The Securities and Exchange Commission has put American banks and other securities as well as financial institutions under tight scrutiny since 2012 when JPMorgans was involved in the provision of false information regarding the trade losses it incurred during the first quarter of the year. Citi Bank as one of the financial institutions has stepped up to be more transparent in its dealings and relationship with its clients and investors.
Prevention of high-risk gambles in banking
Commercial banks have a duty to develop banking strategies to counter different risk dimensions (Saunders & Cornett, 2010). The Security Exchange Commission supervises the activities of banks and other institutions that take part in mutual trading and offer consumers financial services. The commission is involved in this for the main reason of preventing fraud and deliberate deceit as well as misrepresentations.
By supervising the institutions and banks, there exists openness into the dealings of the banks and this allows investors to get full information about the banks before investing. The unexpected changes in the stock market would then become outdated, as there would be no hidden information about the institutions or banks. The commission would eventually safeguard the investors interest when buying stock and trading in other mutual funds.
There are rules, policies, and regulations put in place by The Security Exchange Commission under the Security Act of 1933 and the Security Exchange Act of 1934 that guide the industry. It is the right of all investors to get information about a particular institution or bank before making a decision to venture into it. The acts state that all public companies and institutions are required under the law to provide their financial as well as other information for investors to scrutinize. The commission regulates the environment under which stock market trades by making sure that all players know their obligations, rules, and policies concerning the industry. The commission is accountable to the public through their office of public affairs.
The commission has various divisions. Notably is the division of enforcement. This division is responsible for the starting of investigations on any player in the industry that it deems has violated the law and consequently gives its recommendations for prosecution in the court of law, which could be civil or administrative. The office is also responsible for issuing new rules and inspecting of investment advisers, security firms, and brokers.
Elements of a valid contract between banks and customers
The elements of a valid contract may include an offer, acceptance, intention of legal consequences, and consideration depending on the context of the contract, which contains the basic agreements between banks and their customers.
The first element is the offer. There must be willingness and readiness by both parties to accomplish what they have agreed upon in the contract. This offer by both parties could only end if the acceptance expires. There is also the element of acceptance. Both parties must undertake the offer without giving any conditions. The acceptance has terms and conditions which may be done in writing or by word of mouth.
The other element of a valid contract is the intention of legal consequences. The parties need to be sure that their agreement is legal and that the contract that binds them is enforceable by law. This ensures that one party would be able to sue the other if it does not adhere to the provisions in the agreement. The last element could be a consideration. This explains the price agreed upon by the parties in the contract for the promises made by one party to the other party.
The courts in most cases analyze good faith and dealing to establish from the contract if there is any sole discretion by the lender. Loan agreements always give the bank the discretion to determine whether the customer is repaying the loan satisfactorily, but the law states that the bank should exercise the discretion in good faith. This varies with the terms in the agreement, expectations between the bank and the customer as well as whether the bank, which lends the customers, acted in bad or good faith. Banks need to transact their businesses with their customers in honesty. The preliminary agreements between the two parties should play a big role in their expectations.
This is because, in the agreement, each party has its expectations. The bank or customer would claim a breach of good faith if the deliberate act by the offender negatively affects the other party considering the agreed purpose.
Intentional Vs Negligent torts
An intentional tort is generally committed when one partys conduct or actions injures another party or destroys another partys property with knowledge of the offender. This could be done with the purpose of causing damage to the other party. The party that is involved in intentional tort is always aware that the result could cause a harmful effect on the other party but fails to avert the situation (Cheeseman, 2010).
Negligence torts occur in a situation whereby one party fails to perform its obligation of taking care of the other party as stipulated in the contract. Due to this act by the offender, the other party may suffer injuries and even property damage. In order to differentiate between negligent and intentional torts, it is important to find out if the offender was aware of the outcome of the risk or not.
Some of the examples of intentional torts may include assault, battery, forging of documents, and land trespass. When one party assault the other, it is clear that the party committing the offense is aware that he might cause injury to the second party. The same applies to the battery. Negligent torts, on the other hand, maybe committed by a bank. For instance, a bank may decide to recruit a number of customers that it is not able to give high-quality service because of a lack of capacity to do so.
In this case, the bank will have committed a negligent tort against the customer. Drunk driving could be a negligent tort, as the driver is well aware of the illegality of driving under the influence of alcohol and the repercussions of risking others lives. For one party to sue for negligent tort, it must be able to prove that there is a legal obligation in the agreement that the other party has neglected.
Interference with a contractual relationship and breach of fiduciary duty
There exists a fiduciary relationship between two parties when one party is under the obligation to offer direction to the advantage of the other party in relation to their contract. Interference with a contractual relationship could be because of one party inducing the partner to breach the agreement with a third party while acting with the knowledge of the agreement. For example, a person may come between two parties mutual agreement to make them not achieve their goal. The elements of tortious interference may include the existence of a contract between two parties, the knowledge of the contract by a third party, the intention of the third party to conspire with one party to breach the contract, breach of the relationship and damage or injury to the plaintiff.
Participating in a Breach of Fiduciary duty has five elements, which include proof of the Fiduciary duty, proof that one party owed the complainant the duty, breach of the duty, and the injury. Fiduciary duties are in most cases intended to prevent parties from being unfaithful to each other in terms of contractual relationships (Bagley, 2013).
Citi Bank is one of the biggest and respected banks in the world. Involving itself in such activities would amount to a breach of fiduciary duties. This would have a negative effect on its reputation worldwide. A huge percentage of its respected customers would not associate themselves with it and as a result, the bank would end up losing its customers and investors, which are vital to its survival in the market.
Mobile banking and online transactions
The security and protection of the customers information should be one of the most important factors considered in mobile banking and online transactions by banks. Security policies and rules put up by a bank would determine the level of security of the bank network. Most banks have applied several security technologies that prevent viruses from getting into the banks networks using antivirus. One of the strategies would be deploying strict security rules at all levels and securing the banks network (Mann, 2012).
There is customer education. It is the duty of the customer to follow the right communication channels established by the banks to report any suspected fraud in their accounts to prevent them from falling victims. The customers are also educated on the importance of passwords, updating of operating systems, and other applications they use in relation to online banking transactions.
The banks also emphasize to the customers that the application and devices they use for mobile banking must ensure secure protocols like HTTP for authentication purposes. Vendor management is also another area used by banks to protect the software. The banks ensure that they test the mobile payment solutions developed by third-party vendors before they decide to implement the application. This ensures the security of the application at all levels.
There is also fraud management by banks as a way of protecting the software. There is strong protection of fraud by educating customers on authentication of their accounts, strict account set up procedures, using secure mobile applications, as well as having twenty-four-hour customer support and real-time detective services.
References
Bagley, C. E. (2013). Managers and the legal environment (7th ed.). Mason, OH: South-Western Cengage Learning.
Cheeseman, R. (2010). The Legal Environment of Business and Online Commerce: Business Ethics, E-Commerce, regulatory, and International Issue (2nd ed.). University of South Carolina, USA: Prentice Hall.
