CHAPTER 1 INTRODUCTION

Background
According to (The Royal Bnak of Scotland, 2008) Royal Bank of Scotland (RBS) is one of the world's leading financial services providers and one of the oldest banks in the United Kingdom (UK). Following the takeover of National Westminster Bank in 2000, the Group has continued to grow its business around the globe and, in addition to its strong UK presence, it has offices in Europe, the United States of America and Asia. By the end of 2002, it was the second largest bank in Europe and the fifth largest in the world by market capitalisation. In (The Royal Bank of Scotland, 2008) RBS itself was founded in Edinburgh, by royal charter, in 1727. It opened its first branch in Glasgow in 1783 and developed a large network of offices throughout Scotland during the nineteenth century. In 1874 it opened a branch office in London and from the 1920s developed, by acquisition, a major presence in England. By 1970, following the Royal Bank's merger with the Edinburgh-based National Commercial Bank of Scotland, comprising the former National Bank of Scotland (established 1825) and Commercial Bank of Scotland (established 1810), it enjoyed over forty per cent of Scotland's banking business. Under the Williams & Glyn's Bank banner, it also boasted a large and growing presence in England and Wales. In 1985 Williams & Glyn's merged fully with the Group's Scottish clearing bank which thereafter traded throughout Britain as a single entity, The Royal Bank of Scotland. During the 1980s the Group diversified, setting up an innovative car insurance company. During the early 1990s the Royal Bank refocused on its core business of retail banking. In 2000 the Royal Bank acquired National Westminster Bank which was the biggest takeover in the history of British banking. Now in 2008 RBS took over Aljameen Bank of Netherland, Amstardamsche Rotterdamsche (ABN AMRO), which is considered the number one bank in Asia. RBS has proved itself one of the best bank providing better facilities to the people of Pakistan as compared to the commercial banks. 1

RBS has 75 branches in various cities of Pakistan. Few of them are in the following cities: Karachi Lahore Islamabad Peshawar Quetta Rawalpindi Fasilabad Multan Sialkot Hyderabad Gujrat Mirpur (Azad Kashmir) Sargodha Gujranwala Vehari Jehlum Turbat Drea Ghazi Khan Sukkur Mardan Gujar Khan Kharian Bhalwal Bhawalpur

RBS Pakistan offers products in areas like Deposits, Saving and currents accounts, cash and cheque deposits, and loan facilities. Not only this, but it is also offering products as: Balance Transfer Facility (BTF) which in banking terminology is One Stop Payment Shop, 24 hour nonstop banking centre, relationship card through which customer can access to over 1000 ATMs, life insurance protection, E statements through which you can receive your BTF via email, Drop box facility- the convenience of dropping of your payments at any of the drop boxes placed outside RBS, Pakistan State Oil (PSO) and Shell. Vision of RBS Contributing to profit generating by reducing the amount of time employees spend on training activities and enabling employees to spend more time on revenue generating activities. (The Royal Bank of Scotland, 2008) Mission of RBS To create maximum economic value for our shareholders through a constant relationship focus on the financial services needs of our chosen clients segment and a strict adherence to our financial target. (The Royal Bank of Scotland, 2008)

Purpose:
Now a days the Islamic banking is playing an important role in overall banking sector, not only local banks but foreign banks also sell many of their products on basis of Islamic banking. The main purpose of report is to study the working of Islamic banking in the Mortgage Department, the overall working of this department, the kind of products being offered by this department and the future of Islamic banking unit. As RBS is considered one of the top most banks in providing better services to its customers so in this regard the Customer Service Department (its structure, overall functioning and products offered) is also discussed in detail.

Scope of work:
There are different departments in any bank. It has Human Resource Department, Information Technology Department, Operation Department and Marketing

Department, but the main focus of this report will be on Islamic Department of RBS that is Mortgages and the Customer Service Department of RBS.

Methodology:
Basically for the purpose of research various sources of data collection were used. On the very first day the manager of the bank gave orientation of the bank staff, departments and the position of the bank in Rawalpindi region. After that interns were sent to the Mortgage Department where manager gave the introduction of his department. All the employees proved very helpful during the course of data collection, they were always ready for helping the interns. During the course of data collection the managers of the departments gave the latest information about the various products offered by other banks as well. Banks brochures were very helpful in analyzing the products of both the departments. After the data collection all the information was analyzed very carefully. In some of the cases the information was overlapping but in-depth analysis of data helped in presenting the results in a sequential pattern. The analysis proved helpful in pinpointing the strengths, weaknesses, opportunities and threats (SWOT) of RBS and its departments. From SWOT analysis, the report moved on to the portion of findings and recommendations which were easy to present after having interviews with the banks staff. A survey was also conducted to ask some of the questions regarding satisfaction of the employees. In survey a sample of 70 employees was taken. Survey data was collected through questionnaires. In the survey the employees tick their desired options. The survey data was analyzed and the results of all the employees are shown in a separate table.

Scheme:
The report is divided in to 5 chapters. Chapter 1; includes background, purpose of study, scope, methodology and scheme of the report, Chapter 2; includes Structure of Islamic Mortgage and the Customer Service Department, products offered and the future of both of theses department. After that Chapter 3; gives the 4

details of SWOT, PEST and Porters Five Forces Analysis. Chapter 4; tells my personal experience of RBS. Finally Chapter 5; gives findings and recommendations for the Mortgage and Customer Service Departments.

Overview of the Departments:

According to (personal communication, July 27, 2008) RBS Rawalpindi consists of the following departments:

Administration Department:
The administration department of RBS lies in the basement. It has a main head that looks over all the functions like cleaning, maintenance of the building, issuance of certificates and transfer letters, keeping record of employees of all the departments, providing printing and fax facility etc. As the bank has installed cameras at various places so this department views all the persons going in and out of the bank from a television set.

Islamic Mortgage Department:

This Department is basically the Islamic banking unit of RBS. This department offers various products and services through Islamic mode of finance which includes Musharaka based loans and housing facility. This department is expected to expand in future and will be sub divided in to the Islamic car finance department on basis of Mudarbah. The department has various personal banking consultants who contact the customers by personally meeting them.

Lockers:
This is just a separate unit rather than department. It has a very important function to perform. It provides safety to the customers valuables like bonds and jewelry. Mostly three to four employees work there with proper knowledge about lockers. The doors of the department are not free to enter but are locked by automatic and well secured switches.

General Banking / Customer Services Department:

The ground floor consists of general banking area which has a separate floor manager under whom various Customer service officers are working. This

department provides a list of products like Balance Transfer Facility (BTF), Deposit facility, Locker facility, Credit Cards, ATM facility, Treasure Plus, Insurance benefits, Online banking and Non Stop Banking Service. The Manager of this department takes care of dress code and language of all employees working there.

Operations Department:
This department is divided in to two main sections one which is directly dealing with the customers like account opening, cash transactions and cash transfer takes place over here. The second, has no direct customer dealing like issuing of pay order and demand drafts, telegraph transfer and daily reporting etc.

Legal Recovery:
This department has a head, team manager and various customers handling staff. Basically this department recovers various loans (Auto Loan, Islamic Loans, Credit cards) from those clients / customers who do not pay off. In the list of customers who do not pay their money back to the bank can be of two types those who are unwilling to pay and secondly defaulters. The department contacts these customers through telephone and firstly inform them that their case is in recovery so please contact bank and return the loan. Secondly if they do not turn up then the employees themselves visit the customers. This process consists of settlement letter, sending a waiver to the customers and then contacting lawyers.

Royal Preferred Banking (RPB):

This department has the same structure and products as that of General banking but the main difference is that it deals with high profile customers who have account balance of more than 1 million. Here the upper level management meets the customers. The RBP clients are well sophisticated businessmen with high profits earning ability and are treated as Royal Customers. The environment of RPB is very peaceful and has various facilities for the customers like television, internet, magazines and newspapers.

Credit Initiation Unit (CIU):

6

This is a top secretive department where entry is not so easy for every one. This department has a boss, two supervisors and other employees. Basically it checks and verifies all the documents of the customers who have applied for loan or credit card whether they are common customers or Royal ones. It is being sub divided in two portions the secure and the insecure one. In secure portion those loans are verified against which some collateral is granted by the customer like mortgage and auto loans. In case of non collateral loans like (credit cards and Balance Transfer facility) the secured portion is considered. The external and internal verification of documents is done in this department.

