A study to help a Latin bank enter the US market

3 weeks of planning and preparation before the bank study commences.

Strategy Study W0 1

This Strategy Study training program set in the USA, for a bank, is one of the most popular and effective programs we have. It is one of several training programs where we break down each step of a study into hundreds of videos.

Background of this series

We asked the partner leading this study, Michael, to document each day of the study as he thought through the issues, managed the client and led the engagement team on this complex assignment.

The subsequent live-blog was one of the most popular programs we ever released. The posts were prepared at the end of each day of the study so you can see how the thinking on the study evolved. We have since re-edited the live blog.

At 600 pages long, the re-edited live blog is probably the most detailed guide anywhere demonstrating how a partner thinks on a study. You will see that it is not a linear process. It is not a function of simply finding and plugging in a framework. Though there is a clear logic to the thought process.

On StrategyJournal.com we are publishing the entire re-edited live-blog

On the Strategy Skills podcast channel, we will publish an accompanying free podcast series. The podcast accompanying an article can be found at the bottom of the article.

Insiders, our most loyal clients, who want to see how we conducted the analyses, the actual engagement slides and follow the training to replicate this type of partner-level thinking can view all ~270 detailed videos for the study on StrategyTraining.com.

The content between each podcast, article and video is not duplicated. We discuss different and related concepts, with the most detail in the videos.

This study was unique in that many members of our community joined the engagement team in conducting the analyses. For example, when we needed to conduct focus interviews across the Southern USA, our community of readers went out and completed the focus interviews and collected photos.

When we wanted to document the process to apply for a small business loan our community took on the task of visiting bank branches and documented the process. All of this happened under our careful guidance and all of this information was fed back to the engagement team who led the study.

The engagement team itself was also selected from our 1-on-1 coaching clients.

We wanted to demonstrate that anyone could learn how to do insightful and influential strategy work under the right guidance.

Especially if one lacked a consulting background. Our goal was to show readers in boutique and smaller firms that great work can be done by anyone.

By following this series, you will effectively be thinking through the entire set of issues to determine if Latin American Bank (LAB) should enter the very profitable US retail banking sector. Any detailed training program must be set in a region, covering a sector and solving a functional problem.

We need to go into the details to teach you how to make judgment calls and interpret the data. This program is no different. It is set in the US, the retail banking sector and tackling a strategy problem.

That said, we teach from 1st principles so the training is relevant to anyone trying to learn how partners at McKinsey, BCG et al. think.

Given how large the study is, it may help to visualize each step. Each step contains a video explaining that part of the study, including the client slides and analysis done.

For confidentiality reasons, we have modified some of the details in the articles which follow. Many Insiders, our most loyal clients, will also read this series. They will use these articles to help them gain context to the video training program that is behind a paywall. Therefore, oftentimes we will link to these videos, and other videos, which explain concepts in finer details and also provide how-to teaching commentary. This is a balance we have to strike between ensuring this series is useful to non-members who cannot view the videos and our most loyal members who use the videos as their primary learning guide.

The bank

Basically, we have a sleeping giant of a bank, a behemoth, which believes it has developed specialized skills in managing risk when funding small, medium and micro-scale entrepreneurs in Latin America.

The bank has funded many Hispanics who take the money across the border into the US and start small businesses. They also have a large base of clients in Mexico and other Latin countries.

The bank believes there is a large, profitable and untapped market to provide micro, small and medium-sized loans to Hispanic immigrant entrepreneurs who are pursuing unsexy businesses in the US.

The bank believes they can make this move work, and have largely begun the implementation planning with their own internal strategy teams.

The internal strategy unit at the client, staffed by former colleagues from McKinsey and BCG, are leading this effort. The bank wants to roll out a retail branch network to directly serve consumers in the USA.

By doing this they will replace the existing fragmented non-bank owned distribution network that funnels bank money to consumers.

The bank’s problem

We have been brought in by the CEO to see if the US market is indeed attractive to the banking client. Although, as you will see, that is not how we were initially invited because he had a different problem statement in the original RFP.

With just + 20 days to go before the study begins, we have a lot do.

It will be interesting and challenging to determine if this banking client can build a business off rising US income-inequality.

The problem with serving entrepreneurs at the bottom of the economic pyramid is that current ideas typically offer no path to the middle class, as explained in Forbes. So, entrepreneurs earn some income and are slightly better off, but what happens next?

Being slightly better off was never intended to be the American Dream. The American Dream is about moving up economic classes within a generation.

Yet, the opportunity could be massive if we consider that close to 50 million Americans earn a yearly salary that is less than the minimum wage threshold. Very few entrepreneurs from this group would qualify for banking loans or any other financing to pursue an entrepreneurial path.

The bank believes offering a full service-banking product and finely tailored services via an accessible retail structure can change this.

Can the bank succeed?

As the partner leading this study, I must pay heed to the competing stakeholders at the bank who will all try to push their own agendas.

(1) The retail banking operations staff will want the market entry to go ahead since it widens their empire.

(2) The bank’s internal strategy team will likely want to control the study and make the outcome support their existing conclusions.

(3) The CEO may have an agenda we are yet to discover.

Each will pursue their own agenda this by latching onto some key issue impacting the client, and presenting their approach as a solution to addressing this key issue.

So I have to spend a lot of time with the team thinking through the broad issues facing the company. This is the essence of corporate strategy.

Why is what is happening, happening and what would happen if we changed the outcome? We have identified 7 considerations to keep in mind.

To help you understand the study better, here is a video from the full video training series. Remember to also listen to the free podcast about this article, on the Strategy Skills podcast channel.



QUESTION(S) OF THE DAY: How would you structure this study and why would you use this structure?

We answer this question, additional reader questions and discuss more issues raised in this article on the accompanying episode on the Strategy Skills podcast channel on iTunes, Spotify, Acast and Google Android Podcasts. This is the world’s #1 ranked business strategy podcast channel.

If you have a question, please post it as a comment on iTunes and we will respond in a podcast.

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