A case study from the Greek banking sector: DISCUSSION AND IMPLICATIONS

The present case study provides new evidence regarding the organisational setting that enhances the successful development of new services in innovative financial institutions aiming at leading positions in the market.

By studying the initial stages of new service development in the case of a particular leading Greek bank, the present study identified a new way of developing new services in contrast with the conventional theory on new service development. Its fundamental components are presented in Table 3. This ‘new way’ requires an organisational structure that is based on the product management system instead of the traditional functional structure that the existing literature suggests. The bank is divided into different business units, whose main responsibilities are the development of new services and the management of the existing range of services. It is a completely decentralised procedure, where these business units take the fundamental decisions concerning the actual development of a new service.

The role of the top management is to allocate adequate financial resources and take all the final decisions that are related to the extent that each new service is consistent with the bank’s overall strategic goals and objectives. The functional departments of the bank have a supporting role in the initial stages, without having the authority to take any decisions nor increased responsibilities and tasks in the implementation stages. The whole effort demands more formalised structure of activities in the initial stages than the later ones, while despite the short period in which each new service is developed, none of the initial stages is omitted. However, due to the uncertainty and competitive pressures of the market most of these stages are executed in parallel.

Table 3 Developing new financial products and services: New vs. traditional way

The new way The
traditional way

The organisational structure based on the product

The organisational structure based on the

management system


Each business unit is almost exclusively


responsible for the development of new

(especially in the initial stages)

Limited role of the other departments (including

Increased role of the other departments (especially

the marketing department)

marketing department)

Limited role of the top management

Increased role of the top management



More formalised structure of activities in
the initial

More formalised structure of activities in
the later

stages than the late ones

stages than the initial ones

Although it is contrary to what is suggested in the literature, the work model presented in this paper has been tremendously successful in the case of the bank under study. The proof of this is the fact that the bank has a strong innovative profile and increasing product performance records (ie it possesses a leading market position with a market share of more than 20 per cent in most of its products) in the highly competitive Greek financial market. These were among the main reasons why the particular bank was voted ‘Bank of the year’ for Greece by the internationally acknowledged monthly business magazine The Banker, a member of the Financial Times international publishing group.

In this respect, financial institutions that manage their offerings in markets with similar competitive conditions should start rethinking whether the way their new service development efforts are structured is the most appropriate one. The second decisive step is to accommodate their work model to their competitive strategy in the most efficient and effective way. It seems that financial companies that aim at leading positions should shift their NSD structures towards decentralisation and formalisation during the initial stages of their NSD efforts.

However, some of these findings need to be treated with caution. In particular, the rapid changes that have occurred within the Greek banking sector over the last decade have led banks to develop services that combine more than one characteristic for their customers (ie a combination of a savings account and a mutual fund). Nevertheless, the development of such services may require a more collaborative effort between the different business units within the bank than the current single-functional one. Furthermore, despite the limited responsibilities and authority of the marketing department, an increased role of this department in the initial stages of the new service development process might improve the whole procedure in terms of creativity and innovativeness.