Learning Objectives:

• Analyse business models in banking and their evolution.

• Formulate coherent bank strategies and translate them into risk appetite settings.

• Understand corporate, competitive, and functional strategies.

3.1 Business Models in Banking

The University of Genoa course examines “business models in banking: importance, taxonomy, innovation” . The University of Leeds module covers “asset securitization,” “off-balance sheet activities,” and “funding structure and the role of deposits” . The Macquarie University course guides students to “create bank business strategies that can be operationalised via credit concentration limits, delegated authorities, etc.” .

Key business model distinctions:

• Retail vs. Wholesale: Serving individuals vs. corporations and institutions.

• Universal vs. Specialised: Offering a full range of services vs. focusing on specific segments.

• Digital vs. Traditional: Digital-only banks vs. banks with physical branches.

3.2 Strategy Formulation Framework

The University of Genoa course covers “a framework for strategy formulation: corporate, competitive and functional strategies” .

• Corporate Strategy: The overall scope and direction of the bank (e.g., what businesses to be in).

• Competitive Strategy: How the bank will compete in its chosen markets (e.g., cost leadership, differentiation, focus).

• Functional Strategies: The plans for specific functions like marketing, operations, and risk management .

3.3 Strategy Execution and the Customer-Centric View

The Macquarie University course requires students to create strategies for “migrating from a product-centric to a customer-centric view of a bank’s business” . The University of Leeds module covers “relationship banking: theory and practice” as a core topic . This shift reflects the growing importance of customer relationships in bank strategy.