The Strategy and Management Approaches

Executive Summary

To compete with disruptive Fintech rivals like Revolution, a challenger bank will be established as a separate branch of the parent company. This essay will describe the challenger bank’s strategy and management methods, including a target market study, the technology and infrastructure required, the regulatory compliance measures, and the risk management strategies implemented. With a digital-first strategy, a focus on millennial and Gen-Z consumers, cutting-edge technology and infrastructure, and strict compliance and risk management standards, it is anticipated that the challenger bank will be able to compete successfully with Fintech rivals and provide customers with a valuable service.

Introduction

Fintech startups and challenger banks that only operate online have been putting more and more pressure on the banking and financial services sector in recent years. The bank has decided to launch a challenger bank as a separate, independent branch of the parent firm to maintain its competitiveness in this quickly evolving market. The report develops a thorough strategy and management approach for the new challenger bank as the senior manager selected to head the setting of this new business.

The concepts of early management techniques, various organizational, structural, and management philosophies, and the difficulties teams encounter in today’s quick-paced and dynamic business environment will all be covered in this paper. A strong and engaged team can be built by considering the effects of ethical leadership behaviour on employee results. Overall, the objective is to offer a comprehensive and doable plan for creating and administering the new challenger bank that will enable us to compete successfully with our Fintech competitors.

Principles of the early management

Introducing a challenger bank into an existing multi-national financial institution calls for a strategic and well-prepared method. When establishing the challenger bank, it is important to take into consideration the following early management ideas and approaches:

The Lean Startup technique is an approach that centers on the creation of a minimum viable product (MVP) and the iterative improvement of that product based on the feedback received from customers (Prasad et al., 2020). Using this strategy, the challenger bank will be able to test and validate its products and services in a short amount of time and make any necessary improvements.

The agile methodology emphasizes being flexible and adaptable in response to constantly shifting market conditions (Northouse et al., 2016). The challenger bank will be able to quickly respond to the needs of its customers and changes in the market thanks to the agile methodology.

By breaking down tasks into smaller, simpler components and using scientific methods to optimize each component, the Frederick Winslow Taylor theory, also known as Taylorism or the Scientific Management theory, is a management approach that focuses on increasing efficiency and productivity (Gregory et al., 2020). According to this theory, efficiency and productivity can be improved through scientific study and work optimization.

Frederick Winslow Taylor’s theory is used in the banking sector:

The banking industry is a highly regulated, intricate sector with a wide range of operations. By breaking down tasks into smaller, simpler components and using scientific techniques to optimize each component, the Frederick Winslow Taylor theory can be applied in the banking industry to increase efficiency and productivity.

For instance, the division of labour principle can be used by giving specific jobs to workers with the necessary training and expertise. This can be accomplished in banking by setting up specialized teams for various tasks like account management or loan processing.

Applying the time and motion study principle, tasks like loan processing can be broken down into smaller components. Each component can be studied to find inefficiencies and ways to boost productivity (Choi et al., 2019). This can be achieved by looking at data on loan processing times and locating bottlenecks that cause delays.

The standardization principle can be used by creating standard operating procedures for every task in the banking sector. This can be accomplished by developing standard operating procedures like loan processing and account opening.

Setting clear, quantifiable goals for each employee and holding them responsible for achieving them are two ways to put the management by objectives principle into practice. Setting goals for how quickly loans should be processed or when accounts should be opened is one way to accomplish this.

Approaches to organization, structure and management

When establishing a challenger bank, it is essential to consider the numerous organizational, structural, and management strategies available to compete with other financial technology companies effectively. The following is a list of the four primary strategies that can be taken into consideration:

The classical approach emphasizes the establishment of hierarchical structures within an organization and the formalization of its policies and processes. This strategy may prove useful in establishing a distinct chain of command and preserving operational control within the challenger bank.

The human relations approach emphasizes the significance of people and their relationships within the company’s context (Mustafakulov et al., 2020). This strategy has the potential to be effective in encouraging employee engagement, motivation, and dedication while also contributing to the creation of a positive work environment.

