A case study from the Greek banking sector: NSD process formality

A case study from the Greek banking sector: NSD process formality

The extent to which the bank uses a formal procedure when introducing new services was examined based on the model of Johne and Harborne (1985). This model draws heavily on the work of Hage and Aiken (1970) and Pugh et al. (1963). The model consists of four dimensions: specialisation, standardisation, documentation and centralisation.

Specialisation refers to the ‘degree of division of labour achieved internally in terms of functions and roles’. In the case of the particular bank this kind of specialisation does exist, as each member of the product committee in each business unit is responsible for particular tasks and roles.

Standardisation refers to ‘the degree to which roles are defined for carrying out tasks in a certain way, ie the consistency in reviewing related tasks and the frequency in doing so’. In the case of the particular bank this standardisation does exist in a sense that there is a standard way that the bank develops new services.

Documentation refers to ‘the extent to which rules and procedures are written down for defining roles and for passing information’. This kind of documentation does not exist in the case of the particular bank, since the business unit’s committee is not obliged to develop reports at the end of most stages. Furthermore, there are no written rules concerning the way that the bank should develop new services.

Finally, centralisation refers to the ‘degree of dispersion of power by the chief executive officer’. The way that the particular bank develops new services was characterised as a totally decentralised procedure since its business unit is almost completely responsible for this task. Furthermore, it seems that the board of directors is not participating actively in the initial stages of the whole process. Its role is limited to taking the final decisions and allocating the required financial resources to those services that are finally going to be launched. This finding differs from the studies of Easingwood (1986) and Johne and Vermaak (1993) which found a more active role of the top management of financial institutions concerning all the stages of the new service development process.

Based on all the above, it could be argued that it is difficult to characterise the bank’s new service development procedure in terms of formality. It could be claimed that the particular bank uses a semi-formal procedure when developing new banking services. It is also interesting that most of the respondents felt that the initial stages of the procedure necessitate more formal procedures than the later ones. Additional analysis revealed that there seems to be a tighter structuring of activities in the initial stages in comparison with the implementation stages. This finding is not consistent with Johne and Harborne (1985), who reported that UK financial institutions have looser structuring of activities in the initial stages and tighter structuring of activities during implementation.