The Managerialization of Banking: From Blueprint to Reality

This paper shows how banks in the USA and Western Europe became more managerial during the late 1960s and 1970s, due to the adoption of a multidivisional organizational structure, originally pioneered by industrial enterprises in the 1920s. This meant the introduction of a more elaborate hierarchy with more autonomy as well as accountability for all levels, including the branches, which were supposed to generate profits through more ‘aggressive’ marketing and selling, while the center exercised control through explicit management tools, including budgeting and planning. As this paper also shows, these changes were actively promoted by consultancies, and in particular McKinsey, which had developed a blueprint of a ‘modern’ banking organization that it subsequently implemented in a large number of banks – a process that this paper illustrates through an in-depth case study of the Dutch Amsterdam-Rotterdam (AMRO) bank. More generally, insights from this paper query an established timeline that links the more aggressive, even reckless behavior of banks with deregulation since the 1980s and also casts some doubt on the notion – often sustained by consultants – that management ideas and practices can easily be transferred from one sector to another.