BrazilCommerzbank hires Bain & Company for strategy update
German bank Commerzbank has hired global consulting company Bain & Company to update its strategy with an eye to increasing revenue while reducing costs. The collaboration comes as the Frankfurt-based bank seeks to maintain a competitive edge in a rapidly evolving industry.
In 2021, Commerzbank CEO Manfred Knof launched a four-year turnaround plan following a period of mass layoffs, with the aim of increasing profitability. The plan has so far managed to lift profitability, with profits in 2022 growing to €1.4 billion and 2023 profits set to be even higher, as rising interest rates continue to hand European lenders their best results in years.
Though the rise in interest rates has led to higher returns from loans, the change of circumstances has led the bank to recalibrate its strategy halfway through a four-year turnaround plan, bringing in the support from strategy consulting company Bain & Company to guide the process.
Meanwhile, reports suggest that Bain’s consultants will also explore Commerzbank’s target to acquire new wealth management mandates from existing clients and objective to increase the bank’s digital services offerings.
The consulting arrangement between Commerzbank and Bain & Company comes as other banks move to cut consulting costs. Credit Suisse and UniCredit, for example, both pledged to cut spending on management consulting services by half in a bid to lower spending.
The recent trend of reducing spending on consulting appears to signal an end to the uptick in companies seeking such professional services around the difficult time of the pandemic, when many companies urgently needed advice on strategy, business models and digitalisation.
Now, companies are looking to cut costs in part due to rising inflation and geopolitical risks, with services such as external consulting often among the first spend categories to be contained. KPMG recently announced thousands of employees will be axed in response to slowing demand, while McKinsey & Company is working on its first internal reorganisation in years.
It is not clear why Commerzbank has gone against this trend in seeking consulting services, though a need to keep up with a rapidly changing banking industry is likely the main motivation. Neither the bank nor Bain & Company provided comment on the engagement to Bloomberg.
In 2020, Commerzbank hired both Bain & Company and McKinsey & Company to support strategy overhauls.