Mann, Ian. (2012). Hacking the Human: Social Engineering Techniques and Security Countermeasures. Aldershot: Gower Publishing.
Saunders, A., & Cornett, M. (2010). Financial Institutions Management: A Risk Management Approach (4th ed.). McGraw-Hill Ryerson.
The Securities and Exchange Commission has put American banks under tight scrutiny since 2012 when JPMorgans was involved in the provision of false information concerning the trade losses it incurred during the first quarter of the year. From then on, institutions like Bank of America have strived to put their house in order to prevent such gambles in the future.
Prevention of high-risk gambles in securities/banking
The Security Exchange Commission in the USA is responsible for supervising the activities of professionals who render financial services to their consumers or clients and mutual fund trading to avert fraud and deliberate deceit. It contributes to openness to the activities of U.S. companies to allow potential and existing investors to obtain correct information regarding their validity. This regulation eventually prevents abrupt changes in the stock market due to unavailable or undisclosed information. This further safeguards investors when buying stock and mutual funds.
The Security Exchange Commission under the Security Act of 1933 and the Security Exchange Act of 1934 has put in place policies and rules that guide the sector. According to the acts, all investors have the right to get information about an investment before making a decision to venture into it. All public companies are required under the laws to provide their correct financial information for scrutiny by the investors. This reveals useful information about the market and prevents fraud that might occur due to some undeclared information. The commission also regulates the environment under which trading occurs by making sure that all the parties involved are aware of the obligations and rules that they are required to follow.
The commission enforces the above laws against those who flout them by using civil or administrative actions. When the commission finds out the misconduct of a party, it may decide to file a complaint and ask the court for approval. The commission could also forward the case to an administrative law judge.
Elements of a valid contract between banks and customers
The elements of a valid contract between banks and their customers vary according to the context of the contract. This contains details of the first and basic agreements between the parties involved. There is also the element of duty of good faith and fair dealing, which means that it is the responsibility of each party to be committed fully to the contract. There could also be a contravention of the contract whereby one party fails to perform its part of the bargain as earlier agreed. This may lead to interference with the other party as it may have adverse effects on its expectations and performance. There could also be damages on one partys properties due to the conduct of the other party. This could result in one party demanding payment of the damages caused.
Banks and their customers should endeavor to have honesty while conducting their businesses and transactions. The expectations of both parties should play a big role as this makes the basis of their preliminary agreement. There could always be frictions, which may end up in a court of law in cases where the bank or the customer feels that the opposite party has not met their expectations. For the two parties to work in harmony there should be no compromise on another partys rights since the agreement clearly indicates each partys rights. The two parties should work together with diligence towards the basic goal of fulfilling their initial agreement.
Intentional and negligent tort actions
An intentional tort is committed when one party injures another or destroys their property knowingly. One party not being able to avert a situation that may be detrimental to another party or individual contributes to negligent tort. Negligence occurs in a case where one party goes against the obligation of taking care of the other party. This could result in one party suffering property damages due to the other partys negligence (Cheeseman, 2010).
The difference between intentional and negligent torts could be determined by examining the state of mind of the party that has committed the offense to validate if there was any huge risk expected. Examples of intentional tort may include the forging of documents and using them for personal benefits. The offender could sometimes intentionally ask for compensation for services not rendered. Negligent tort could be due to a professional accepting so many clients or customers and is not able to provide quality service to them considering their numbers.
Interference with a contractual relationship and breach of fiduciary duty
A fiduciary relationship between two parties occurs when one of the parties is under the obligation to offer direction to the advantage of the other party in relation to the parties contract. Loyalty is one of the elements that drive a contractual relationship between two parties. This involves the willingness and devotion of both parties to a particular cause. Fiduciary duties are in many cases intended to prevent parties from being unfaithful to each other in terms of the contractual relationship (Bagley, 2013).
When one party disregards the relationship, then there is a breach of fiduciary duty. The breach could be in terms of one party involving itself in activities that are self-beneficial at the expense of the other party. For instance, a bank may not properly analyze the frictions that may arise between activities done on its behalf by its agents and the resulting effects on its customers as a third party in the agreement. In this case, there is a need for the agent to exercise discretion as it is acting on behalf of the bank and considering the customer as a third party beneficiary.
When Bank of America involves itself in the above breach of fiduciary duties, then a good percentage of its customers would lose faith in it for fear of losing their money especially in terms of deposits. As a result, the bank would end up losing its customers and more so investors.
Mobile banking and online transactions
Mobile banking and online transactions have been on the rise recently due to the urge to have a cashless world. This has necessitated the need to protect online transactions from fraud. Banks have put in place various ways of protecting themselves and their clients from malpractices by improving on their verification of account activities online. This means that one is able to verify online whether any transaction done on his or her account is valid or is a fraud.
There has been an application of security technologies that prevent computer viruses from getting into the banks networks using antivirus. One of the strategies would be deploying strict security rules at all levels and securing the banks network ((Mann, 2012). When an individual tries to gain access to ones accounts or the banks network, then firewalls block them. This means that the individual has to go through an authentication process before gaining access. There has also been an application of data integrity procedures that ensures no individual interferes with the information relayed during the transfer process.
References
Mann, Ian. (2012). Hacking the Human: Social Engineering Techniques and Security Countermeasures. Aldershot: Gower Publishing.
Cheeseman, R. (2010). The Legal Environment of Business and Online Commerce: Business Ethics, E-Commerce, regulatory, and International Issue (2nd ed.). University of South Carolina, USA: Prentice Hall.
Bagley, C. E. (2013). Managers and the legal environment (7th ed.). Mason, OH: South-Western Cengage Learning.
ADCB is 65 % held by the state-controlled Abu Dhabi Investment Council, and is the UAE 3rd-biggest deposit taking institution by assets. In mid 1985 the Khalij commercial bank was changed to form ADCB. This happened after Khalij merged with the Emirates Commercial bank and the Federal Commercial Bank. The bank operates as a limited liability company listed in the stock exchange. It was listed in the Abu Dhabi Stock Markets in 1975.
The banks memorandum lists its activities as business and personal banking as well as investment banking. The bank at the time of registration had 33 operational offices distributed across the Kingdom. It also had an office in India and the Cayman Islands. The bank offers a variety of banking and economic services primarily in the United Arab Emirates and also in India. ADCB routes its retail, business, investment, and merchant banking services along with, brokerage and asset management activities through its interconnected units of currently 42 operational offices in the United Arab Emirates. It operates interconnected units of 137 ATMs. The Bank along with the traditional banking value offerings and services offers Shariah-compliant value offerings and services. In May 2008, ADCB officially introduced the ADCB MSCI Arabian Index Fund, a 1st-of-its-kind designed to track the activity level of a diversified basket of Arabian business arena investment holdings.
In June 2008, ADCB was awarded the Outstanding Deposit taking institution and Outstanding Advertising & Marketing in the Middle East at the highly rated Banker Middle East Business sector Awards 2008. In May 2008, ADCB won the Outstanding Retail Deposit taking institution United Arab Emirates and the Outstanding Customer Loyalty Programme at the Asian Banker Excellence in Retail Financial or economic Services Awards for 2008.