Fraud Risk Management:

This is the subunit of CIU which keeps check and balance on the customers that if they are involved in any kind of fraudulent activity, fake documentation so in this way checking the integrity of a customer. The main focus of this department is on those clients who have requested for credit card, home or Auto loan. The case passes through the following threes steps as: vigilance, monitoring and investigation.

Structure of RBS
Diagram 1 Organizational Structure of RBS

Consumer Branch Head Uzair Rasool

Floor Manager Asif Butt

Operations Manager Bashir Ahmad

Administration Manager Abdul Aleem

Royal Preferred Banking Head Amir Jami

Mortgage Manager Ejaz Aslam

Legal Recovery Head Mohd. Bashir

Credit Initiation Unit Head Adnan Mansoor

Source: RBS (2008) The structure of the bank is in accordance with its functions and various products offered by it. The structure matches with the other Pakistani banks which has Islamic units as well. But the glaring feature of the structure which makes it different from other banks is that RBS has got a separate unit for high profile

customers by name of Royal Preferred Banking, so this shows that it gives special treatment to its high deposit holders.

10

Chapter 2 -- DESCRIPTION
Islamic Banking in RBS
According to (personal communication, July 29, 2008) the emergence of Islamic banking has made banking easy for customers interested in financial products and services which are in harmony with their religious beliefs. RBS understands the needs of their local communities, and the RBS Islamic Banking brand is able to meet customers desire for Shariah Complaint Solutions. According to a report (RBS Islamic Banking, 2008) RBS Islamic Banking unit is a client driven institution which provides innovative solutions to cater to genuine customer needs. Central to their customers is their commitment towards adherence to Shariah which is evident through all their practices. RBS Islamic Banking commits to deliver only the best service standards through its presence across the country. Diagram 2 Islamic Banking in RBS:

Source: RBS Islamic Banking (2008)

11

Islamic Mortgage Department Structure

Diagram 3 Islamic Mortgage Department Structure Islamic Banking Head Ali Asghar

District Head Ehsan Iftikhar National Sales Manager Zahid Mustafa

Area Sales Manager Muhammad Ejaz

Team Manager Azhar Mehmood

Relationship Managers

Maqsood Nawaaz Hassan Arif

Personal Banking Consultants Mehmood Jasknai, Arshid Khan Source: RBS (2008)

12

The structure of this department is according to the modern standards of Islamic banking. It starts from the Banking Head and moves on to the Personal Banking Consultants (PBCs) who cater the needs at the individual level. But the structure should be made stronger by consistent coordination and harmony among various levels of management.

Products Offered
In (personal communication, July 30, 2008) RBS has introduced the concept of Islamic Banking in Pakistan. The main consumer product being offered by bank is home finance. Any customer with certain conditions and criterion can enjoy the desired home being facilitated by the bank but that property must be registered by Capital Development Authority / Rawalpindi Development Authority. According to (personal communication, July 30, 2008) the followings can apply for Islamic Home Finance product which can be called the target market for home finance: 1. Potential Salaried from Multinational Companies 2. Self employed Professionals (Teachers, Doctors, Engineers and Architects etc) 3. Branch Banking Customers (RBS customers) 4. Business Persons (Any kind of businessmen) According to (personal communication, August 2, 2008) the range of products offered by the department is as follows:

1. Home Buyer
This product category provides finances to the customers for buying ready made home. If any person is interested in buying ready made home at some location then the bank will purchase the desired house for this customer. In this case the bank will not pay whole of the money on behalf of buyer but pays a certain amount that is 70 % of the home value to the seller and the rest 30 % will be paid by the buyer himself. In this way the process works by the participation of buyer and the bank. This is called Mushraka. In future the buyer will pay the installments over the prescribed period mentioned by the banks policy.

13

2. Home Builder
This product offers the facility of buying land on which any desired customers wants to build his / her home in future. If a person is interested in building home on any piece of land but he does not have enough money then he can enjoy this facility of RBS.

3. Home Renovation
RBS offers another amazing home renovation financing product in which the customer can buy the funds for renovation of home.

4. Re-Finance
This product of RBS gives their customer the facility of switching their loan to consolidate their debt. According to Hassan (RBS Islamic Banking, 2008) the rental rates for their customers as follows: Rs 1million 5 million Rs 5 million 10 million Rs 10 million 20 million Rs Greater than 20 million Karachi Inter Bank Offer Rate (KIBOR) + 4.25 % KIBOR + 3.75 % KIBOR + 3.5 % KIBOR + 3.25 %

The product offered by this department is highly income generating but this Islamic unit should focus on introduction of some more Islamic products.

Working of Mortgage Department

According to (personal communication, August 2, 2008) in Musharakah loans RBS moves through the following procedure in which a PBC visits the customer for solicitation. Customer signs the application then all the documents are collected along with the cheque in favor of Bank After this PBCs submit the case to the processor, who check the desired documents and save it in the computer system. From there the sales processor forwards the case to the Credit Initiation Unit (CIU) which completely verifies the documents. For income estimation purposes CIU sends these documents to external agencies. These external agencies after performing their tasks send back there reports to CIU which then 14

triggers a credit meeting. If the credit meeting succeeds, the customer is given the offer letter and bank buys the desired home or property on behalf of customer and payment is made to the seller. This is how this department works by keeping in touch with customers to sending the documents to CIU. The working of this department is smooth but the process is highly time consuming.

15

Organizational Review of Mortgage Department:

The Islamic Mortgage Department has been reviewed according to various aspects as:

1. Employees Review Education

The minimum education required in the Mortgage Department is Bachelors (BA, BSc, B.Com and BBA) and maximum Masters (MA, MSC, M.Com and MBA). This department prefers people with good communication skills. According to the Area Sales Manager of RBS: In department like mortgage we like to hire people with strong written and verbal skills rather than high qualification. Verbal skills are used to communicate the customer on the telephone, while written skills are required when the customers need to know something technical so for proper guidance sales team should be strong in both the skills (Personal communication, August 5, 2008) In reality the education of the staff is good but they are lacking the in-depth knowledge of their own products. There should be training sessions for such employees.

Experience
In Mortgage Department at least one year of experience is required from any organization. On the average all the staff members have experience of almost three years in this field. One of the PBCs was first working in National Bank of Pakistan for last 2 years but now he is working with RBS. Although RBS Islamic Mortgage Department prefers experience but in actual any one can apply here even without having any experience, in this way they keep employees with and without experience on the same lines.

Training
In (personal communication, August 5, 2008) with one of the employees of this department:

16

Training is the need of every new entrant in any organization. Training enables you doing your job perfectly. In my view on the job training is preferable than of the job due to its cost reduction benefit. In Mortgage Department of RBS training is considered an important part of ones job. There are training sessions for individual sale members and as well as for teams. After the new hiring the specific employee is trained for continuously three months, in which he gets to know the basic functions and understands his duties and responsibilities. After these training sessions the employee starts his regular work with the existing staff members. In Mortgage Department the training tenure varies depending upon the need of trainee. Training sessions can be reduced if the employee is learning fast and giving positive results. Most of the time on the job training is given to the employees but some times the staff receives these training sessions outside from the job site like in Marriot and Sareena (Islamabad) or some times they are sent to Karachi. But in actual training is not considered as important part here. The same tenure is not given for training, as mentioned above by which employees do not get the required knowledge.

Salary
The salary structure is very good in the Mortgage Department. The basic salary is from Rs 16,000 to 20,000 (exclusive of all benefits) benefits are of approximately Rs. 10,000 for the sales persons who are mostly graduates. For the upper post it varies depending upon the experience, skills and the type of job being performed. Not only this sales people / PBCs are also given commission which is considered as their incentive. The commission received by these sales members is 0.8 % of the total worth of the case, so the total salary is as: Total salary = fixed salary amount + commission (0.8 %) + Benefits This salary package is quite satisfactory for the sales members. According to one of the PBCs (personal communication, August 5, 2008):

17

I am happy at RBS; it recognizes the abilities of its sales staff and gives them the fruit of their efforts. Medical facility and fuel reimbursement are also considered as incentives being provided to the employees. In survey it is noticed that some of the employees show their dissatisfaction regarding salary. They said that the amount of basic salary is fine but the salary package should contain the benefit for introducing new product (a kind of incentive) that whenever there is a successful launch of a new product the management should award its employees.

