Expanding the Bank Strategy Cube Framework

A Bank Strategy Framework

On our path to describing the Bank Strategy Cube framework, we laid down the four horizontal layers HERE. In this article, we tackle the vertical layers that complete the cube. Where the horizontal layers pertain to strategy development at different parts of the Bank, the vertical layers provide the foundation for execution. These vertical layers contain the answers to the question of what customers to target, with what value proposition, in what segment or geography and with what resources. If you are interested in a more effective bank strategy model, read on as this framework will give you an easy way to build strategy, block by block.

Getting a Real Strategy

Most banks, if you ask them about strategy, they will tell you about providing a high level of service to their community. If you ask what business they are in, they would tell you that they exist to provide loans and to take deposits. Unfortunately, that answer serves as a limiting belief in truly developing a successful strategic plan. If your core mission is to provide a commodity product, then your business will be a commodity and will be subject to the winds of competition. However, if you want to differentiate yourself in the long run, then a true strategic plan is needed.

Reframe the question as “What business should you be in,” and then broaden your perspective and you might come to the conclusion that you are in banking to allow customers to experience financial growth. Loans, deposits and other financial services are just ways to accomplish your goal. This is where the cube comes in.

Using The Cube

Once we understand the layers of strategy hierarchy – bank, department, discipline and operational layers – we can now turn the cube on its side and look at each set of goals through a set of execution layers. These layers help create a strategy that truly sets the bank apart. A graphic of the bank strategy cube is below:

The Cube Strategic Framework

Customer Target: While the bank has an overarching set of customer targets, each department will have a different set of target customers. The Bank may have a strategy to go after customer segments with above average profitability and that are heavy users of bank product. For the Commercial Department layer, this might mean targeting health care providers while for the retail sector this might mean going after households with middle school children. The Discipline Layer for technology within the commercial department may articulate this initiative with their effort to develop further small business onboarding technology for deposit account opening while also rolling out a small business loan decisioning platform. At the Operational Layer, the customer focus gets articulated by going after subsets of high value, health care and municipal customers that are material targets in their area. A bank may define this operational layer by branch, by region or by business development officers.

Bank Strategy 

Value Proposition: If there was one thing in your bank’s strategic plan to get right, it is determining where your bank can create value for your customer given the position of other alternatives. The value proposition for each layer may or may not be the same. For some banks, speed and ease of product use may be the main theme throughout the bank. However, for others, speed may be important for their commercial customer, but the value may be important for the retail department due to demographic factors. The key here is to define within each layer what the value proposition is of the bank, department, discipline, product or community. There are a variety of ways to add value – speed, transparency, being a low-cost provider, being a high service provider, simplicity and the list goes on. Understanding the value proposition compared to competitors will drive each layer’s positioning in the market. Once determined, the byproduct will be a natural position in marketing, pricing, distribution, and community.

Community: Deciding where to focus is one of the most important strategic decisions that can be made as it is usually the factor that has the largest influence on financial performance. For most banks, this will be a geographical distinction when they define their community focus, however, for some, the community may be defined by product (f.e. SBA) or a customer segment (f.e. country clubs across the US that are older than ten years old). In cases where the community is defined along customer segment lines, this layer can be collapsed with the Customer Target layer.

Budget/Resources: To execute on a strategic plan, identifying the required resources that are needed to achieve the goal is mandatory. Initiatives often fail for lack of focus and formal resources. The most common mistake banks make to assume you can layer on an initiative such going after a new market in your spare time. Few bankers have spare time, and so an initiative such as this will get pushed off and likely fail. Identifying dollars, people, equipment, real estate or other assets will prepare all layers of the strategy cube for the effort. Also, it should be noted that this section should also include any capabilities or organizational changes that are required to execute.

Process/Systems: For smaller banks, the required processes and systems may be included in the above vertical layer, however, for most banks, it is helpful to break out the required systems needed. If your bank looks to strategically focus on high-value customers per our example above, having a relationship profitability model and a customer relationship management (CRM) system is mandatory. While each initiative requires multiple systems, this section hones in on those systems or processes that are specifically required to support strategic execution. Revised back office processes, customer facing technology, faster credit decisioning, and similar are all examples of processes and systems that may be needed to be successful in executing the bank’s initiatives.

Working Within A Cube

The cube methodology has the huge advantage of being able to segment out a sub-cube so that it can function independently and can be worked on in isolation. Security, for example, can come up with the basis of their plan without requiring, the technology group to complete their strategic plan. The Operational Group West may include several branches in the western part of the state that doesn’t have any wineries but is target rich with health care. Here, they can target their bank’s strategic plan for their particular area to increase the plan’s effectiveness. 

Strategic Planning

Further, a bank may want to simplify or expand the layers on the cube to meet their needs. A small bank cube may contain a single operational section while a larger bank may have 55 geographic sections and 20 product sections within the operational layer. Conversely, for a small bank, if the value proposition is all the same for every layer, that vertical section can be collapsed in order to simplify the planning process.

Putting This Into Action

The bank strategy cube represents one of the most effective frameworks for developing a detailed and effective working strategic plan that can be easily updated each year. Each layer can be boiled down to a matrix filled with bullet points with very little narrative. This not only makes production easy but allows a cross-discipline view as disciplines like human resources or technology can now look up, down and across the cube to see how they fit into the bank’s overall plan. Finance, for instance, can simply sum the required budget from each layer and aggregate that into a starting budget.


Strategy is an iterative process involving the entire bank’s stakeholders, including employees, customers, managers, board, vendors, regulators, and community. Working within a flexible framework such as a cube allows silos to be broken down and moving parts to come together. The end result is a more thought-out strategy that not only makes a difference but brings the bank together into a single cohesive unit – it will just be in the form of a cube.