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%0 Banking Industry: An ov0rvi0!roducts S0rvic0 o 2 major categories: deposit products: commodity products, involved storing of money, transaction oriented loan products: Loans given out to customers O Checking accounts distinguished by fees, channel access, overdraft protection O About one third of customers lost due to attrition Largest in first year O Large ATM networks; increasingly viewed as profit centers O Call centre to address customer grievances istribution Employ00s O
%0 Banking Industry: An ov0rvi0!roducts S0rvic0 o 2 major categories: deposit products: commodity products, involved storing of money, transaction oriented loan products: Loans given out to customers O Checking accounts distinguished by fees, channel access, overdraft protection O About one third of customers lost due to attrition Largest in first year O Large ATM networks; increasingly viewed as profit centers O Call centre to address customer grievances istribution Employ00s O
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%0 Banking Industry: An ov0rvi0!roducts S0rvic0 o 2 major categories: deposit products: commodity products, involved storing of money, transaction oriented loan products: Loans given out to customers O Checking accounts distinguished by fees, channel access, overdraft protection O About one third of customers lost due to attrition Largest in first year O Large ATM networks; increasingly viewed as profit centers O Call centre to address customer grievances istribution Employ00s O
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Gowthom Sr|n|vos 142 Kon|ko Jo|n 147 Kon|ko S|nghon|o 148 kudro kodhokr|shnon 173 Soh|n| 8ero 185 Iojeshwor S|ngh 188 %0 Banking Industry: An ov0rvi0 %0 Banking Industry: An ov0rvi0 !roducts S0rvic0 O 2 major categories: Deposit products: commodity products, involved storing of money, transaction oriented Loan products: Loans given out to customers O Checking accounts distinguished by fees, channel access, overdraft protection O Used demographics such as age, income, geographic location Recently included individual customer profitability O About one third of customers lost due to attrition Largest in first year O Banks created large branch networks because proximity of branch was major influence for selection of branch O Large ATM networks; increasingly viewed as profit centers O Call centre to address customer grievances istribution Employ00s O mployee selection on basis of ability to perform repeated tasks, interact with customers O Training consisted of: O Policies and procedures O Features of deposit and loan products %0 Banking Industry: K0y tr0nds %0 Banking Industry: K0y tr0nds O Two key trends: Push towards cross selling of products; on average 1.5- 2.5 per customer Growing revenues from transactions and functionality. N 1998-2001: fee revenue increased at 27% compared to interest income growing at 11% O 34% of customers lost due to dissatisfaction due to steep fees, fee surprises, poor service O Many banks merged with each other to access other banks branch networks O Because of lower marginal transaction costs, electronic banking was encouraged by banks Comm0rc0 Bank: %0 story across Comm0rc0 Bank: %0 story across t0 y0ars t0 y0ars 1973 - Commerce Bank was founded by Vernon W. Hill II - With a $1.5 million capital and a determination to be different 1981 - Grew to $1 billion in deposits 1994 - Developed the WOW! program - A framework to teach employees service 1997 - Introduced WOW! Awards - To honor outstanding service performers for the year 2002 - Introduced Retailtainment - To encourage branch managers to suggest ideas, even wacky ones. A comparison it ot0r banks A comparison it ot0r banks COMMERCE BANK O 4 types of checking accounts O Deposit growth of nearly 40% in 2001 O Customers are not pushed towards internet banking O Customers - revenue generator O Do not believe in M & A O Lowest rate payer in every market O Longer working hours O Lower loan to deposit ratio than industry average O More than half its deposits from consumer business %!ICAL BANKS O A dozen or more types of accounts O Cumulative deposit growth of 5% in 2001 O Customers encouraged to move transactions to self-service channels O Customers - cost generator O Wide occurrence of M & A O Pay at least 0.5% more than Commerce Bank O Lesser hours ->lesser cost O More focus on credit than deposits O Around half of overall business only from consumer business A diff0r0nt approac toards A diff0r0nt approac toards d0posits and cr0dits d0posits and cr0dits 0posits Loans O Deposits called as the value of the bank O Deposit rates half a percent lower than competitors O More than half deposits from customer business O "Were winning the ground war- company executive O High expense ratio focussed on service to customers; giving back to customers O Loans assigned to respective branches that services the customers unlike competitors Branches received the credit O Loan to deposit ration significantly lower than industry average O Cautious approach towards giving out loans to avoid credit risk O Loan takers encouraged to open deposit accounts CUS%OMER FOCUSSE S%RA%EG CUS%OMER FOCUSSE S%RA%EG O Building on the customer `trust O Commerce branches are built to be inviting and are replicated everywhere. O The location of the branch was chosen carefully O 10-minute rule : open 10 minutes early and stay open 10 minutes late O Free gift in opening account O Customer - centric programs : pens, dog biscuits, lollipops, phones in ATM machines, Penny Arcades O O O Process improvement - Offices have quality-assurance results to live by O WOW! Awards for outstanding service performers O It is an integral part of training process at Commerce University - an award of stock options at course completion O mployees should be passionate, future leaders O Red Fridays - time for WOW! Patrol O Mystery shopping- to rate banks O Leagues -inter branch competition for most impeccable service report O Kill the stupid rule - $50 for the alternative O Blue and red Commerce vans - mobile service RE%AIL%AINMEN% RE%AIL%AINMEN% O Other banks had started emphasizing on retail experience O Retailtainment - entertain branch customers on Friday afternoons %0 call0ng0s of b0ing diff0r0nt %0 call0ng0s of b0ing diff0r0nt O "The hardest thing about becoming a big bank is not becoming a big bank-CFO; Can CB continue to be small while continually getting bigger? O Do the customers really wanted all this? And at what cost? O Higher marginal costs associated with full service channels Justified to fight a ground war? O Are lower deposit rates justified to provide high customer services? O Staffing: Getting the right people and integrating them into the unique CB culture O A few customer concerns with service focussed approach: mployees focussing on greeting than getting work done Odd mishaps due to crossing the line on retailtainment; hotdog carts and juggler in the branch O Company focus was on centrally controlling the branch environment but sometimes decentralized approach required A f0 r0comm0ndations A f0 r0comm0ndations O Putting across the value proposition clearly to the customer nhanced customer service is CBs forte and reason for the past success O Maintaining balance between decentralization and customized branch experience O nsure company doesnt lag behind competitors while focussing on traditional channels and ignoring alternative channels O Not crossing the line with retailment; being true to a banks definition %ANK OU %ANK OU