During September 2008, the bank substantially altered the composition of the board of directors. In the same month, ADCB officially introduced its Islamic banking division ADCB Meethaq to offer Shariah-compliant economic solutions.
Business Model
ADCB primarily offers traditional banking along with Shariah-compliant value offerings and services. The bank is focusing on catering for simple retail and small and medium-sized companies. The ADCB is focused on providing its clients with innovative and conveniently delivered services, improving its operational procedures and raising productivity through improved systems and widening its scope.
In the end of the year 2009 ADCB came forward in its innovativeness by introducing a new product by the name Pro Trade. The product is a web based infrastructural offering that is meant to make the clients able to access their accounts and perform all the operations they would need form virtually any place that is connected to the internet. This is seen as one of the attempts to adopt the emerging trends in which people prefer mobility and convenience in the services. The platform has been very beneficial to those working in international trade. The product has brought in many benefits and improved the quality of services. First the platform allows the bank to handle customers concerns throughout the day and improves on productivity as business goes on unrestricted. Secondly, and this one is on quality service, the customers are able to follow their account operations in real time.
Commenting on the official introduction of ProTrade, Colin Fraser, the leader of Wholesale Banking at ADCB, is quoted as having stated Today ADCB made permanent its position as a leading trade finance bank with the capacity to offer users of international trade value offerings on a leading internet based system to handle their transactions. With ProTrade customers access a dedicated channel which allows them to manage their trade business over the internet and execute their transactions in a very short time. The effective allocation of time is at the heart of any business, big or small.
The Abu Dhabi Kingdom has a very ambitious program encapsulated in the vision 2030 that is meant to transform the Kingdom into a regional business hub. The ADCB has positioned itself as one of the most ardent supporters of the vision and in line with it has committed to make the landmark construction one of the most noticeable pieces of real estate in the region. The building is likely to change the whole skyline and street outline of the district. One part of the construction which will cover residential facilities is expected to be ready for occupation by the end of the year 2012. The location of the residential facility is a highly rated plot in a very strategic area of the district. One of the senior managers of ADCB has stated that the work is going to be an exceedingly beautiful piece of work that is expected to be in line with the high quality standards of the kingdom and the other real estate investments of the bank. The district is already the home to the most recognizable real estate projects and has been a magnet for business from all over the Middle East and North Africa region.
ADNEC has a very prominent building in the area and there are even more similar works coming up within the district. The ADCB project is situated in an area well connected to the transportation lines and is going to provide eminent accessibility to all its users. In the provision of services like banking and investment services, convenience usually ranks very high as a mark of quality. Clients prefer organizations that can offer those services in easily accessible and appealing places. The ADCB is achieving just that. The start of construction work on the AD-1 building clearly shows ADCBs dedication to the wider society and the successful future development of Abu Dhabi. We are looking forward to witnessing the development over the next year, and see the emergence of a new modern business society in Abu Dhabi, Head of Government Relations in ADCB is quoted as having stated.
Things have continued to show positive trends for ADCB in many areas. In the same period its construction projects and the new ProTrade initiatives were being rolled out the credit rating agency Capital Intelligence, announced that it has adjusted upwards the ratings for the banks foreign currency accounts. The bank was given some of the highest ratings in the banking sector. This was in recognition of the banks improving performance with the support of the government. The government has supported the bank in many aspects making most of the previously risky foreign accounts become very strong looking into the future for the bank. The bank holds a sizeable market share in the local market and the government appreciates its role in promoting business growth in the Emirate. The government also has a substantial ownership stake in the bank, making it one of the most strategic companies for the governments agenda of business promotion.
However the economic outlook for the Emirate has not been very favorable and the bank has experienced some difficult times in the recent past. This led the company to make a loss in the year 2009 and its asset quality to be downgrade slightly. The banks market segment has however stabilized and the previous disturbances have eased. The is expected to continue in the next several years as the world economy emerges from the economic crises of 2008-2009.The bank decided to take a deep bath in the beginning of the year 2010 leading to some negative performances. This is expected to put the second quarter earnings on the positive side as the allowances leave the books. The improving outlook of the Emirate financial sector is expected to take the ADCB with it, however the risk of default still remains as most of the borrowers experienced a shrink in their earnings occasioned by the world economic crises.
The ADCB is one of the biggest deposit taking institutions in the nation and is a substantial participant in the commercial, large scale and investment services business arenas in the country and the Middle East region. The negative performance of ADCB is attributable to some huge provisions that were made in that year in line with the banks prudence and conservative accounting model. The banks main operations however registered positive performances. The global economic recession that started in the USA affected the whole of the financial sector in the Emirate. For the ADCB, this led to an increase in bad loans held in the books. This was also observable in many other major banks in the region. This is what led to the deteriorating quality of assets held by the bank. There were also some foreign exposures that have a very high risk of default that were taken into account when grading the assets. This obviously increased the dip in the quality of assets. The fall in quality is seen as the maximum effect of the crises and the bank is therefore very optimistic that in future the trend can only be upwards. The Non Performing Loans allowance coverage ratio fell substantially last year but improved in the 1st six months of 2010. On the up side, new Non Performing Loans classifications appear to have fallen in speed this year and the Banks big capital base offers additional security.
Capital rose substantially last year as a result of some adjustments in loan holdings and government activity. ADCBs liquidity levels took a positive direction at end 2009 but remained conservative. The ADCBs management has intensified their work on expanding the customer holdings in the last few years. The bank has also gone back into the debt investments. In the year 2010 the bank took on some significant amounts of a Malaysian debt issue which was very popular and is expected to give the bank some good returns and improve its stability. The ADCB offers a very wide variety of products and services in its well distributed office network. The value offerings range from small retail products to large scale business products. The bank also has some foreign operations in Malaysia through an ownership stake in one of the operators and in India through fully functioning offices. The bank expects to expand even further abroad and increase its coverage of the domestic market (TAIB Research, 2009).
Total Quality Management Implementation in ADCB
TQM methods were first developed for the manufacturing Businesses. There are several important characteristics that differentiate service businesses like ADCB from industrial production businesses and these would affect TQM principles, tools and methods transfer to service environments and the discussion of their implementation in ADCB. The most significant and notable characteristic is the intangibility of a service as compared to a tangible or sensible product in industrial production environments. Tangible value offerings are more measurable and standardized in their specifications. In contrast, intangible value offerings are less homogenous and difficult to measure. For example the idea of SERVQUAL, developed by Zeithaml in 1990 to measure quality of services, was dominated by non-physical elements such as responsiveness, courtesy and accessibility. Another significant difference is that the operation systems in service businesses are different whereby the consumption and delivery of a product takes place simultaneously. As such, it is difficult for checking mechanism to work in ensuring the quality of the product before delivery to a customer. On the other hand, the quality of manufactured value offerings can be tested and checked for quality before delivery. This is also supported by the fact that a defective product can be replaced but a defective service may create a permanent damage (Choppin, 1994).