Transfer
The transfer at RBS takes place at two levels: inter bank transfers and inter departmental transfers. When employees are needed by some other branch of RBS then those specific employees are transferred from one branch to the other. Recently due to RBS take over of ABN AMRO many employees were shifted form the Islamabad branch to the Rawalpindi branch. Inter departmental transfers are very rare but they take place if the employee himself suggest that he / she wants to go to some other department depending upon his / her skills. This transfer rate should be low for this department because here employees have developed such skills which can not be used in any other department of the bank.

2. Review of sate of communication Meetings

The best thing about this department is that every morning the manager of the department calls up the employees for meeting. In this meeting the manager discusses some of the important issues regarding sales, he announces the KIBOR rates and the floating rental rate being provided by the other banks. Not only this most of the staff also participates in this discussion. According to (personal communication, August 5, 2008) following are the meetings held by the Area Sales Manager (ASM): I. Morning hurdles II. Deep brief 18

III. Weekly clinic In meetings all the employees actively participate for generation of new ideas. Here manager always prefer that employees come on time and attend these meetings but it should be the duty on part of employees that they also take them seriously. With respect to communication channels, RBS is the first bank in the market which has the system of direct lines and facility of call conferencing. All of the computers being used by this department are very fast with facility of internet. Telephone is also used by all sales members and they can use this facility any time when needed.

Filing system and data uploading

The data is kept safe in computer systems. This work is done by the Sales Processor. According to (personal communication, August 2, 2008) the Sales Processor maintains the shadow files of the customers and work is totally on the system in which the records of all the clients are kept. This department keeps the documents and files of their customers manually as well as electronically. The customers files are kept in an arranged order in the cabinets. All the data of the related customers is daily uploaded by the Sales Processor. The data kept, is then transferred to CIU department, which verifies it according to their rules and policies.

3. Physical facilities
The Mortgage Department is in the basement and is very spacious; almost sixty people can easily work there. The furniture is quite comfortable. Despite its good working conditions this department needs some improvements, the sitting arrangement and offices must be overlooked in order to make the working environment better. Otherwise this department has every facility; fully air conditioned, having separate cabins for employees. The employees and interns can order for tea or coffee any time whenever they feel for it. The ASM is very friendly and always contribute positive towards the success of his department.

19

The main reason of success of RBS is its good working environment, decent language of the staff and the dress code of employees.

4. Organizational Climate
The overall environment of the department is very good. The male and female staff works like a family. Female staff is welcomed because the climate is very conducive for them. Many a times the manager of this department arranges parties for the employees in which interns are also invited whole heartedly. The staff is very decent and has no moral / ethical issues. The manager of the department always keeps him busy in creating better opportunities for the employees.

20

GENERAL BANKING / CUSTOMER SERVICE DEPARTMENT Structure

The structure of this department starts from manager. Then under manager different Customer Service Officers (CSOs) work. These CSOs are for different purposes for example; provision of credit cards, consumer loan and for information / help of customers. Diagram 4 Customer Service Department

Manager Asif Butt

(CSO) Help Desk

Seemab Fatima

(CSO) Credit Card M. Owais

(CSO) Consumer loan Rana Sikandar

Source: RBS (2008) The structure of the department is very brief. Although it is like many of the other banks but it should have a separate complaints section where customers can record their problems or any of their complaints regarding the bank. By this RBS can open new doors of communication with the customers. At RBS the General Banking (GB) is the basic banking unit which serves the purpose of customer facilitation. According to floor manager (personal communication, August 3, 2008): What ever we say represent the bank, so we only say what we can do!

21

In (personal communication, August 3, 2008) this department is working very efficiently with providing better facilities to the customers. The GB floor is divided in to three main sections which are as: 1. Diversion Area / Information desk: The diversion area is located right towards the main entrance of the bank. It greets the customer and leads him / her to the counter. 2. Transaction Area / Cashiers: It is behind the diversion area where the customers make transactions according to their wish for example they can withdraw or deposit cash / installments / utility bills / credit card payment bill. This area contains the receipt and payment slips for pay order, draft and deposit. 3. Lobby / Customer Service: Lobby is the area located to the right side of the diversion area. The floor manager desk is in the corner of the lobby area from where he can easily view all the customers and the employees. The lobby contains the consumer loan desk, credit card loan desk help desk. Liability help desk is considered part of lobby. Liability Help Desk: The liability help desk is called the diversion channel. It means that it helps and diverge the customers to their specific counters in order to fulfill their demands. The main functions of help desk are as: 1. To help customers and connecting their calls to the Help Line (111-06-0606). 2. Looks after ATMs and provides help when ever needed. 3. Keeping a check on key service indicators whether the customers are being treated properly with in the exact time 4. Recovery of envelopes and checks from drop box. 5. Maintaining the check list in order to check whether the department is maintaining its cleanliness. Credit Card Desk: The main function of Credit Card Desk is to handle issues of credit cards. It also serves the following purposes:

22

1. Handling complaints of customers regarding credit card. 2. Resolving disputes of customers. 3. Generate funds for issuance of new credit cards. 4. Remittance enhancement. Consumer Loan Desk: This desk handles issues regarding personal or consumer loan. The main functions of this desk are to: 1. Give information about loan to the desired customers. 2. Check the number of installments being paid by the clients. 3. Handle complaints regarding consumer loan. 4. Issuance of new loans. The arrangement or dcor of the bank is perfect. The customers feel ease and comfort with the physical structure of the bank.

Products and Services

According to company brochures (RBS, 2008, p. 2) the Customer Service Department is offering the following products and services to the customers: 1. Balance Transfer Facility (BTF) 2. Deposit facility 3. Locker facility 4. Credit Cards 5. ATM facility 6. Treasure Plus 7. Insurance benefits 8. Online banking 9. Non Stop Banking Service

1. Balance Transfer Facility (BTF)

According to (BTF, 2008) RBS has introduced BTF which is often called one Stop Payment Shop that take care of all your financial needs. BTF is most convenient and flexible, economical and easy-to-use-to-use loan facility designed

23

to suit your needs and give you the power to control the finances. It brings you the variety of features that provide you the spending convenience you need. In BTF there are no lines or limit of credit, generally you can get the loan between PKR. 50,000 to PKR. 500,000. But in BTF there is no matter, what your limit, you are charged on the amount of money you used and not on the whole amount assigned to you.

2. Deposit Facility
According to (RBS, 2008) the followings are the main type of deposit accounts being offered by RBS for various categories of people: Current Account --------------------Sahulat Account Savings Account--------------------Anchor Account Checking Account------------------Access Account Term Deposit Account-------------Value Term

3. Locker Facility
If your jewelry has been given you sleepless nights, and the prize bonds tucked in the bottom drawer make you feel tense, it is time to discover peace of mind. According to (Lockers, 2008) the lockers at RBS are safe, convenient and private. As a customer, you can enjoy personalized service and operate your locker in a friendly and pleasant environment.

4. Credit Cards
In (Credit Cards, 2008) credit card is the safest mode of using money. It is used repeatedly to borrow money or buy products and services on credit. Credit cards are issued by banks, savings and loans, retail stores, and other businesses. RBS is offering three kinds of credit cards 4.1 Future Perfect Master Card 4.2 RBS Air Blue Master Card 4.3 RBS Ufone Credit Card

24

5. ATM facility
According to (Javed, 2008, p. 26) through RBS ATM network you can have access to money 24 hours a day, 7 days a week. This facility gives you the flexibility of withdrawing money from your account any time. The RBS ATMs are located inside the premises of the bank. Any customer can make one to five transactions in a single day, by withdrawing 20,000 of amount in a single transaction, so the customer having the credit card can withdraw 100,000 in a day. If some one wants more than 100,000 then he can use his cheque book.

6. Online banking
In (RBS online banking, 2008) RBS is offering the facility of online banking to its customers through the country wide network of branches. If the customer is interested in sending the money in any other branch of RBS then he / she can use this facility. Customers can use ATMs or banking counters of any branch for day to day banking needs, irrespective of branch where they maintain their accounts. It is fast and secure access to any of your private accounts via Internet.

