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COMMERCE BANK
Group No. 8:Vijay Jain (60)
Yamini Kalra (65)Renu Pathak (68)
Shakti Tandon (70)
AGENDA
Overview of Banking Industry Commerce Story Key Leanings from the case
Product Differentiation Employee Training and Its Impact Brand Building Strategies Customer Satisfaction and Value
Individual Assignments
OVERVIEW - BANKING INDUSTRY Retail banks offered commodity Products
i.e. Deposit and Loan Products Two important trends in the industry :
1) Push to increase the “cross sell” of products 2) Growing Revenues from fees customers paid
for certain transactions and functionality Customer Satisfaction with banking
industry had been quite low Customers selected their bank for variety
of reasons such as proximity of a local branch, large ATM networks
OVERVIEW …contd.
Front line employees in retail banks were often selected for their ability to perform repeated tasks, interact with customers and their willingness to accept low wages
Compliance with Processes and Product attributes were paramount in the industry
Commerce Story
Commerce Bank was very different from other banks in the industry
They compare themselves with a retailer more than a traditional bank
Their service delivery system is based on guidelines and standards for their products, branches and employees, and focused on customer centric programs
Services were based on personal contact, with branches opening longer on working days and modified hours on the weekend
KEY LEARNINGS
Product differentiation in service industry
Importance of customer satisfaction and value
Employee training and its impact on service quality
Brand building strategies in service industry
Product Differentiation
Instead of several products they offered just a few and replaced high interest rates with extraordinary friendly service
They also had a big branch network and generated deposit growth rate on a store level
Employee Training and Its Impact Internal system of cultural training and
incentives WOW!ing customers included awards,
commendations and compensation, as well as intense training and education
Mystery shopping, the WOW shops, was a significant component of performance measurement
Leagues were organized whereby branches in different regions might compete against each other for the most impeccable service report
Brand Building Strategies
Building every branch itself and didn’t go through mergers and acquisitions because of cultural differences and brand weakening
High service quality standards Customers as fans Drive through window for faster service 10- minute role Spent a lot of money on big promotional
activities and giveaways Wow terminology to measure service
excellence
Customer Satisfaction and Value In 2001, cumulative deposit growth rate in the
united states was 5% while Commerce deposits alone grew by almost 40% and households grew by 20%
Commerce model was to give the best of every channel what customers used
The big-bank sees a customer as a cost, not a revenue generator
3% - wanted the highest rate while 62% picked a bank for service, convenience, etc.. Commerce targeted this 62% while others focused on 3%
What Sets Commerce Apart
ATM Phone
COIN Machine
Mr. CBuzz
Dr. Wow
Mystery
Shoppers
Can ≠ May
Kill the
Stupid
Rule
IVRS PersonEasy
Retired Part
timers
Hot Dog FireJuggler on
Fire How far we
go ?
INNOVATION-EXAMPLESFROM INDIA & ABROAD
Banking Innovations Abroad Netting Clearing Houses
Bundling of services one stop shop for all financial needs
ATMs
Direct Debit Pay Monthly Bills
Global Banks
Online Banking - anytime
Cash withdrawal at Retail Counters
Mobile Banking – Apps world – Anytime / Anywhere
Banking Innovations - India Adoption of Global Innovations
Drop Boxes
Utility Payments
Door Step Services – Cash, Drafts, New Accounts, Cheque Books
Welcome Kit - ICICI
High Interest on SB accounts – Kotak Mahindra / Yes bank
Gold Deposits
Any ATM Withdrawals
SMS Alerts
Futuristic Perspective What Business I am in?
Deposits? Loans? Payments? Risk Management? Financial Intermediaries?
Can someone else do this?
Retail outlets? 100% Virtual bank? Insurance?
Why customers deposit?
Interest? Safety? Convenience?
What customers want? EMI AMI (Adaptive % )? Spending Pattern
analysis and AI based Advice
Inflation Linked Rates
Technology Trends? Bit Coins ? Big data? Social Banking?
?
CO-CREATION: CURRENT EXAMPLES AND FUTURE POSSIBILITIES
Co-Creation – Current Examples Branch network optimization (number
and size of branches), reviewing network architecture (i.e. hub and spoke model)
Basic multichannel integration, alignment of channels and integrated governance processes for real-time banking
Proactive and reactive management interaction based on customer needs
Operational customer segmentation driven by a needs based offering structure
Sales force effectiveness powered by consistent sales behaviors and tools
Simple and clear communication with customers
Performance management (new customer-oriented metrics) and tailored compensation schemes
Future Possibilities
GLOBAL BANKING:STAKEHOLDER MAPPING AND
CURRENT CHALLENGES
Global Banking: Value Chain
Value Chain: Cyclic Transformation
Global Banking: Stakeholders
Global Banking: Coalitions
Coalitions Explained
Stake Holder Engagement?
External vs Internal How much power
Govt. vs Employee Supplier vs. Customer
Allies or Opponent +ve Collaboration or –ve advertising
Management Strategy Marketing Communications Media
Engaging with Stakeholders The long-term success of our bank depends on our ability to gain and
maintain the trust of our stakeholders. Banking business works on the basis of trust. One of the ways we inspire trust in our stakeholders is by knowing
what they expect from us and how their expectations are changing. We therefore regularly engage in a dialogue with clients, shareholders,
employees, regulators and NGOs, as well as other groups of stakeholders.
We gain an understanding of their needs and interests through discussions and by conducting surveys or participating in events, as well as through our involvement in initiatives, forums and associations. Individual groups of stakeholders have different – and sometimes conflicting – interests and consequently have their own specific expectations of us as a bank.
By exchanging our views with these stakeholders, we gain a more detailed understanding of our responsibilities in our core business of banking, as well as our responsibilities toward our employees, society and the environment. At the same time, this dialogue enables us to identify potential issues at an early stage, offer our perspective and help to develop solutions to current challenges wherever possible.
Strategic & Regulatory Challenges
Strategic challenges: Private banking industry professionals need to reinvent
themselves in order to reinforce themselves as a leading pole in private banking services.
Retail bankers also have to face a growing competition from abroad as well as from non-traditional institutions. Asset management and investor services institutions need to prepare themselves for significant changes in infrastructures, regulatory frameworks and their competitive landscape.
Industry regulatory challenges The constant evolution of local and international regulations is a
major driving force in the banking and securities industry. The likely introduction of Basel III standards, as an example, will
have a major impact on the way institutions run their business. There is likely to be an increased focus on capital efficiency. Implementing all these rules can be an issue, yet the real challenge is more about optimising your regulatory investments than merely complying.
Operational Efficiency Challenge
Industry operational efficiency challenges
To appropriately address strategic and regulatory challenges, impeccable execution is a must. Constantly improving operational efficiency has to be high on the agenda of bankers. Now more than ever, institutions have to optimise their processes, control their cost structure, and explore new operating models using all the tools now at their disposal.
Analysing the opportunity to mutualise operations or IT systems across entities or geographies, outsourcing non core activities, improving risk management frameworks and tools… these are some of the areas where financial institutions can find the levers to reach excellence.
TECHNOLOGY IMPACT ON BANKING SERVICES AND
FUTURE
http://www.youtube.com/watch?v=oYPtBhkn_HU
http://www.youtube.com/watch?v=LsEV5wdh3EE
THANK YOU