Service Quality Systems
Following the success of TQM in industrial production, academics have begun to study the potential to transfer and apply TQM principles to service firms. ADCB has on the front line in this trend in the United Arab Emirates. Taking such a wind can be challenging since TQM was born and developed in the industrial production areas. TQM proponents or gurus developed TQM based on their experiences with industrial production businesses. Albeit the fact that those individuals have suggested that TQM can be applicable in services business sector, obstacles can arise if the TQM philosophy is not adjusted enough to suit the nature of service business sector this has happened in ADCB. Banking service system is an integration of all the components involving a big number of individual workers working with the essence to satisfy the varying requirements of clients. Banking service systems involve a wide variety of procedures like deposits withdrawals both at the counter and through ATMS, online cash transfers, being an agent of the client in collection or payment of debts etc.
Such systems involve a very big variety of business procedures and a big scale interaction with a variety of clients. To meet the multiple requirements and conflicting priorities of such a wide base of clients can be a challenge in service business sector. Demand on service quality increases as the society becomes more advanced economically, matured culturally and knowledgeable educationally in the Emirates. Service provision procedures can be differentiated in many ways and there are several attributes that define them. 1st, service systems normally produce services which maybe tangible or intangible and sells directly to users. Service systems establish multiple contacts with its users who provide a chance for either good or bad quality of service. Service systems need to be available to provide its service when the customer requires it. Clients consider that timely availability of service and responsiveness in providing service are the basic essences of the system although with an optimum price. The service system has also to meet the customer expectations in regard to time of completion (Lakhe, 1995).
Application of TQM in ADCB
ADCB has been facing an unprecedented competition in the industry creating a survival of the fittest environment. The ADCB is now interested more than ever before in adopting TQM methods and tools to survive and excel in such a fierce rivalry environment. In banking service business sector the word quality means clients expressed and implied expected standards are met fully. Clients are more sensitive to service quality and service delivery than in industrial production because they are always in contact with front-line service personnel as opposed to the case of factory workers. ADCM benefits tremendously from TQM rolling out for the mere fact that their success and thrive depends on customer satisfaction and loyalty.
High quality service in ADCB starts with understanding clients requirements and using these requirements to drive the good service or new product development procedure. Instead of solely depending on marketing research firms to define these requirements, members of the bank including management and personnel meet clients and gain a 1st-hand understanding of their requirements; this is done by looking upon their customers as the sales people because they are users of the value offerings and their recommendation to family and friends is usually received in utmost good faith. Clients play a significant role in the marketing of services and value offerings of ADCB whereby they have more creditability to attract new clients than salesmen who are normally perceived with less creditability as their main motivation is to meet certain quotas and earn commissions.
To create such a customer appeal and endorsement of product and services, ADCB has created a life-long official overall objective to continuously delight and surprise their clients ahead of competitors. ADCB has ensured that their clients not only buy their value offerings but also recommend it to others because if they are only buying it they could shift at any moment to try competitors value offerings and services. A 1st approach to TQM rolling out in ADCB was a skillfully designed training program to continuously improve professional skills of the workers. Several training methods have been employed to ensure the effectiveness of the program which include on the job training, business sector level seminars and workshops. Another substantial element in implementing TQM is looking out for new technology to modify the procedure or what is known as Business Model Reengineering. Management has dedicated to employ innovation continuously to evaluate how things are being done and the need to alter them (Prajogo, 2005). Through procedure innovation, lower layers of the firms chart can pass the intended information to top level management on how things really should be done to reflect on better satisfaction of clients. Generally, the important banking services that ADCB has regularly evaluated for quality improvement are:
Procedure duration of important value offerings and services e.g. loans, new accounts, ATM cards, credit cards etc
Queuing duration like down time
Customer complaints, formal or informal
Hospitality and effectiveness
Correctness and promptness in the preparation of statements of accounts and records
Competitive rates, which include all service and miscellaneous charges
Speed in responding to customer concerns such as in answering the phone, the number of passes before the client talks to the correct person
Lost clients and records
Implementing ISO in ADCB
Implementation Procedure in ADCB
ADCB has not acquired the ISO certification as yet. However many procedures of quality management in the bank point to many of the requirements of the ISO standards. The initial stage for obtaining the ISO certification for ABDC is to have an in-depth analysis of the companys own quality activities and compare them to the ISO 9000 standards. If the banks activities and job training are poorly documented and there is proof of poor communication with management, then compliance to ISO 9000 standards will be very difficult to obtain. Next, an external consultant can be hired to assess the original activities and take the necessary stages to conform them to ISO 9000 standards. To ensure that these measures are kept, a quality assurance program is created and implemented. This will often require some description of the system, evaluation of new training requirements, calibration of equipment, and a corrective or preventive system to stop recurring problems. The assessment procedure is the next stage, which involves a system of audits by a 3rd party. This involves review of the firm, documentation, workers, and their knowledge of the quality system
Finally, a 3rd party registration assuming the ADCB complies with the standard of ISO 9000. The ISO 9000 certificate will usually expire after three years which will force ADCB to audit their procedures yearly. The expense of obtaining an ISO certification will vary among companies. An estimate of the rolling out expense can be found by bringing into account the following factors in ADCB
Human Resource base
Dispersed locations in the Emirates and India
Level of closeness to ISO 9000 requirements within the current quality systems.
Required stages to re-engineer quality activities employed by the bank
Implementing Balanced Score Card to Achieve Total Quality
The Balanced Score card Procedure
The 1st procedure in the Balanced score card implementation process in ADCB was translating the vision. This has helped the managers build a consensus around the firms vision and official overall objective. The strategic managers used to convey their strategic plans to the workers through a very rigid and inefficient method and the visions needless to say were hardly translated into performance. The Balanced score card model facilitated the development of a process that made sure all the top management guidelines were translated to worker processes and monitoring was done. The implication of this is that quality measures have been tied with the long term organizational objectives and closely monitored for deviations which has led to knowledge accumulation.
The 2nd procedure is communication and connection. Managers in ADCB pass the intended information about the official overall objective up and down the firm and connect it to divisional and individual long term goals. For a long time the divisions were evaluated in terms how well they hit the financial targets established by the management. This was also the model applied in the use of incentives. The incentives were linked to the financial results of the departments. The score card gives the ADCB managers a way of ensuring that all levels of the firm understand the long term official overall objective and that both divisional and individual long term goals are aligned with it (Robert and Norton, 2004).
The 3rd procedure has been business planning. This enables ADCB to integrate their business and financial or economic plans. Different organizations adopt slightly differing models although the logic is still the same. Strategic managers nowadays have a model that enables them to link the financial performance of a division with the quality propositions.
The 4th procedure is feedback and knowledge accumulation. This gives ADCB the capacity for what is called strategic knowledge accumulation. With the balanced score card at the centre of its management systems, ADCB can monitor short term results from the three additional perspectives; clients, internal business procedures and knowledge accumulation and development and evaluate official overall objective in the light of recent activity level. This ensures that quality is maintained and improved on in all the firms divisions. The score card thus enables ADCB to modify strategies to reflect real time knowledge accumulation (Robert and Norton, 2004).