The systems approach emphasizes incorporating a variety of the organization’s parts into a unified whole to achieve a certain objective. This strategy has the potential to be beneficial in the process of establishing a coherent and coordinated organization that is capable of efficiently reacting to shifting market conditions.

The contingency strategy emphasizes the necessity of adapting the organization, structure, and management to the particular conditions that exist within the firm’s operating environment (Tuckman et al., 2019). This strategy is valuable in determining the most suitable strategy for the challenger bank to consider the market’s current state.

In conclusion, when establishing a challenger bank, it is essential to consider combining these approaches to organization, structure, and management. This will allow the establishment of an effective and efficient organization capable of competing with rivals in the fintech industry. The traditional method will ensure that there is a transparent chain of command and that the challenger bank’s operations are always under control. The approach focusing on human relations will result in a positive working environment and increase employee engagement. The systems approach will result in the creation of a unified and well-coordinated organization that is capable of adapting successfully to shifting market conditions. In addition, the contingency strategy will adjust the organization, structure, and management according to the particular conditions inside the commercial setting.

Managing 21^st-century employees

When beginning the process of establishing a challenger bank, it is essential to give careful consideration to the management strategy that will be implemented in order to compete effectively with other fintech companies like Revolut. Managing employees in the 21st century are one of the most important aspects of this, and this involves having a concept of what a team is, what gives a team its purpose, and the obstacles that teams must overcome.

A group of people who work toward accomplishing a shared mission or purpose is what we mean when we talk about “teamwork.” In the context of a “challenger bank,” this could refer to groups of people working on specific projects, such as developing new products, promoting those products, or providing customer service.

The ability of a team to articulate and agree upon its goals and the significance of its progress toward those goals is what gives a team its sense of purpose (Veile et al., 2019). In the context of a challenger bank, this could take the form of a concise mission statement that describes the institution’s objectives and core beliefs, as well as how those things relate to the requirements of the bank’s clientele. In addition to this, it is essential to make certain that each team member is aware of their specific functions and responsibilities, as well as how they contribute to the accomplishment of the team’s overall goals.

According to the Expectancy Theory, a person’s drive to complete a task is impacted by their conviction that great effort will produce excellent performance and that excellent performance will bring about desirable consequences like prizes or professional promotion (Pambreni et al., 2019).

Applying the Expectancy Theory from a managerial standpoint to creating a challenger bank division would entail outlining performance expectations and goals for staff, connecting performance to particular rewards or outcomes, and equipping staff with the tools and support they need to perform well. Establishing a direct connection between individual accomplishment and the division’s overall success is also crucial.

Giving your staff autonomy and chances for professional growth is crucial in managing in the twenty-first century. By offering staff members the ability to design their plans and make decisions that support the division’s overall objectives while also giving them chances to improve their careers and develop their talents, the Expectancy Theory can be effectively used in this situation.

Impact of Ethical Leadership Behavior on Employee Outcomes

When establishing the challenger bank, it is essential to consider the effect that ethical leadership behaviour will have on the outcomes for the employees. The behaviours and choices that leaders follow moral and ethical standards are referred to as ethical leadership behaviour (Zhang et al., 2019). A leadership style such as this has the potential to significantly influence employee outcomes such as motivation, work satisfaction, and commitment to the organization.

Establishing a clear code of ethics and values that all workers are required to follow is one of the most important strategies that can be used in order to promote ethical leadership behaviour in the challenger bank. This code should be presented to all personnel, and frequent reinforcement should be provided as a chance for training and growth (Den Hartog et al., 2018). In addition, those in positions of authority should lead by example and demonstrate ethical behaviour in the choices and actions they choose for themselves.

Within the challenger bank, fostering a culture of transparency and open communication is another crucial tactic that should be implemented. This can be accomplished by providing a secure environment where employees feel comfortable discussing any ethical concerns and encouraging workers to speak up and share their opinions. Additionally, this can be accomplished by encouraging workers to speak up and share their opinions.

