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Because they can: Banks can get away with not doing business the conventional way. They have cash (well, some still do) and they usually self-fund their business, while most of manufacturing companies require cash to either run business, invest or expand.

Smoke and mirroros: Diversity and size of many banks obscure their inefficiency. It is very hard to keep large organisations lean and efficient. Unlike factories where productivity is measured by the amount of the tangible output, it’s hard to measure banks’ efficiency. Multiple Business Units and layers of management hide true purpose of many departments.

No Refund Policy: I don’t know of a single bank whose products had “Refund/Return” Policy. While you can usually exchange or return a widget (no matter how small or expensive it may be – consumer laws make sure of it), no bank would allow you to terminate a loan simply because you found it unsuitable or inconsistent with another bank’s product. If people could easily chose/receive/swap banking products, banks would have to be more competitive and price conscious.

Can you imagine what would happen if banks could adopt best manufacturing practices such as Just In Time, Lean production, Zero Inventory, Made-to-Order production, Sharing future forecast with vendors etc? How much leaner and productive would they be! And how much cheaper and transparent their offering could be. Or am I dreaming?

Perhaps the advent of the current credit crisis will force banks to review the way they do business? I’d like to see the day when Supply Chain and Logistics conferences are attended by bankers, when Supply Chain is not interpreted as beating vendors into submission to produce “savings, when banks are actively seek expertise and knowledge of those who understand production capacity and value chain management, and when banking products can be as easily returned and replaced.

Do you recognise an emerging pattern? If you do, then I would like to hear from you.  Please comment.

And if we looked at the situation through the prism of ITAM, we would see that the shift in the paradigm could greatly reduce the stockpile of desktops and laptops where there's currently 2 or more per employee. It could also rationalize the use of software licenses by reducing the number of "idle" licenses and creating a better accountability of what has remained. As far as procurement, adoption of eAuctions could lead to reduction in Asset unit price and could deliver extra acquisition savings through the process of bidding. Let's remember that each $1 saved as a result of cost reduction equals around $5 in revenue, be it through cheaper buying or having less assets. The intangible value of the change would be in having a better transparency of the end-to-end process where we'll see all IT "ingredients" before the project starts, during the implementation, its useful life and through the retirement. Imagine if that was a reality in a Bank!