How TQM Concepts are Applied in ADCB
TQM
Rolling out of TQM in the ADCB has not been straight forward due to the fact that quality of services cannot be defined in long term goals accurately. Additionally, the banking business sector by nature has less checking mechanism over factors which affect quality. In service settings, there is much higher level of external uncertainty compared to industrial production settings because services cannot be stored for later use and because of the participation by the customer in the procedure. Another difficulty that ADCB has experienced is the fact that services are intangible which makes it difficult for the compiled standards to conform to them and to measure them. High quality services are subject to the individual customer expectations which may be unknown or unstated, and may vary from customer to customer and also from time to time (Rana, 2006). In overall however the bank has done fairly in the implementation of TQM.
ISO
Before applying for ISO certification, ADCB must first decide if ISO 9000 is something they need. This is yet to be done for ADCB making it a negative aspect. Issues such as customer requirements, competition, and legal expected standards must be examined. This has been done in trying to implement other quality procedures making it a positive aspect. If a significant customer demanded an ISO certification for a product they buy, or international clients require certification, ISO 9000 would be appropriate for ADCB, this is however yet to happen a positive thing for ADCB. The competition must also be brought into account. If a significant competitor of ADCB has ISO certification for their procedures, ADCB may desire to obtain the same certification. Since non of this has happened ADCB is not under pressure to implement ISO which is a positive thing. ADCB may also pursue ISO certification for legal purposes.
Europe, for example, requires an ISO certification for many value offerings they import from the United States and this may extend to cover even businesses from other regions. ADCB might face a problem in trying to access these markets. After ADCB decides if ISO certification is appropriate, they must then evaluate how it will be beneficial to their company processes and products. The most substantial benefit is that their procedure will be recognized as a world-class quality system. Other advantages will be; lowered waste, higher quality value offerings and procedures, and consistency in operations.
Balanced Score Card
The Balanced Score card model has had the greatest impact in ADCB this is very positive given the level of quality that ADCB has been able to achieve. The procedures have been applied to a reasonable degree and this is observable in the improved customer service and growing deposit levels. However the negative thing is that there is still much room for improvement and competitors might exploit this to their advantage. The problem ADCB is experiencing is the challenge in integration of the various quality procedures which require conflicting processes at various levels.
Analysis
TQM
Offering high quality products and services is now a must and is concerning management increasingly in ADCB and all over the globe now (Garvin and David, 1987). Several quality tools and methods have been used to achieve this long term goal and the TQM model has proved to be among the most effective method that have been applied for ADCB. TQM has added a significant dimension to management practice around the globe since its introduction in early 1980s. It became a source of competitive advantage and very few companies can afford to ignore it. Empirical studies have shown that the way firms implement TQM can significantly affect the results and business impact, hence firms need to take proper measure in implementing TQM in their processes. ADCB especially being in service industry that is importing the TQM model from the manufacturing industry must be very careful. TQM has been translated in a variety of ways depending on the environment. It generally means a quest for excellence, creating the right attitudes and checking mechanisms to make prevention of defects or errors possible and optimize customer satisfaction by raised efficiency and effectiveness.
The literature has suggested that TQM has advanced beyond capturing tools and systems, and its focus has changed to conceptual rather than practical aspects. This is very true for ADCB. Therefore, TQM is now accepted and adopted by many businesses around the globe as a management philosophy in ADCB that embodies a compilation of generic core principles which are unconstrained by business sector unique considerations. The recent arguments in ADCB concerning TQM have supported the contingency model of the application of TQM core principles into different environments. These arguments suggest that TQM is applicable to ADCB but should not be applied in its entirety and only compatible tools and methods are applied to reap the utmost benefit of its use. Additionally, soft aspects of TQM that emphasize behaviors and attitudes, such as leadership, customer focus, empowerment, involvement and cultural elements of TQM have facilitated a more successful and beneficial roll out of TQM in ADCB. Due to emerging need of quality management rolling out in financial or economic service business sector now is the time for the sector to consider a paradigm shift. ADCB must pay attention to this shift and start developing strategies for providing high quality value offerings to clients. The bank needs to determine where improvement is required, how services can be improved and where business procedure interruptions occur, why they occur and how they can be avoided. (Goyal and Bhatia, 2009).
ISO
ISO 9000 is a compilation of standards and criteria regarding quality checking mechanism for companies specializing in industrial production and services. ABCD falls into the service category. Its essence is to provide a means for ADCB or any other organization to demonstrate a dedication to quality to their clients (Kyma and Macko, 2005).
The International Standards Firm represents 140 nations around the globe. The ISO 9000 standards were officially introduced in 1987, although the ADCB has started considering it just recently. The consistency in dimensions of value offerings such as cassette tapes and credit cards are the result of ISO standards. These standards are necessary to insure quality value offerings that serve their essence. Most ISO standards are size standardization oriented and consist of dimensions. The ISO 9000 is different from these as it is more judgmental and more applicable to the ADCB service model. They do not standardize the final product, but the procedure to make the product. ISO 9000 lays down what expected standards the quality system must meet, but does not dictate how they should be met in the firm (Kitazawa and Sarkis, 2000). This allows ADCB and other businesses great flexibility in the procedure of meeting these expected standards. A number of different quality methods can be used and still meet the criteria. While ISO 9000 would give ADCB direction for implementing a quality program, being certified does not guarantee quality however.
Balanced Score Card
As ADCB change itself to tackle competition that is based on information, their capacity to exploit intangible assets has become far more decisive than their capacity to exploit the physical assets. Many years ago in light of this transformation in the business management models an idea was developed that is now referred to as the balanced score card. The new model enabled business managers to track the activity level of the various business departments while at the same time tracking the financial performance of the same business divisions without having to delay any one. This model of activity control has had a very positive impact on the quality of the products and services being offered or produced by ADCB. The model has become very popular with managers and business consultants (Robert and Norton, 2004).
Results
TQM
In this competitive age, the survival of a business mainly depends upon the quality associated with the product. Similarly, in order to succeed in the banking business, ADCB will need to develop a firm culture based on Quality Management approach where every body is involved in quality enhancement procedures and the deposit taking institutions management is keen and fully dedicated to the satisfaction of both internal and external clients (Cowling and Karin, 1995). The analysis has shown that the ADCB has the infrastructure to implement fully the TQM policies.
ISO
Companies that have received ISO certification have found many advantages from ISO 9000 certification and Abu Dhabi Commercial is not an exception. Complete implementation of ISO 9000 would offer many advantages to ADCB by focusing the whole organization on quality. Lowered expense, higher revenue, and an international reputation for being a quality focused banking service provider are only a few of the advantages from the various ISO certifications that ADCB is deriving from closely matching the quality Standards of ISO. In an increasingly globalizing business environment, a competitive marketplace, and growing economies, ISO will continue to help companies satisfy the increasing demand for quality standards.