7. Insurance plans of RBS:

RBS is offering various kinds of insurance plans. According to (Insurance Plan, 2008) RBS product menu spans across various lines of insurance and offers combination of life and non-life insurance plans which are made-to- fit your personal needs. RBS has insurance plans for young professionals, married, retired people. This insurance plan provides cover on the following risks I. Robbery II. Fire III. Natural Calamity IV. Vandalism V. Terrorism VI. Applicable on each locker. VII. Only events that take place in the locker area are covered under this scheme. 25

8. Treasure Plus:
Treasure Plus (Treasure Plus, 2008) is a kind of insured loan for childrens education. It is very simple. You select the premium amount (in multiples of 12,000) and term of the plan. Minimum annual premium amount for customers is Rs. 120,000 to Rs. 24 million You have the flexibility of paying the amount on a monthly, quarterly, half yearly or annual basis. When your child reaches the college going age, you will receive a lump sum amount to meet his / her education needs. In addition to the above, Treasure Plus also offers a unique School Fee Continuation Benefit. This option would ensure continuity of your dream to give your child the best education in case of your untimely death.

9. Non-Stop Banking (NSBC):

According to (personal communication, August 17, 2008) any one can make payments for their credit card, order a demand draft, stop a cheque or pay telephone, gas and mobile bills. In this way one can do almost all kind of banking transactions over the phone.

26

Organizational review of General Banking

The following information is retrieved from an interview with the Credit Card Help Desk officer (personal communication, August 20, 2008):

1. Employees Review Education

The education required in Customer Service Department is minimum bachelors (BA, BSc, B.Com and BBA) and maximum masters (MA, MSC, M.Com and M.B.A). Here the people with good communication skills and high patience are required because you are constantly in touch with variety of customers. The manager of this department is M.B.A meaning that one can be transferred to the post of manager with M.B.A degree.

Experience
In this department experience does not count so much as compared to other departments. Any one can apply soon after completing his / here bachelors or masters. Although experience is a plus point but not a necessity for working here. According to the manager (personal communication, August 21, 2008): The new employee is always preferred depending on his / her skills of keeping the customer happy. In this regard sometimes we make the new hiring form the interns who are efficient enough to greet the customers well. In the department the most noticeable feature is that young and confident professionals are working dedicatedly. They are always ready to help out customers without any hesitation.

Training
Training is considered very important for learning the basic skills of banking. For this the new entrants are trained for 15 to 30 days. For old or existing employees off the job and on the job training sessions take place. The basic purpose is to update the existing knowledge of employees. The employees response towards these training sessions is quite positive which is checked by comparing their old

27

knowledge with the one after the training. The training cost is low and the duration depends upon the requirement of trainee.

Salary
The salary structure here varies depending upon the post, skills and experience of employees. The basic salary is same for all employees but the incentive differs depending upon the kind of product employee sells to the customers like some of the products like Treasure Plus (TP), BTF and Credit Cards. For selling such products the employees get the commission of 0.9 % of the total worth of the sale. Bonuses are also given to the employees. These aforementioned products can be sold by any employee rather than sale staff without any restriction.

Transfer
Transfer rate is quite low. Sometimes employees are being transferred form the Islamabad branch to this branch but mostly the transfers are being hampered due to reluctance of employees. It is very much obvious that an employee working in Karachi will never prefer to be posted to Lahore. The inter-departmental transfer rate is high as compared to the transfer among the bank branches. Sometimes employees are transferred from one department to the other. Many of the employees of this department have been shifted to other departments because here an employee is in close contact with products being offered by the other departments, like one of the BTF department totally deals with the BTF being provided at the Customer Service Department. In this way employees of Customer Service Department can be transferred easily to other branches and departments. This transfer rate is suitable for the employees.

Promotion
In general banking the inter-departmental promotion rate is quite higher rather than the cross departmental one. The employees are being promoted depending upon their performance and skills. The appraisal is conducted twice a year. On the basis of performance appraisal the boss evaluates the employees. After evaluation some of the employees are promoted to the specific posts like General Banking Managers or Royal Preferred Banking head etc. Most of the employees show their 28

dissatisfaction regarding cross department promotions, in their view the management should pay more attention to the rotation and cross departmental promotions so that employees do not feel frustrated by the same type of work.

2. Communication Review Filing system and data upload

The data keeping in this department is quite different than that of Mortgage Department. There is no manual data which is to be kept in the registers. Every thing is saved in the computers. This department does not keep any data with itself so at the day end all this data is saved in hard disks and CDs for the analysis purpose and finally it is sent to Karachi. In this way the bank keeps record of data for their own purpose in CDs which are fully protected. The data is not accessible to every one only authorized persons can view it. In this department a single person is assigned for saving all the data, so the persons at their respective desks save the transactions in their systems and then all the staff forwards this information / data to the help desk officer who further saves it in hard disk. In this way each person contributes in uploading new information and keeping the database up to date.

Writing skills
The writing skills of the staff are very good. As mostly the staff has MBAs and BBAs so they interact with each other in English. The writing skills of this department are better than other departments because here the employee according to his / her duties has to inform their respective customers about the banks products. The manager calls all of the employees for meeting after every two days in a week.

3. Moral problems
The staff has no ethical moral problems because of suitable climate of the bank, but most of the time employees are tensed regarding customers. The employees feel problem in dispatching customer their goods which leads to mental stress and

29

employees fighting among themselves, disturbing the peaceful environment of the bank.

4. Physical facilities
The outlook of the floor is very good. The decor of the bank is according to the modern banking standards. The arrangement of this department is very systematic; the information desk being located towards the main entrance, cashiers at the back side and customer services to the right of information desk. The customer facilities like drop box, ATMs, help line and elevators are located inside the premises of the bank. The furniture is really comfortable, besides this customers can read the news papers and magazines as well. The plants near every desk and in the waiting area give a very fresh look to the bank. RBS has high standards of cleanliness and maintenance which makes the environment very neat and clean.

30

CHAPETR 3 -- ANALYSIS
General Environment Analysis----PEST
The analysis of RBS will take in to account the general environment analysis, the competitors analysis by comparing the products offered by the competitive Islamic banks and the departmental analysis. The general environment of takes in to account the external factors like politics, economy of country, socio-cultural factors and technology. Now we will analyze these factors one by one and check how these affect the working of RBS:

Political
The present state of the government in Pakistan is directly affecting the policies of banks. Although RBS tries hard to keep its business away from the politics but sometimes it is not able to do so. RBS has no accounts of political leaders or parties. But its Customer Service Department faces peer pressure from such political parties. As RBS is trapped in dual sanctions from the State Bank of Pakistan (SBP) and from the European Union so the changing political environment is not so conducive for the bank to operate freely. The changing policies of the government, affects SBP which in return affects the RBS rules and policies. The government of Pakistan is privatizing most of the banks. The number of government owned banks are constantly declining, so these changes directly affect RBS and other banks working in Pakistan.

Economical
The economy of any country directly influences any financial organization. Economic indicators include Gross Domestic Product (GDP), inflation, balance of payment, debt of the government. The following graphs are showing the economic position of Pakistan. In view of these graphs we come to know that the banking system is adversely affected by the economic condition of any country.

31

Graph 1 Fiscal deficit (as % GDP)

Source: Economic Focus Pakistan (2008) Graph 2 Public Debt

Source: Economic Focus Pakistan (2008)

32

The poor economy of Pakistan and instable government is badly affecting RBS and its various departments; recently it has downsized many of its employees. The economy of our country is very down, businesses are reaping low profits and stock market is in great danger. Pakistans foreign debts are rising day by day so such a situation is a big challenge for banking institution to survive. The financial crisis in Pakistan has made the management of RBS tensed to work in such an environment. Now a days the bank is not extending loans but recovering the existing ones.

Social
RBS has been influenced by the socio-cultural factors. After 9-11 the Islamic banking in the world expanded rapidly. Now every European country is keeping its eyes on Pakistan as being the terrorist country, so people of Pakistan are emotionally getting affected by it, as a result arising a feeling of love for their religion by using Islamic products. The Talibanization and terrorism has given rise to such a class in society which prefers to deal with Islamic banks or at least with Islamic products, so in this way the wide range of Islamic products offered by RBS make people to divert their attention towards them. On the other hand RBS is facing another challenge from the customers as it is a foreign bank so most of the religious people and patriots do not wish to deal with it. They like to transact with the local / domestic banks. Pakistani people are traditionalists who do not like the open banking environment of foreign banks. Some of the customers do not use ATMs they still prefer cash counters, so these kinds of socio-cultural factors affect the banking environment and its operations.

