Navigant Consulting wins MCA business strategy award

Navigant Consulting has won the Business Strategy Award at this year’s MCA Management Awards for its work in helping Tesco launch the UK’s first major new retail bank since the dot-com era. Navigant used its financial services experience on the project which resulted in Royal Bank of Scotland (RBS) moving from both shareholder and supplier of Tesco Personal Finance (TPF), to being simply a supplier. In just 12 weeks and with no service disruptions, all operational aspects of the deal were achieved.

The prestigious MCA Management Awards identify the best case studies in each of 12 categories, where organisations, in the private or public sector, have achieved a significant improvement in performance with the assistance of management consultants, either in-house or external.

TPF was set up ten years ago as a joint venture between Tesco and RBS. The combined expertise of the two companies has been hugely successful, earning the venture five million customers and more than £200million in profits. But although the supermarket had an unrivalled brand, customer knowledge and chain of outlets, it still relied on RBS for product, processing capability and technology. Therefore Tesco decided that it was time to take the next logical step in its development to become a fully-fledged retail bank in its own right by buying out RBS’s share.

Faced with this challenge, Tesco asked Navigant Consulting to help it move from a situation where RBS was both shareholder and supplier to one in which RBS was simply the supplier. Firstly, Navigant needed to evaluate the different possible operating models which would enable Tesco to become a key player in the financial services sector. They then developed detailed designs for the chosen model.

About 15 consultants from Navigant worked alongside four people from the retailer’s corporate finance function. A deal as large and complex as this required Navigant to work very closely with lawyers, actuaries and accountants in order to support negotiations and draft contracts.

Navigant structured the arrangement, designed the new organisation and operating model, supported the negotiation process and carried out operational due diligence on Tesco’s behalf.

In July 2008, Tesco signed contracts worth £950million with RBS, establishing TPF as a significant independent player in the retail banking market. Navigant is now helping Tesco prepare for the next stage of the bank’s evolution.

“It was a challenging project,” says Nicola Goodricke, Tesco’s business development manager. “Our objectives changed and evolved as we went along. Navigant’s consultants were very adaptable in helping us find our way. They provided resources and advice at late hours and into the weekend. They made things work for us in difficult circumstances.”