In addition, the challenger bank needs to have a structured process to identify and resolve ethical issues. This may include an ethics hotline or a committee where employees can submit problems to receive feedback. To ensure that employees feel comfortable reporting any concerns, these systems need to be discreet and straightforward in their operation.

The challenger bank needs to regularly conduct surveys and evaluations of employee performance to determine how much of an impact ethical leadership behaviour has on employee outcomes. This can help identify areas within the company in which employees are particularly motivated or disengaged, which can then inform any required adjustments to the strategy (Robbins et al.,2018).

According to the original leadership hypothesis, leaders who are self-aware, open, and ethical in their behaviour are better equipped to build a favourable work environment and employee loyalty. Building employee trust and loyalty will be essential for the success of the new division, making this notion especially pertinent for the launch of a challenger bank.

The new division of the bank may establish a culture of dedication and trust among employees by using an authentic leadership style, which will be essential to its success. Establishing a code of ethics, a culture of openness, frequent training, reporting and dealing with ethical violations, and setting an example for others will be crucial.

Organizational culture

When beginning the process of establishing a challenger bank, it is essential to give careful consideration to the organizational culture that will be nurtured within the new division. The values, norms, and beliefs that shape the conduct of persons working for an organization are the organization’s organizational culture.

Edward Schein’s levels of culture provide one framework for understanding an organization’s culture. According to Schein, culture may be divided into three levels: artifacts, basic assumptions, and stated ideals. Artifacts are the visible components of culture, such as symbols and the actual locations of cultural events (Schein et al.,2010). The ideas and beliefs an organization has publicly declared to uphold are its espoused values. The term “basic assumptions” refers to the unconscious and frequently unspoken values responsible for moulding the conduct of employees working for the company.

The cultural aspects proposed by Hofstede are an additional framework for comprehending an organization’s culture. Hofstede discovered that culture could be broken down into five categories: power distance, individuality against collectivism, masculine versus femininity, uncertainty avoidance, and long-term orientation. The term “power distance” refers to the degree to which cultural members accept the notion that power is not evenly divided (Bogers et al., 2019). The degree to which people prioritize their requirements more than the collective is referred to as individualism against collectivism. The amount to which a culture prioritizes traditionally masculine or feminine characteristics is referred to as a culture’s level of masculinity or femininity. The degree to which a culture is comfortable with ambiguity and uncertainty is referred to as its level of uncertainty avoidance. A culture is said to have a long-term orientation to the degree to which it prioritizes long-term planning and perseverance.

It is important to consider how to align the values, norms, and beliefs of the challenger bank with the values of the parent company while also keeping in mind the specific requirements of the challenger bank in order to develop a robust organizational culture for the challenger bank. This is necessary to create a strong organizational culture for the challenger bank. In addition, Hofstede’s cultural dimensions can serve as a guide for understanding the distinctions between cultures and adjusting one’s strategy accordingly.

When considering strategies for management, it is essential to articulate a distinct vision and objective for the challenger bank and convey this information to the workforce efficiently. Due to this, the organization will have a better idea of its purpose and where it is headed. In addition, it is essential to put together a powerful leadership team with a wide range of expertise and points of view to guarantee that many points of view are taken into account during the decision-making process. In addition, it is essential to include staff members in the decision-making process to foster a sense of ownership and encourage involvement with the bank’s mission and strategy.

When establishing a challenger bank, it is critical to give thought to the organizational culture that will be nurtured within the company’s new division. This can be accomplished by bringing the norms, beliefs, and values of the bank into line with those of the parent corporation while keeping in mind the requirements that are unique to the challenger bank. The cultural aspects proposed by Hofstede can serve as a useful guide for understanding cultural variations and adjusting one’s approach accordingly.

According to the Cultural Change Theory, an organization’s culture may be consciously altered through initiatives including training, communication, and leadership development. In order to attain desired results like enhanced performance and alignment with company goals, this theory emphasizes the significance of comprehending and managing organizational culture.