Technological
Technology has great influence on various kinds of organizations whether banks or any kind social welfare organizations. In RBS technology has great effect on the working environment. Basically all banks use computers no one keeps data manually so the bank has to be constantly in touch with the modern ways of task performance. RBS is always willing to introduce new computer systems for keeping its staff up to date. The intranet facility is playing an important role in

33

enhancing the knowledge of staff. It is due to technology that bank staff keeps in touch with the customers via e mail; ATMs and online banking is possible due to technology. In this way technology is playing its key role in and is helping management to further improve its functions.

Conclusion:
Overall we can say that RBS is influenced by the economic position of Pakistan, which has stopped it from extending loans to the customers. After that the policies of RBS are also affecting its performance and free functioning. Social and technological issues are of secondary importance but they also can not be neglected. RBS is focusing positively regarding technological issues but it should also keep its eye on the social cultural factors also.

Porters Five Forces Analysis

For further analysis of RBS environment, Porters Five Forces Analysis is also applied on the bank. This analysis takes in to consideration the following factors:

Availability of Substitutes
Substitution of one product with another one increases the rivalry within an industry. Although perfect substitute of banks are not available in the market but people still have choices of saving or investing their money. They can either save their money at homes or put their money in the National Saving Centers (Banking Intermediaries) which give protection to their assets. Aside from saving one can invest money in stock market in form of shares / bonds or in real estate. These kinds of substitutes increase the rivalry in the banking sector.

Rivalry among existing firms

There is tough competition among various banks. As variety of public and private banks are already existing in the market, offering products on competitive prices. If we look at Islamic Banking products then Alfalah Bank, Meezan Bank, Habib Bank

34

and many others are offering wide range of products in this sector. The tough competition among these banks gives rise to the challenges which the competitor banks have to face. The competition among various banks increases the switching of the customers form one banks product to the other bank. The tables on the following pages show the total number of branches of some of the banks working in Pakistan and the various products being offered by these Islamic banking branches as compared to the RBS. Table 1 Branches of competitive Banks Islamic Banks Meezan Bank Pakistan Ltd Dubai Islamic Bank Emirates Global Islamic Bank Bank Islami Pakistan Ltd Habib Bank Muslim Commercial Bank Ltd AlBaraka Bank Pakistan Ltd RBS Branches 120 17 13 30 1000 900 30 75 Source: RBS (2008)

35

Table 2 Products offered by Competitors

Albaraka Bank Pakistan Ltd Current, Savings & Time Deposits Joint Pool Investment Accounts Import Financing Export Financing Working Capital Financing Infrastructure Financing Project Financing> Financing of other Business needs Murabahah ( Sale/Purchase/Trading) Musharaka (Partnership) Ijarah (similar to Leasing) Istasna & Salam (Sale of goods at a future date) Investment in Sukuks (Islamic Bonds) Bank Islami Pakistan Limited Islami Current Account, Islami Bachat Account Islami Dollar Bachat Account, islami Amadni Certificate Islami Mahana Munafa Account Leasing / Ijarah Islamic Export Refinance Letter of Credit (Sight & Usance) Letter of Guarantee Forward Cover Bill Purchase Auto Ijarah MUSKUN Home Financing

Muslim Commercial Bank Limited Al-Makhraj Saving Account Al Makhraj Term Deposit AL Makhraj Car Ijarah Concept Purchaisng goods on basis of Murabahah

Habib Bank Limited Current Accounts AL Habib Saving Accounts AL Habib Term Deposits Mudarbah finance Ijraha finance (for vehicle, machinery and equipment)

Meezan Bank Pakistan Limited

Buy, Build, Renovate, or Replace Car Ijarah

Emirates Global Islamic Bank (EGIB) Mudaraba (Partnership) Saving Account

36

Bachat Account Meezan Capital Protected Fund (MCPF)

Mudaraba (Partnership) Term Deposit Al Bait Halal house financing Local Purchase Murabaha Murabaha financing against Imported Merchandise (FIM) Murabaha financing against Trust Receipt (MTR) Export Murabaha (Pre-shipment)

Dubai Islamic Bank Limited Islamic Home Finance through Musharaka cum Ijara model (Home Purchase and Home Renovation) Purchase of undivided share of property at other bank (Balance Transfer). Auto Finance through Musharaka cum Ijara model

Source: Arif (2008)

Threat of new entrants

The banking sector of any country has always chances of growth and competition so many new banks enter and leave the market. Mostly foreign banks step in the developing countries for expanding their branches, not only this mergers between foreign and local banks take place at large scale but Pakistans present economic condition and government instability has arose the feelings of awe and terror among most of the foreign banks to enter in the market. In future due to uncertainty and security problems in Pakistan investors will not be willing to invest here. Due to overall financial problems in the whole world new banks will not be entering in to the banking industry.

Power of buyer
Bargaining power of buyer is low where the products substitutes are not available and customers are large in number. In case of banks there are lots of other banks and banking intermediaries, having wide range of products, so power of buyer in banking sector is high. The bank can not force any customer to buy the desired product because this directly affects its reputation, but can convince its customers by giving them special discount or rewards. If we look at RBS we will find that the competitors are also offering products due to which customer feel in power by saying that they can go to some other bank in case of dissatisfaction.

Bargaining power of suppliers

37

As in banking sector suppliers does not exist so there is no bargaining power of supplier.

Conclusion
According to Porters Five Forces analysis we can say that RBS has no fear of new entrants due to the poor economic position of Pakistan but it should keep its eyes open regarding mergers of various banks. There are two big threats; firstly from the buyers who can go to the other banks and secondly form the substitutes like investment in stock market, so RBS should carefully examine its task environment.

Organizational Performance Analysis Strengths

1. RBS is the first multinational bank which has started the concept of Islamic banking and so rapidly expanded its products of Islamic banking. The launching of Islamic credit cards and auto financing on basis of Mudarabah is expected to provide positive growth opportunities to the bank. 2. RBS formerly ABN AMRO, was at number five with respect to its assets but now it is at number one. 3. It enjoys better position than the other banks of Pakistan because RBS maintains big accounts of highly profiled businessmen as compared to other banks. 4. RBS has expanded the network of its branches in a very short period of time. It started with eight branches in major cities of Pakistan but now it has seventy five in various cities of Pakistan. 5. One of the plus points of RBS is that it has very tight policies based on foreign and State Bank mandate, which makes it better than Pakistani local banks. 6. RBS has one special department by name of Fraud Risk Management (FRM). The staff of FRM verifies the customers at various stages in order to reduce the occurrence of fraud in bank. 7. RBS provides best service to the customers by taking care of their needs. 38

8. RBS gives too much importance to its customers. On the main entrance of bank there is special greeter desk which is responsible to properly guide the customer. Not only this bank always keeps two to four staff members who are ready to help the new customer any time. 9. The concept of NSBC introduced by the bank is very positive by providing 24 hours service to the customers. Also the SMS banking is better than other banks of Pakistan. 10. All the departments of the bank follow the policy of KYC that is Know Your Customer. According to this policy the bank staff knows its customers fully from his / her business to daily activities so that they do not fall a pray to illegal activities. 11. A very positive point of this bank is that it gives separate status to high profile customers. For example the customers who have account worth of more than 1 million are treated specially. Bank has a separate department and dealing section for such customers which is known as RPB and customers are called Royal Preferred Customers. These customers have access to luxurious and well decorated waiting areas where they can enjoy reading newspapers, magazines, watching television and using internet. 12. On the whole employees are satisfied with the bank and its environment and have high salary structure than the other banks. 13. RBS has a very strong management who is always ready to take strict actions and wise decisions during the bad conditions.

Weaknesses
1. One of the weaknesses of this bank is that some of its branches have not even started its operations like its Peshawar branch is not functioning because of lack of employees in that area. 2. It is very much true that RBS considers its customer a great asset but some times it is not able to satisfy them. The main problem is with ATMs mostly the customers get annoyed but the bank employees do not take this problem seriously.

39

3. Many of the times employees on the floor who have direct dealing with the customers feel frustrated without any break during the work schedule. 4. There is lack of proper rotation among the departments, which leads to limited knowledge among employees. 5. Sometime the customers feel dissatisfied and complaints that bank does not clearly mentions the terms and conditions on various products like deduction of service charges. Mostly credit card holders come up with such complaints. 6. Many of the banks employees are not loyal with it. They just leave the job in search of better job opportunities to other banks. 7. Some times the customers are not informed before time about the certain changes being going in the bank; regarding banking products or changing the name or structure of the bank, which creates confusion in minds of the customers.

