Effective Product Control

CHAPTER 1An Introduction to Product Control

The Emergence of Product Control

Finance within banking is unlike finance in most other types of industries. In most non-banking companies, the finance team is separate from the producer. For example, in a manufacturing company the finance department is not on the shop floor, and in a retail company it is not in the stores. Most likely, finance is housed in the head office.

In these industries, the value of the product is not often in dispute. Usually the cost of sales and production, or margin per unit, is known and the revenues are the function of a simple calculation. There is also often a team of management accountants providing information to the product line managers on the results of their business and assisting in analytics on those results.

In banking, it is not that simple. Finance is more integral to the production because the products banks deliver are financial. In the 1990s, with increasing volumes of trading, a greater pool of financial instruments and higher levels of complexity, it was necessary for banks to establish a dedicated function within finance to control evolving sales and trading desks. With that, management accountants within finance morphed and grew into a function called product control, which came to dominate large swathes of finance, establishing footprints all over the developed world and later on, the developing world.

Over the past decade, these large swathes have been migrating from the more expensive ...