What can investment banks learn from benchmarking?

2 Types of benchmarking

Investment banks have different types of benchmarking they can use, depending on their objectives, scope, and data availability. Internal benchmarking involves comparing and evaluating performance, processes, and practices of different units within the same organization. External benchmarking looks at performance, processes, and practices of other organizations in the same industry or sector, or across different industries or sectors. Competitive benchmarking compares and evaluates the performance of direct or indirect competitors. Functional benchmarking looks at specific functions or activities across different organizations or industries. Lastly, best-in-class benchmarking compares and evaluates the performance of the best performers or innovators in a given field or domain.

3 Steps of benchmarking

Benchmarking is not a one-time task, but a continuous cycle of learning and improvement. The process typically involves defining objectives and scope , selecting data sources, analyzing and interpreting the data, developing action plans, monitoring results, evaluating outcomes, and revising the process as needed. This helps to identify gaps, strengths, weaknesses, opportunities, and threats for the organization and its competitors or peers. Furthermore, by tracking progress against benchmarks and KPIs, the organization can leverage strengths, overcome weaknesses, exploit opportunities, and mitigate threats based on the benchmarking findings and insights.

5 Best practices of benchmarking

To make the most of benchmarking, investment banks should ensure the involvement and support of senior management and key stakeholders, as well as select the appropriate type and source of benchmarking data. It's important to use a mix of quantitative and qualitative methods and tools to collect and analyze the data, while benchmarking not only outcomes but also processes and practices that lead to them. Furthermore, banks should benchmark not only against competitors or peers, but also against aspirational or innovative organizations or practices. Finally, benchmarking should be done not only for improvement, but also for innovation, so as to create or capture new value or advantage for the organization and its clients.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?