Opportunities
1. RBS has started NSBC there is opportunity of growth in this field. 2. There are growth trends in Islamic Banking sector of Pakistan which will further enhance the working condition of Islamic banking in near future. 3. The bank should employ the best courier companies and keep in touch with them, for resolving the problem of dispatching customers goods. 4. The bank management should use the modern ways of communicating with staff and staff in return to the customers, so that flow of information leads to rapid and positive results. 5. As employees have the habit of working with ABN AMRO, but now with RBS take over there are chances of further growth in productivity of employees and improved banking environment.

Threats
1. Due to present government and the instability of the policies RBS may face a lot of problems in future.

40

2. The religious class emerging from the Pakistani society, which hates working with the foreign banks and prefers local banks, can disturb the working of the bank in future. 3. Due to depreciation of Pakistani rupee, bank may earn less profit than its other foreign branches. 4. The employees are not loyal with the bank, when they find better opportunities they leave their existing posts so it can create the problem of recruiting new staff for Human Resource Department. 5. Many new and emerging banks like Barclays are offering better pay packages to the employees which in future may increase the turnover of employees.

Conclusion
The biggest strength of RBS is that it is the first multinational bank which has started the concept of Islamic banking. It enjoys better position than the other banks of Pakistan because world wide it is at number five with respect to its assets The department of FRM is giving good results as compared to other banks of Pakistan. The main weaknesses are that some of its branches have not even started its operations so they should be in the working condition, lack of proper rotation among the departments and customers dissatisfaction arising about changes going on in bank. But the bank has opportunity of growth in Islamic Banking sector. On the other hand the biggest threat is the instable economic position of Pakistan and the depreciation of Pakistani rupee by which it will earn less profit than its other foreign branches.

Departmental Performance Analysis Mortgage Department Strengths

1. Cooperative and dedicated staff and team work. 2. The manager of this department is well experienced and knowledgeable, who understands the need of his department and the staff.

41

3. Good communication skill of the staff therefore facilitating the customer in making any decision 4. Security and safe dealing in the product. As this department deals with property (land) which gives assurance that its price will not fall in future, meaning there by that the product is safe and rental rate can be earned any time. 5. There is high possibility of generating revenue than any other departments. As personal business consultants forward cases of worth 50 or 100 million, so on the whole it has small percentage of expense as compared to other departments of the bank. 6. High salaries as compared to other departments.

Weaknesses
1. The department is facing problem of proper accountability in Islamic products. 2. The staff is lacking the proper knowledge about the Islamic products. 3. There is lengthy documentation which sometimes annoyed the customers. 4. Customers have to pay visits many a times just for the simple things. 5. Less number of Islamic products as compared to its competitors. 6. Need to make the working environment of department better.

Opportunities
1. Home financing schemes can be useful for the bank because property prices are continuously rinsing. There is high possibility of future growth in Mortgage Department. 2. In market there is little number of people who are being qualified in the job of mortgages so there will be high demand for such qualified and experienced professional individuals.

Threats
1. Increasing inflation, reducing the purchasing power and value of money, so people will not feel comfortable dealing with banks for home loans. 2. Rising processing fees and KIBOR by State Bank of Pakistan. 42

3. High mark up rates as compared to other banks. 4. The policies of RBS are very different and tough regarding Islamic Mortgage customers which may create problems for the mortgagee. As the bank is multinational so it has to follow a blend of foreign and local policies which may hamper the growth of this department and reduce the number of customers.

Conclusion
Overall the Mortgage Department has highly dedicated staff with strong team work. The department is generating higher revenue and giving high salaries than any other departments, as it is dealing in the safe and secure product. The weaknesses are that this department is offering less number of Islamic products as compared to its competitors and the lengthy documentation sometimes annoyed the customers. On the other hand there is high possibility of future growth in Mortgages, and the qualified Mortgage staff is highly demanded in future by the market. But the two biggest threats for this department are that as Pakistans people have low purchasing power which in future will be more affected by inflation so in that case less people will be willing to go for home loans.

General Banking / Customer Service Department Strengths

1. This department has young staff members who know their customers and have more technical knowledge. 2. The decor of branch gives a new and modern look 3. Availability of required office equipment. 4. RBS has assigned separate parking for its regular customers. 5. ATMs are located inside the premises of bank, enabling the customers for having access to the comfortable environment. 6. The help desk can easily view the customers from the desk which make the staff aware of customers problems. 7. Customers can get the bank statements or the check books in a single day as compared to the other banks. 43

8. Customers do not have to wait too long or stand in long queues to wait for their turn. 9. All the customers are greeted properly. This skill is given foremost importance in this department, so it must be learnt by the employees and interns.

Weaknesses
1. Front line employees are not sometimes well groomed to handle difficult customers under stress conditions. 2. Customers are not properly informed about the upcoming changes. 3. No proper rotation and cross departmental promotions of employees which lead to limited knowledge among staff members related to other departments. 4. Weak delivery system and courier facilities. 5. Link down problem of ATMs.

Opportunities
1. More ATMs to attract new customers and to minimize load on cash counters. 2. Opportunity for young and fresh blood to get employment and make its career in the banking sector. 3. RBS formerly ABN AMRO had a good name that can be exploited for business growth with the increased number of branches.

Threats
1. Customers have to become more educated and demanding. 2. Inflation is the biggest threat for the banks to launch new products and to maintain service delivery system. 3. Increasing competition posed by other banks.

Conclusion
The overall strengths of RBS are the new and modern outlook of the branch, proper greeting of the customers by the help desk, separate car parking assigned 44

to the regular customers of the bank and the ease on end of customers because now there is no need for stand in long queues. The main weaknesses of this department are the weak courier facilities and the link down problem of ATMs. But the big opportunity for the bank is that it can easily hire young and fresh blood who understands customers deeply than the old staff. RBS also faces some real threats from the customer retention who can be attracted to other banks, so ever rising competition form the banks can be the biggest threat for RBS.

45

CHAPTER 4--LEARNING AND EXPERIENCE My personal experience at RBS:

I did my six weeks of internship at RBS, Rawalpindi. In my first week of internship I felt a bit uncomfortable, as I was new there. I took some time in order to adjust in the new environment. The first thing which I noticed in all the departments of RBS is that all the employees work very hard, so the overall lessen I learnt is that One can not go without hard work, especially when one joins any Multi National organization one has to show him / her as a dedicated worker. On my very first day I was given the history and overview of bank and all the departments respectively. After that I was rotated to the Islamic Mortgage Department and to General Banking. The important event which took place during my phase of internship was that of taking over of ABN AMRO by RBS. The bank had placed various banners and cards to reflect that ABN AMRO would be replaced by RBS very soon. The bank staff was very inquisitive that how the bank will look like after its take over by RBS. On the day when finally the former bank has to change its name to RBS, all the employees and interns were dressed up in navy blue. As at that time I was working in Mortgage department so I also came up in navy blue dress, my supervisor gave me RBS pen and a pad. There was a good change in overall departments, I found it amazing. Regarding working experience with RBS staff I would like to say that they are the real people who have grip over their specific working areas. I enjoyed working with them and they provided me every bit of information which I required during course of my internship. In Islamic Mortgage Department I found a dedicated

46

manager who is always busy with meetings, he is real person I have found who took tension of his work. In this department the team manager taught me how to fill the forms and arrange the documents of the customers. I also conducted interview with three customers by asking them specific questions. Not only this I telephoned the regular customers for advertising the new product launched by the Islamic Mortgage Department. In General Banking I noticed that customers are guided properly to the counters. I spent three weeks there and learnt about cash deposit, cash withdrawal, pay order issuance, account opening, sign verification etc. I also spent 3-5 days in Credit Initiation Unit where I saw that how the bank verifies the documents of the customers and how it takes the services of external agencies during course of verification. One thing I noticed in the bank which makes it different than other banks of Pakistan is its rules of conduct which include: RBS dress code, language and its working environment. I worked there very dedicatedly with the aim that I have to learn, I took internship not only as a degree requirement but an opportunity to learn and stepping in to the practical life.