Balanced Score Card
Many companies including ADCB adopted early balanced scorecard ideas to improve their activity level measurement systems and quality management. This was either done partly or in full sometimes even without terming it as balanced score card and generally adoption those ideas provided clarity, consensus as well as focus on the required targets in activity level. In the recent past, ADCB has been increasing the usage of the balanced scorecard to perform the following functions;
Make clear and update official overall objective
Pass the intended information about official overall objective throughout the limited liability company
Align unit and individual goals with the official overall objective
Connect strategic long term goals to long term targets and annual budgets
Identify and align strategic initiatives
Conduct periodic activity level reviews to learn about and improve official overall objective
The balanced score card enables ADCB to align its management procedure and focus the entire firm on rolling out of long term official overall objective. These are the very activities that are required in the achievement of high and sustainable quality by ADCB. The bank has many of the recommended strategic procedures in place for the full rolling out of the balanced score card but this can still be improved further (Newman and Alan, 1996).
Conclusion
The Total Quality Management
There are several methods that need to be implemented to ensure that TQM rolling out is being effective one of which is expanding the role of ADCB internal auditors to evaluate activity level in term of quality, service, cleanliness and value rather than limiting their function to only checking cash flows, transactions and balances. 2nd, quality models could be employed such as value analysis which evaluates procedures based on value addition to ADCB through method studies, work measurement, and job evaluation. 3rd, the bank can ensure proper quality system rolling out by using the well-known industrial production methodology, Cycle Time Reduction (CTR) coupled with identifying defects using ISO guidelines. In order to implement TQM in an environment, new alterations have to take place and people within ADCB have to commit to those alterations. In a survey of 160 operational office managers of deposit taking institutions in England, interviewed managers regarded communication and management style to be the two most significant issues to be altered to enable an effective TQM rolling out process. In other words, managers ought to be able to pass the intended information throughout the firm effectively. The survey was on a scale from 1 to 5 where 5 was of significant importance and 1 of minor importance (Burton and Gummer, 1999)
ISO
The International Standards Firm simply defines the standards to be used for certification. The firm itself does not audit companies. Because of this, ADCB can not be termed ISO 9000 certified . ISO has indicated interest to put an end to the use of this terminology, as it can be misleading, causing clients to think that ISO is sponsoring the certification procedure. ISO also does not allow its logo to be used to advertise certification. Private sectors take on the responsibility for auditing companies to check for compliance to ISO 9000. ADCB can be certified with a certain private limited company that relies on its own credentials. This private limited liability company will check to see if the management procedures relevant to quality are in line with the corresponding ISO 9000 standards (International Standards Organization, 2001).
Balanced Score Card
It is observable that there are many strategies available to the management of ADCB for the essence of quality improvement offer very promising results. It is also observable that the bank has implemented quite a substantial amount of the procedures outlined by the balanced Score Card model. However the entire quality management procedure would need to be integrated to ensure that all the efforts lead to the same goal. The recommendation that can be made for ADCB would be to translate every effort aimed at improving quality in terms of one model like the balanced score card since it is comprehensive and endeavor to implement it fully.
References
Burton, C. and Gummer, T. 1(999). TQM and Organizational Change and Development, New York: Rockfield College Press.
Choppin, J. (1994). This Total Quality Business, Managing Service Quality, Vol. 4, No. 6, 1994, pp. 5-7.
Cowling, A. and Newman, K. (1995). Banking on people, Personnel Review. Vol. 24 No. 7, 1995, pp. 25-40.
Garvin and David A, (1987). Competing on the Eight Dimensions of Quality, Harvard Business Review, 10110.
Goyal, N. and Bhatia, L. (2009). Improving Financial or economic Services through TQM: A Case Study, Web.
International Standards Organization (2001). The Magical Demystifying Tour of ISO 9000 and ISO 14000. Web.
Kitazawa, S. and Sarkis, J. (2000). The Relationship between ISO 14001 and Continuous Source Reduction Programs, International Journal of Operations and Production Management, 20, no. 2, 225248.
Kymal, C. Omnex (2005). The Impact of ISO/TS 16949 and ISO 9001:2000. Web.
Lakhe, R. R, (1995). Understanding TQM in service systems, International Journal of Quality & Reliability Management, Vol. 12 No. 9, 1995. pp.139-153.
Newman, K. & Alan C. (1996). Service Quality in Retail Banking, International Journal of Bank Marketing. Vol 14, Issue 6.
Prajogo, D. I. (2005). The comparative analysis of TQM practices and quality activity level between industrial production and service businesses , International Journal of Service Business sector Management, Vol. 16 No. 3, 2005 pp. 217-228.
Rana, I. A. (2006). TQM paradigm in banking business sector, Web.
Robert S. K. and David P. N. (2004). Using Balanced Score Card as a Strategic management System, Harvard Business Review, USA.
Garanti Bank counts among the largest privately owned fiscal institutions in Turkey. This is based on asset size and recurrent banking revenue generation. It serves an average of 10 million clients in different sectors, including corporate clients, in addition, to small and medium business ventures. This position is also guaranteed since the firm has a presence in different business lines. At the end of 2009, the firm had assets worth $90 billion. The bank offers a variety of services, including commercial, private, retail and corporate banking services to its different clients (Garanti 2010).
Mission Statement, Vision Statement and Bank Strategy
The institutions vision is to be the best bank in Europe. Its mission is to ensure a notable increase in the value created for shareholders, customers, the society, the environment and employees on a continuous basis. This will be achieved by making use of the firms agility, organizational efficiency and influence. The strategy laid down to achieve this entails ensuring sustainable growth by continued value creation over the long-term (Garanti 2010).
Local and International Representation
The institution boasts of 863 domestic branches and 6 overseas branches, which are located in Cyprus, Luxembourg and Malta. It is represented internationally, with offices in Dusseldorf, London, Geneva, Shanghai and Moscow. The bank also has over 3000 ATM service outlets, a functional internet and mobile banking service and a well-equipped call center. These achievements have earned the firm recognition internationally, with the Euromoney voting it the best Turkish bank. It has also been recognized as the best managed company in central and Eastern Europe. Investors in People, Contact Center World organization and the World Finance Magazine, issued other awards.
It is noteworthy that their internal network covers 96% of the Turkish state, while each of the 3000 ATM outlets registers an average of 140 transactions daily. It has the largest fiscal call center in Turkey, attending to an annual average of 51 million persons. It is a market leader in the internet and mobile banking sector. The bank continuously records leading figures in assets, loans and deposits per branch annually. The total of 14 million debit and credit cards among its clients make it a market leader in the number of cards, in addition, to having the largest merchant network with 450 000 Point of Sales terminals. Garanti boasts of a 20% market share in issuing and acquiring volumes for Pioneer payment systems. The bank is a market leader for spending per debit card, with average figures larger that the sector by 2.5 times (Garanti 2010).
It has a dynamic human resource strategy that ensures competence among employees is maintained using different methods. It has an effective team of 17000 employees, with 90% being university graduates. They are provided with a 9-day training period every year. The firm has a system of collecting innovative ideas from employees. This ensures the collection of over 5000 concepts from the employees every year. Most importantly, the workforce enabled the bank to be the first Turkish firm receiving an Investor in Persons award (Garanti 2011).
