Barriers to Customer-oriented Control in Financial Services

Abstract

Increasing competition and demanding customers in the financial retail sector has become a challenge to the sector's traditional management accounting systems. Few financial institutions have accounting systems that allow them to identify the profitability of customer segments, and the relationship between customer related activities, customer loyalty and profit are hardly known at all. However, information systems are changing. This article documents how Danish financial institutions have accomplished - or planned - analyses of customer profitability. Other initiatives seem to support the customer orientation through empowerment at the branch level, but several barriers hamper further customer-oriented change in organizational behaviour. Data gathered at the branch level most strongly indicate problems of ownership and project sponsoring and it is argued that new accounting systems may be less important than goal-oriented participation of the frontline employees.