47

CHAPTER 5: FINDINGS AND RECOMMENDATIONS

Findings of Islamic Mortgage Department:
1. One of the major issues in Islamic Mortgage Department is the absence of transparent and appropriate performance standards in Islamic sector. It should be resolved quickly because these policies / standards are the basis of Islamic banking. Once the Islamic banks are clear regarding the accountability problem then other problems can be solved easily. 2. Another problem in Islamic banking and regarding RBS Islamic Mortgage Department is that employees working there are lacking the proper knowledge of Islamic terms and products. There is a long list of Islamic products in Shariah Compliance but the employees are not clear about some of the terms, which in turn create misconception in minds of customers. 3. In Islamic banking sector, RBS has no innovative products to be introduced in the long run, although the concept of Islamic banking is new for the bank. But it is not launching any kind of unique and new products for the customers. This innovation of product is also affecting the salary structure of the employees of this department. 4. Another problem from the management perspective is from the customers side, most of the people do not trust Islamic banking products by thinking that their money is not save, so they feel shy to invest in Islamic banking and its products. Mostly people deal with the conventional banks more confidently than the Islamic banks.

Findings of General Banking / Customer Service Department

1. The primary issue faced by the customers in this department is regarding the ATMs. Customers face the problems of link down, by which they feel disappointed. Some of the customers show their anger on staff which directly affects the repute of the bank. 2. Sometimes customers are not properly informed about the changes, so leaving them in state of confusion. 48

3. Most of the times RBS new employees like young sales people are interested in more of sales so they use convincing words during sale of certain product by hiding the actual characteristics. 4. This department is facing the severe problem of delivering goods to the customers via courier services. This creates tension among bank staff, some of the employees transfer certain products on their own to the desired customers.

Recommendations for Islamic Mortgage Department:

The following recommendations are meant to improve the working of Islamic Mortgage Department, depending upon their time frame these are divided in to three categories as short term, mid term and long term:

Short term 1. Give sufficient attention to international accounting standards, (corporate) governance, transparency and accountability in Islamic banking
This first recommendation for smooth working of this department is regarding policy making which can be implemented from SBP, after that improving the overall position of Islamic banking. As SBP is the main controlling authority of all banks so it should clearly designed all the rules and policies required by the Islamic banks. SBP should properly guide the Islamic Banking departments regarding standards and policies. Once policies are clearly designed by SBP then it should be properly implemented by those banks having specific Islamic products. Although it will take time to make accountability standards for Islamic banks but this recommendation should be implemented in short period of time as it serves the foundation of all the other recommendations. After SBP setting up of standards the Islamic banks or the banks having Islamic products should clearly announce and follow these accountability standards. The manager of RBS, Islamic Mortgage Department can play a very important role for proper implementation of the accountability standards.

49

The following flow diagram will make it clear the implementation procedure for the first recommendation: Diagram 3 Implementing the standards in Islamic banks

SBP should pay check if these standards are properly followed up by Islamic banks

Designing / revision of accountability standards by SBP for Islamic banks

Standards to be adapted by the banks having Islamic banking departments / products

Mid Term 1. Basic concepts and philosophy of Islamic banking

50

RBS, Islamic Mortgage Department should promote greater understanding of Shariah principles, asset and liability management and features of product structure. The staff working in Islamic Finance should exactly know the meaning of terms like Mushrakah, Mudarabah or Ijarahah. This recommendation can be implemented by proper training of employees of Islamic Mortgage Department. Already this department is spending only Rs. 10,00,000 / annually on training which is less as compared to the earnings of this department. The following training structure should be followed by manager of the department: For new employees 6 weeks of training sessions is required. The initial training should consist of three weeks intensive classroom learning, covering an introduction to Islamic banking structure and its products. Networking sessions should be followed up during the training, supported through mentor. The boss or colleagues can help employees in understanding of Islamic Banking terminologies. Another alternative is that the department can hire the consultants form the institutions like AlHuda-Center of Islamic Business and Economics (CIBE) and Online Islamic Certified Islamic Banker Karachi. These institutions offer the following courses in field of Islamic banking:

1. Islamic economical and financial systems. 2. Islamic mode of financing.

3. Islamic commercial and investment banking Online Banking courses, with 2 months duration are also the easiest way to understand the basic concepts of Islamic banking. The employees will be attracted towards online banking courses because the organizations providing such courses also award the certificate of Certified Islamic Banker after completion of the training sessions / courses. These online courses are quite cheap as compared to the hiring of consultant. Not only employee learning is to be enhanced but customer learning programs are also to be given importance which raises their consciousness about the distinctive features of Islamic banking and the range of services and products. Every thing

51

should be made cleared to customers so that at the day end they are not left in sheer confusion.

Long term 1. Diversification and innovation of financial products

Some new and innovative products should be launched in the long run. This recommendation will have the dual effect on 1) product line: as already competitors have greater variety of products in the market. 2) Satisfaction of employees who need benefit for introducing of new products. This would involve either introducing innovative Islamic products on a stand alone basis or applying a combination of Islamic instruments. In attempting the latter, it needs to be ensured that vanilla Islamic products such as Murabaha, Ijara and Mudarabah etc are implemented with their necessary preconditions, consistent with Shariah principles. This would require greater reliance on equity based financing, given that it is akin to participation and risk sharing consistent with infrastructure financing requirements and Islamic principles. At the same time, RBS needs to diversify Islamic financial structured products to support project finance like associated real estate, shipping, trade, and aircraft financing. This idea of project finance through Islamic mode will also help the bank increasing its share in overall Islamic market. For this RBS should hire new and young employees having fresh ideas with them. The Islamic Mortgage Department should have two categories of employees for launching innovative products; old sales people, they should work in convincing the customers to buy the products and new sales employees like fresh graduates should work on ideas generation by constantly coordinating with the manager of the department. These new employees can make the environment better, it will give rise to competition between the two categories of employees. But the

52

question is that from where to find these new employees? The Mortgage Department can make the new hiring possible if it contacts the top management universities and by taking away their talented students, this problem can be solved easily. The hiring of new staff may disturb the salary structure of old employees, so the new employees should be awarded same as old ones but instead of giving commission (as part of total salary) they should be given incentive which will depend upon the workability of any idea. The overall salary structure should be as: Old employees = Basic salary + Benefits + Commission =16,000 to 20,000 + 10,000 approximately + 0.8 % New employees = Basic salary + Benefits + Incentive for ideas =16,000 + 10,000 + Incentive In this way this department will create competition between the two categories of employees.

Recommendations for General Banking Unit

Some of the problems in the Customer Service Department can be solved in a very short period of time. But some problems might take longer time as compared to the short term problems so they must be solved by proper planning. The following recommendations can improve the condition of Customer Service Department.

Short term: 1. Improvement of ATMs

The first recommendation for Customer Service Department is that there is need to improve the existing condition of ATMs because it disturbs the working environment of the bank, when customers show their dissatisfaction regarding the problem of link down with ATMs. RBS should improve the situation by taking the following steps: 1.1. Increase the number of ATM machines. 1.2. Inform the customers about link down problems of ATMs, basically most of the customers are unaware of their working so they blame the 53

bank for keeping tardy machines. Customers should be told that link down is not the fault of their bank and this problem also arises because of using the credit card of other banks. 1.3. ATMs should be serviced regularly each month instead of every four months, for keeping them in proper order. Keeping ATMs in proper working is not the hard task for the bank because by this the bank will earn appreciation from their regular customers and the rush of customers can be reduced from the counters. For this the manager of the department should employ a separate person for keeping the check on these machines.

2. Informing the customers before time

As we have seen in the weaknesses that RBS customers are not properly informed well before time in case of any change, so they should be kept in contact with the bank in case of the following situations: Launching of new products Changing the name of the products Changes in bank rules and policies Shifting of departments In this regard the information desk officer should contact the loyal customers either through phone calls or via email. RBS should use media for marketing of its various products so that customers get the idea in case of new product launch. If these measures are taken then most of the customers will give respect to the staff for keeping them updated.

3. Clear information of any product

Another thing about Customer Service Department is that it should give clear cut information of any product to the existing or potential customers for creating the air of trust between bank staff and the customers. Information given should not be ambiguous. In some cases banks staff hides the actual information especially in case of marketing of new products the sales people exaggerate the benefits of their products, in this way hiding the reality. 54

The manager of this department should apply strict rules for sales / marketing staff. Some of the measures are as: Salary deduction Commission or incentives elimination Firing of such sales members so that other members learn some lesson Promotion efficient sale personals, having wide customers range.