Notable Milestones in its History
In 1993, Garanti became the first Turkish fiscal firm to list shares in international stock markets. In 1997, Garanti became the first Turkish bank offering internet and telephone banking simultaneously. In the year 2000, it released the first chip based and multi branded credit card in Turkey. In 2002, it established the first interbank card platform with bonus cards. In 2005, it was the pioneer fiscal institution internationally to offer short message service based banking. In 2006, the Bank introduced a credit card with contactless chip technology. In addition, it was the only Turkish bank to offer American Express Centurion Line Cards and accept merchants to its network (Garanti 2010).
Competitive Advantage and Market Share
It is Turkeys second largest private bank with a 13.3% total assets markets share. It is also the largest lender, with a 13.4% total loans market share. The firm boasts of an impressive 20.4% foreign currency loans market share, with a 12.8% customer loans market share. This makes it a market leader with its customer oriented growth strategy. Garanti is the second best relational banking institution with a 12.0% customer deposits market share. It is also has the second largest customer base, with a 13.0% market share for demand deposits (Garanti 2010).
Financial Indicators
Figures for the year 2010 indicate that Garanti is a sustainable institution due to the immense growth recorded by all departments. It recorded an 18% growth in assets to $137 billion from $116 billion. The volume of loans grew from $53 billion to $70 billion, representing a 31% growth. Securities grew by 8% from $14 billion to $17 billion. The firm also registered a 3% growth in net fees and commissions, from $1.6 billion to $2 billion. Lastly, ordinary banking income remained at $7 billion, matching figures of the previous year. These figures implied a 10% growth in net income from $3.1 billion to $3.4 billion. Summarily, the key financial ratios for the year indicated a 2.8% return on average assets, a 22% return on average equity, an 18.1% capital adequacy ratio and a 3.1% none performing loans ratio (Garanti 2010).
Social Responsibility
The bank gives priority to gainful and sustainable growth strategies for the long haul, by designing services that add value to the economy and society. This is anchored on the belief that the firms corporate mission is not limited to banking exclusively. Consequently, the bank avails continued support for educational, artistic, cultural, athletic and environmental segments of society. As a result, the bank perks up and executes national and international projects that enhance societal and individual visions hence create value through its corporate culture (Garanti 2010).
Management Approach and Performance Indicators
Garanti endeavors to enforce proper data collection, monitoring and reporting parameters with the aim of producing reporting material that satisfies internationally recognized processes. This enables the management and other stakeholders to benchmark actions against recognized international practices and provides a scaffold for improvement. As a result, several sectors have been placed under scrutiny, with prominence being given to the performance of emissions (Garanti 2010).
The bank strives to reduce direct carbon emissions by focusing on energy efficient operations. They are considered from internal use in the office and transportation vessels. It is noteworthy that the firm produces substantial amounts of emission; hence, the need for pronounced mitigation measures to contain the situation. Foremost, the bank has initiated low interest loan packages for persons interested in purchasing hybrid vehicles.
The firm has also shifted focus to energy efficient operations, by ensuring optimized consumption in buildings. It has also commenced the purchase of energy efficient IT and office equipment, in addition, to enforcing behavioral change and reduced business travel.
Alinma bank is one of the leading organizations in the finance industry and has been operational in Saudi Arabia since 2006. Alinma is known for providing a wide range of Shariah-compliant retail and corporate banking and investment services to many people. Nonetheless, the company faces competition in the industry, with Bank Albilad, Al Rajhi, and Riyad banks being its main competitors. Therefore, this report will involve an industry analysis where various factors that can impact Alinma banks performance will be examined.
Analysis and Prediction of Industry Profitability
An industrys profitability can be determined by various aspects such as demand for products and services, cost of production, competition, and the general economy. In this case, one can examine competition in the sector to determine whether the organization has high chances of gaining profits. Typically, competition in business is factual in all industries and unavoidable. However, the company can make profits using various strategies such as advertisement and improving its services. The demand for the services is another essential factor that shows the industry is profitable. Many people in Saudi Arabia acquire money from the sale of petroleum products. The presence of many investors in the country shows that the demand for financial services is high. Globalization has also enabled many people to engage in Foreign Direct Investment (FDI). Thus, many people desire to invest in Saudi Arabia, mainly in the petroleum sector, which increases the demand for corporate banking and investment services.
Porters Five Forces Framework
Level of Industry Profitability Based on the Porters Five Forces Framework
Porters five forces have been used to determine the level of profitability since the model helps identify competitive rivals, potential new entrants, and substitutes that can limit a companys output. High, intermediate, and low ranks of productivity are attained using Porters five forces approach. In this case, one can argue that Alinmas finance industrys viability level is intermediate since factors such as competitive rivals and availability of substitutes can limit efficiency in the sector. For example, many people may opt to invest in micro-finance, which offers discounts and low-interest rates. Competition is also experienced in the industry since Saudi Arabia has many banks that offer similar finance and investment services. Consequently, clients have different substitutes, which limits the profitability of the industry. However, companies with a strong brand name, such as Alinma, have attracted many customers in many areas.
Implications for Strategy
One of the implications of the strategy is that it can lead to increased competition. In this case, organizations can identify their weaknesses and develop approaches to improve their performance. For instance, firms can focus on marketing plans such as using social media marketing to increase their competitive advantage. Industry analysis is also essential since it helps corporations gain insights about competitors and seize other opportunities to enhance productivity. Industry exploration has been used as a form of market assessment to help organizations focus demand. In this case, the strategy can help companies predict the need for different industry services, leading to an increased number of new entrants. The power exerted by the buyer is a significant factor that can be determined using the industry analysis approach. Managers focus on the customers feedback to determine whether the services are appealing or can lead to clients seeking other substitutes. Therefore, the strategy is vital as it can help businesses develop plans to increase their output and expand the market share.
Strategies that Rival Companies can adopt to Reduce Competitive Pressure and Improve Industry Profitability
Although competition in business is inevitable, some ways can be developed to limit competitive pressure. One of the strategies involves targeting new customers, which can increase the demand for particular services. Competition is mainly high when the supply exceeds the demand. Thus, identifying new customers can be essential since the industrys need for different services will be increased. Another approach rival companies can exercise is the signaling tactic, which involves communication to influence a competitors decision (Grant, 2019). For instance, businesses can use the approach to ensure that reasonable charges and exercised to limit competition. Developing a marketing plan is another essential aspect that can help rival corporations reduce the industrys competitive pressure. Marketing helps companies attract more clients and increase the demand for the products and services. For instance, advertising is one of the marketing approaches that companies use to attract more consumers. Therefore, the organizations can use such strategies to improve industry profitability and limit competitive stress.
