This paper responds to emerging concerns from banking practitioners and media about service operations mismanagement in banking industry. It presents a general review, discussion and empirical analysis of relevant academic literature on cross-functional integration from the Service Operations Management (SOM) and Service Management (SM) domains, together with a proposed SOM functional integration framework for use in future research into the enterprise-wide cross-functional integration of operations management in banking. Empirical analysis of literature themes by industry, content analysis of key papers exploring their usage of the term ‘function’, and critical analysis of the literature from a new ‘functionalist’ perspective are conducted. The focus on strategic intentions in SOM and SM academic literature fails to address the emerging concerns in the banking industry regarding problems arising at functional execution levels of management. Research into this gap in knowledge may help to explain the factors contributing to banking performance shocks and their relationship to operational inadequacies exposed during economic turbulence. A functional integration framework provides banking operations managers with an improved ability to locate operational inadequacies, and thereby identify opportunities to increase operational resilience. Although the implications of this conceptual paper can be translated to the financial services industry in general, the examples presented here are from banking.

Emerging challenges caused by operational turbulence in the banking industry are creating an urgent need to improve current knowledge about the functional contributions made by Service Operations Management (SOM) to banking performance. Headlines in the business press confirm an increasing vulnerability of banks to performance shocks due to operational inadequacies (Hutton, 2007). These shocks expose weaknesses in the way banks deal with such matters as product innovations, new market opportunities, risk concentrations, regulatory compliance demands, and trading volatility (Cohen, 2007). Their impacts on performance are refocusing current industry attention beyond service delivery to include the functional areas of banking operations that contribute to managing financial assets, liabilities, offerings, risks, liquidity and regulatory compliance. Anecdotal evidence suggests that the effects of operational challenges are less traumatic for banks that take a more collaborative and proactive approach to SOM (Ilin, 2006a; and White, 2007).

Operations Management Journal, Service Operations Management (SOM), Integration Imperative, Service Management (SM), The Functional Integration, Operations Management, Banks, Research