Mid Term: 1. Employee satisfaction via improving courier services

Most of the employees in this department are mentally upset about dispatching customers goods. In this regard RBS should make contacts with the famous courier services of Pakistan, in order to avoid the problem of dispatching goods to the desired customers. According to (Courier Services in Pakistan, 2008) the following list contains the names and contact numbers of Pakistans famous courier services: ABC Logistic Group 92-21-4392407 ACI Express Pakistan 92-21-4322489 Asian Pacific Express 92-21-2428609 Atlas Freight System 92-42-6673133 Continental Courier Cargo Services 92-51-5562239

Promotion rate
In this department the rate of promotion is quite slow as compared to any other banks department. This recommendation can be implemented in the long run as RBS has already a lot of problems to be solved in short and medium term. The Customer Service Department is lacking cross departmental promotions. The survey also shows that the employees are not satisfied with rate of promotion. They want quick promotions or at least cross departmental ones. The employees should be promoted with in the department so that they work well. Cross departmental promotion will be very helpful for employees because: It will enhance the knowledge of employees.

55

Create the feeling of hard work Break the monotony and dissatisfaction among employees.

For implementation of this recommendation the dedicated employees are to be promoted at least every six months.

56

Conclusion
RBS has a very strong position in Asia. In Pakistan it has more than seventy branches. It is known as one of the best customer service providers with focus on the high profile business persons. In Islamic banking it is one of the first foreign banks to launch Islamic products. It has a bright future ahead. The Islamic Mortgage Department is working on launching various products, although its products range can not be compared with the competitors but one can predict that in future a wide variety of RBS products will be covering the market. The Customer Service Department is one of the best departments in the whole bank, offering products in areas like Deposits, Saving and currents accounts, cash and cheque deposits, and loan facilities. Not only this, it is also offering products as: Balance Transfer Facility (BTF) which in banking terminology is One Stop Payment Shop, 24 hour nonstop banking centre, relationship card through which customer can access to over 1000 ATMs, life insurance protection, E statements through which you can receive your BTF via email, Drop box facility- the convenience of dropping of your payments at any of the drop boxes placed outside RBS. Despite its strong position RBS has some of the weak points which can be removed easily. There are weaknesses in the bank which can be overcome by efforts of the staff. Its strength is that it is the number one bank in whole world with respect to the assets and the big weakness is that it should improve its information sharing with the customers. On the whole we can conclude that almost all of the employees are satisfied, although some are dissatisfied whose results are shown in the survey. But on the whole we can not compare RBS with any other bank. One can feel the difference while entering its premises thats why it says, We make it happen.

57

ANNEXURE 1
PERSONS INTERVIEWED Name of Designation Name person Team Manager RBS Azhar Mehmood of Tel. number 5795114 Time & date 11:00 July 10:45 am, 1st RBS Associate Regional Manager Seemab Fatima 5795107 Aug 12:30 Aug He gave valuable & information about the department. He was confident and interested interview She was bit hesitant information. well. But in my Remarks organization RBS

am, 29 useful

Relationship Mehmood Manager Jaskani

pm, 7 in providing the basic overall she guided me

DOCUMENTS CONSULTED Title of Document Products for Customers as compared to competitors The Royal Bank of Scotland RBS Islamic Banking Economic RBS RBS RBS RBS Hassan Malik RBS General Banking floor Mortgage Department Mortgage 1 February 2007 12 March 2008 10 January 2008 58 Organizati on RBS Name of Author Owaise Arif Where Available Customer Services Date Released 1 January 2007

Focus-Pakistan

Department

59

ANNEXURE 2 EMPLOYEES SATISFACTION SURVEY

The survey was meant to know the overall satisfaction rate of RBS employees. The main purpose of the survey was to check whether the employees in RBS are satisfied with the banking structure and the environment. Some very basic and direct questions were asked in order to keenly examine the attitude of employees.

Questionnaire
Please tick the following choices. If you want to mention your name then write it below other wise leave the blank. Do not forget to write your designation. You can give your suggestions at the back of the questionnaire: Name: _______________________ Designation: __________________ 1. Are you satisfied with the salary structure? Yes No

2. The working environment of the bank is Bad Good Better

3. Are you satisfied with the rate of promotion? Yes No

4. Do you feel any problem in dispatching goods to customers? Yes No

60

5. Does the bank recognize the training need of employees? Yes No

6. The work load on the employees is More than their duty According to their duties Less than their duties

Thanks for your cooperation and coordination

61

In the survey population all the employees working in the bank for more than one year were taken in to consideration. For survey sample 64 employees were taken. Out of 64, 20 were fully satisfied with the bank its environment, their salary structure etc. But the rest of them were not fully satisfied. The result of all the employees is shown in the following table: Issues Issue 1 Issue 2 Salary structure Environment of the bank Issue 3 Issue 4 Issue 5 Rate of promotion Rate of promotion Training of employees Issue 6 Load on employees 8 2 4 2 4 10 8 3 Satisfied 10 8 Dissatisfied 2 3

Total

36

28

All of the results are shown in the form of a graph on the next page.

62

E m p lo y e e s S u r v e y
16 14 12 10 8 6 4 2 0

D i s s a ti s fi e d S a ti s fi e d

Analysis of Survey:
Sometimes in direct questioning employees feel shy, because their privacy can not be kept, so data was collected through the above given questionnaire. For data collection purpose the questionnaire was distributed between the managers of Mortgage and Customer Service Department. The managers further distributed to their employees. After two days I, myself collected the desired questionnaires form the employees. Data was analysed with the results being given below:

Views of employees:
Salary structure 1. The basic salary should be above 16000. 2. Salary structure should be improved . 3. One of the employees said that, RBS is following the principle of paying 63

Iss ue Iss 1 ue Iss 2 ue Iss 3 ue Iss 4 ue Iss 5 ue 6

Employees Number

Is s u e s

less and taking more from employees. 4. According to most of the satisfied employees, Salary structure offered by RBS is better than the other banks; here we get the true fruit of our efforts. Environment of the bank 1. It is not conducive for the females in Mortgage Department to work, but the overall environment is good. 2. Some of the departments do not look like part of this bank so enough facilities should be given so that we should confidently lead our customers to those departments. As Islamic Banking Department has been shifted from Islamabad to Rawalpindi so it needs continuous improvement. Rate of promotion 1. Most of the dissatisfied employees did not give any logical reason regarding their promotion but most of them said that it is very slow so management should give attention to those departments where employees 2. There should be more cross departmental promotions. 3. According to one employee, Loyalty breeds promotion, employees need to be more loyal if they want something positive form the management. The bank should focus on the promotion of employees because the graph is showing a great amount of dissatisfied employees regarding issue of promotion. Training of employees 1. Proper training is required in mortgage Department 2. Strict action for those who do not take training seriously Workload on employees 1. Workload in Customer Service Department is heavy and limited to few members 2. Some employees are absent during the time of job so work load is not equally distribution between the present and absent workers.

64

References
Arif, O. Products for Customers as compared to competitors. Rawalpindi: Pakistan. Ejaz, Ch. (2008, July). Royal Bank of Scotland Islamic Banking. Paper presented at meeting of Islamic Home Finance, Islamabad. Fiscal Deficit (as % of GDP) [image] (2008). Retrieved August 10, 2008, from Economic-Focus----Pakistan--02-April-2008-,pdf Javed, Faiza. (2008). ABN AMRO Bank Pakistan Limited. Quaid-i-Azam University Islamabad. Malik, H. (2008). RBS. Rawalpindi: Pakistan. Malik, H. (2008). RBS Islamic Banking. Rawalpindi: Pakistan. RBS Online Banking. (n.d.). Retrieved August 9, 2008, from www.rbsinternational.com/personal/internet-banking/login.ashx Public Debt [image] (2008). Retrieved August 9, 2008, from Economic-Focus----Pakistan--02-April-2008-,pdf Royal Bank of Scotland. (2008). Royal Bank of Scotland (Annual Report). Rawalpindi: Ejaz Azhar. RBS Islamic Banking [image] (2008). Retrieved August 15, 2008, from http://www.rbs.com.pk/Pakistan/islamicbnk/ Royal Bank of Scotland. (2008). Treasure Plus [Brochure]. Rawalpindi: Asif Butt. Royal Bank of Scotland. (2008). Balance Transfer Facility [Brochure]. Rawalpindi: Asif Butt. Royal Bank of Scotland. (2008). Lockers [Brochure]. Rawalpindi: Asif Butt. Royal Bank of Scotland. (2008). Credit Cards [Brochure]. Rawalpindi: Asif Butt. Royal Bank of Scotland. (2008). Insurance Plan [Brochure]. Rawalpindi: Asif Butt.

65

66