companies around the world to strengthen a customer focus in all their operations. We have redesigned processes at all customer touch points with the organization and installed feedback loops to ensure the voice of the customer is heard and acted on - most importantly at the front line and through to strategic resource allocation decisions. Our unique metric is the Net Promoter® Score (NPS). Derived from asking customers to rate, on a 0-10 scale, it measures how likely they would be to recommend a company to a friend. NPS's true importance lies beyond its use as a metric. Correlating customer feedback with different rates of profit growth, it helps senior managers set targets and incentives and provides a universal language for customer loyalty throughout the organization. For employees, NPS is a tool for guiding them in making interactions more successful, for correcting problems customers encounter, and for coaching and mentoring. With NPS, loyalty leaders aim to discover the things that matter most to customers and then excel at them. A European insurance group has successfully used an NPS-based approach to drive continual improvement in its service, sales and product innovation activities, both directly with customers and through broker channels.

An expertise in Financial Services consulting

Financial Services accounts for nearly 20% of Bain's work. We help clients get results - even in the most challenging environments. We work with leading institutions in all major areas, including:

• Asset management
• BPO/data providers
• Commercial finance
• Credit cards/payments
• Insurance
• Retail and wholesale banking
• Specialty financial products
• Stock and commodities exchanges
• Wealth management and securities distribution

• Growth strategy
• Organizational effectiveness
• Operational excellence
• Information technology
• Mergers and acquisitions
• Change management
• Private equity

To find out more about Bain's work in this industry, please contact the Financial Services practice.