Measuring Shareholder Value Drivers in Banking

Abstract

All stakeholders are dependent on each other for their success in the long term and managing to create sustained shareholder value is not a zero-sum game. Creating stable shareholder value requires an intense focus on delivering benefits to customers in the most efficient way, hiring and retaining a motivated workforce, maintaining excellent supplier relationships, and being a good corporate citizen in each of the local areas where the company has a presence. As such, several strategies have been developed since the 1990s to improve customer satisfaction that have included the redesign of productive and delivery services, the development of more flexible organisational structures, the introduction of incentive schemes that motivate banks’ human resources to act according to shareholders’ goals, etc. In Chapter 4, we identified four primary drivers that create shareholder value in banking. These relate to improved bank efficiency (cost efficiency, profit efficiency and productivity), enhanced customer satisfaction, optimising banks’ financial structure and developing an optimal mix of business activities.