A case study from the Greek banking sector

A case study from the Greek banking sector

INTRODUCTION

Over the last decade, tremendous technological and organisational changes have occurred in the banking sector of many countries. Changing information technology, new customers’ needs, increased concentration and deregulation and intensified competition among domestic and international financial institutions have transformed the whole industry. Moreover, customers are becoming more sophisticated nowadays, as they have moved from the ‘traditional passbook savings customer’ to the ‘investor, who is seeking appropriate rates of return from its financial products’.

All the above rapidly changing circumstances have posed a real challenge for bank management. This changing environment has led many banks to adopt more sophisticated marketing techniques. In this context, new service development could be characterised as a crucial marketing activity that many banks undertake in order to gain competitive advantage. Davis (1997) has claimed that nowadays, the only ‘sure-fire’ way for a bank to ensure long-term stability and profitability is to develop new services. Having realised the strategic importance of new services, bank executives are re­examining their organisations’ approach of developing new services and endeavour to improve the success rate of new services.

Despite the importance of developing new services, limited research has been undertaken on this topic in comparison with the field of new product development. This is intensified by the fact that most of the existing literature on new service development (NSD) has focused on those factors that determine the success of the whole effort, without paying attention to particular components of the process itself. This is particularly obvious as far as the initial stages of the process are concerned. Although several authors regard them as the most important stages of the new service development procedure,  the empirical research on this topic is very limited. Most importantly, the success records of new services are still at low levels.

In an attempt to increase knowledge of the intricacies of effective new service development, this paper seeks to investigate a particular phase of the process, namely the initial NSD activities in the case of a leading Greek bank whose name cannot be disclosed for reasons of confidentiality. More specifically, this paper focuses on (i) the initial NSD process activities, (ii) the formality of the NSD process and (iii) the functional involvement during the initial NSD stages.