Conclusion and recommendations

In conclusion, to establish a challenger bank, one must have a comprehensive understanding of management approaches, organizational structure and management, and strategies for managing employees in the 21st century and cultivating ethical leadership behaviour. It is important to note that different management approaches, such as classical, human relations, systems, and contingency, may be more appropriate for different situations (Beirman, 2020). It is also essential for the management team to be able to adapt and apply the management approach that is most suitable for the situation at hand.

When it comes to the management of employees working in the 21st century, it is essential to have a solid understanding of the meaning of the term “team” and the components that contribute to the formation of a team’s mission. In addition, it is essential to be aware of the potential difficulties that may be encountered by teams and have plans ready to deal with these difficulties.

Because ethical leadership behaviour has a direct influence on the results achieved by employees, the significance of this trait cannot be overstated. A robust ethical culture within an organization can result in higher employee engagement, motivation, and overall satisfaction.

When it comes to an organization’s culture, it is essential to foster a culture that is congruent with its core values and long-term objectives. This can be accomplished through strong communication, leadership, and management practices.

Based on those mentioned above, the following suggestions are made:

1. Create a management plan that considers the various management styles and the flexibility to adopt and use the best management method for the situation.
2. Develop management strategies that are appropriate for the employees of the 21st century. These strategies should include methods for fostering a strong sense of team purpose and addressing the challenges that teams may face.
3. Facilitate ethical leadership behaviour within the organization through the use of practices that are effective in communication, leadership, and management.
4. Establish a strong organizational culture congruent with the organization’s values and goals.

To ensure the success of the challenger bank, it is imperative to continually review and evaluate the efficacy of the strategies and approaches that have been implemented and make any necessary adjustments.

References

Bierman, D. (2020). Restoring tourism destinations in crisis: A strategic marketing approach. Routledge.

Bogers, M., Chesbrough, H., Heaton, S. & Teece, D.J. (2019). Strategic management of open innovation: A dynamic capabilities perspective. California Management Review, 62(1), 77–94.

Choi, T.M., Wen, X., Sun, X. and Chung, S.H., 2019. The mean-variance approach for global supply chain risk analysis with air logistics in the blockchain technology era. Transportation Research Part E: Logistics and Transportation Review, 127, pp.178-191.

George, B., Walker, R.M. & Monster, J. (2019). Does strategic planning improve organizational performance? A meta‐analysis. Public Administration Review, 79(6), 810–819.

Gregory, A. (2020). Planning and managing public relations campaigns: A strategic approach. Kogan Page Publishers.

Kotter, J. P., (1996). Leading change. Harvard Business Review Press.

Northouse, P. G., 2016 Leadership: theory and practice. Sage publications.

Mustafakulov, S., 2020. Features of the system approach to managing regions’ social and economic development.

Pambreni, Y., Khatibi, A., Azam, S. and Tham, J.J.M.S.L., 2019. The influence of total quality management toward organization performance. Management Science Letters, 9(9), pp.1397-1406.

Prasad, L.M., (2020). Principles and practice of management. Sultan Chand & Sons.

Robbins, S. P., Judge, T. A., & Sanghi, S. (2018). Organizational behaviour. Pearson

Tuckman, B. W., (2019). Developmental sequence in small groups. Psychological Bulletin, 63(6), 384-399.

Den Hartog, D., Koopman, P., Thierry, H., & Tamboer, P. (2018). Ethical leadership and its impact on employees’ attitudes and behaviours. Journal of Business Ethics, 147(4), 753-766.

Schein, E. H., (2010). Organizational culture and leadership. John Wiley & Sons.

Veile, J.W., Kiel, D., Müller, J.M. and Voigt, K.I., 2019. Lessons learned from Industry 4.0 implementation in the German manufacturing industry. Journal of Manufacturing Technology Management.

Zhang, F., Hu, X., Langari, R. & Cao, D. (2019). Energy management strategies of connected HEVs and PHEVs: Recent progress and outlook. Progress in Energy and Combustion Science, 73, pp.235–256.