Recommended Strategy for the Company to Improve its Competitiveness and Earnings
The strategy I can recommend Alnima Bank to exercise to enhance its production is marketing. The company can market its services in various regions to ensure that many people know its services. Marketing can involve using the media platforms, where commercials can be used to advertise the organization. Many people are also using social media platforms to market their products (Tafesse & Wien, 2018). Thus, I would recommend that the corporation use this approach to advertise its services and encourage individuals to join the organization. Marketing may also entail analyzing customer feedback to determine what the consumers want and how to meet their demands. Typically, customer satisfaction is one of the ways that organizations increase their earnings. Additionally, consumers are attracted by companies that focus not only on improving their profits but also on meeting customer demands. Consequently, interacting with consumers during the marketing and learning about their needs can help the organization design ways to meet their expectations and increase competitiveness.
Alinmas Key Success Factors (KSFs)
Alinma has various KSFs that can be analyzed as they can determine its productivity. One of the organizations KSFs is its finances, whereby the company has different assets that enable it to provide various investment services to its customers. The business is also in one of the industries requiring huge funds since some of its services involve offering loans. Thus, having finances as one of the KSFs has enabled Alinma to meet customer demands and retain its competitiveness. Staff is another KSF of Alinma since the company has focused on ensuring that it acquires skilled employees. The workers have been encouraged to focus on excellent communication skills to interact with customers and inform them about the companys services. Training is also exercised in the organization to ensure that employees gain customer service skills. Marketing is another KSF of Alinma, where the organization has focused on improving customer relations. Responsiveness is also encouraged in marketing to help the company learn what the customers feel about its services. Therefore, marketing as a KSF has enabled the company to attract clients from different regions.
Focusing on who the customers are and what they need is another fundamental approach that can improve a businesss performance. One can analyze Alinmas customers to determine what they want and how to meet their needs. The analysis shows that the organization has investors as its main customers. Workers in different organizations are also some customers since they use the company for their banking services. Additionally, some organizations pay their customers through Alinma bank. Other companies are also customers since they conduct businesses to business transactions with Alinma bank. The demands of the customers mainly involve acquiring better investment and financial services. For instance, some of the clients are people who borrow loans from the bank and prefer fair interest rates. Another issue that customers want from the organization involves easy access to banking services. Consequently, the organization has implemented modern technology to enable clients to access their accounts through mobile apps (Mimoun, 2019). Therefore, focusing on the companys customers and their needs can help the organization develop more competitive strategies.
Alinma faces competition from different banks in the country. Nonetheless, the organization has ensured that it survives rivalry through marketing its services, focusing on customer demands, and encouraging innovation (Mimoun, 2019). Marketing has been exercised by the bank where it has advertised its services on different radio and TV channels. The organization has also used journals and magazines to promote its services. Focusing on customer demand has enabled the company to develop ways of meeting their needs. For instance, the company has introduced discounts in various services such as loans, which has attracted many clients and helped the company survive the competition. Novelty has been of great significance in the organization since it has helped the company attract many customers. For example, the use of mobile apps to access funds from the bank has attracted many customers.
The KSFs of organizations can change over time, whereby customer demands mainly influence them. Therefore, the KSFs of Alinma bank have changed over time due to changes in customer demands. The increased number of banks has also led to clients changing their needs since they have many substitutes. Innovation is another aspect that can impact the KSFs of an organization. In this case, inventions have changed the KSFs of Alinma since many customers have shifted their focus on organizations that encourage creativity and focus on modern technology. The economy is another factor that can influence the performance of a business. Thus, the changes in economic developments have altered the KSFs of Alimna since customer needs shift based on the countrys economic trends.
Conclusion
Industry analysis is an essential aspect that can help organizations design ways of improving their performance. Companies can use the survey to determine customer demands and develop strategies to meet consumer needs. Competition is also analyzed using the industry analysis approach and can help businesses focus on remaining competitive. For instance, Alinma bank can use the analysis to design systems to become more competitive. Porters five forces is also an essential tool in business since it allows organizations to examine different aspects that impact their productivity. For instance, focusing on threats such as new entrants and competitors helps an organization design new ways to remain competitive. Marketing is also encouraged in Porters five forces since it is one of the practices that organizations can use to attract new customers. In essence, industry analysis is vital for organizations as it enables them to increase their productivity.
References
Grant, R.M. (2019). Contemporary strategy analysis. 10th ed. John Wiley & Sons Ltd.
Tafesse, W., & Wien, A. (2018). Implementing social media marketing strategically: An empirical assessment. Journal of Marketing Management, 34(9-10), 732-749. Web.
This presentation is about the effects of online banking on Dubai International Bank (DIB). The financial institution acts as a case study for understanding the impact of digitisation on Islamic banking. The investigation was premised on the lack of adequate information regarding the effects of e-banking on DIBs service quality, customer satisfaction standards, employee workload and operational efficiency. Data was obtained from secondary and primary research. Primary information was generated by interviewing six employees of DTB, while secondary data was gathered from a review of credible published data.
What has Caused the Problem?
Growth of e-banking.
Development of new financial products.
Changing customer preferences.
Technological advancements.
The lack of proper understanding regarding the effects of e-banking on DIB operations is caused by the rapid rate of technological advancement in Islamic banking and the larger global banking sector. These changes have led to the growth of the online banking platform and the development of new financial products. For example, DIB has developed t-banking (telephone banking), e-banking (electronic banking) and m-banking (mobile banking) from this trend. Lastly, changing customer preferences has contributed to the failure to understand the impact of the digital change because DIBs clients are demanding better quality services in the midst of the change process.
How to Fix the Problem
Sensitisation about benefits of e-banking.
Increase awareness about digital banking.
Improve user interface.
From our investigation, we found out that Argyris maturity theory, Lewins change model, Scheins management theory and the technology acceptance model were pivotal to our understanding of change management at DIB. The technology acceptance model highlighted the need to make the change user-friendly; Scheins management model demonstrated the need for supporting the change through a culture shift; Argyris maturity theory emphasised the need to balance management-employee relationships and Lewins change model highlighted the need to understand the lifecycle of the change process. Based on these theoretical reviews, we deduced that there is a need for DIB to sensitise customers about the benefits of e-banking to improve their overall client experience because digitisation enhances customer satisfaction. We also established that the change (digitisation) had a positive impact on the banks service quality, efficiency and employee performance. Formulating a campaign to increase clients awareness about digital banking to reach the maximum number of users and constantly improving the user interface to enhance customer experience would further enhance the companys productivity by improving the reliability of the e-banking platform.
Interview Transcript (Qns 1&2)
Qn 1. How Does Digital Banking Affect The Quality Of Services At DIB?
Respondent 1: Digital banking has had a positive effect on the quality of services provided at the bank because by reducing the time and effort taken to process bank transactions.
Respondent 2: Digital banking has improved the quality of services offered by the bank through a reduction in human errors.
Respondent 3: Digital banking has improved the efficiency of processing bank transactions.
Respondent 4: I should say it has brought time and energy savings but these benefits have been made possible through the development of a good user interface.
Respondent 5: Digital Banking has helped us to develop new products, service market opportunities and support management processes, such as planning, controlling, and co-ordination.
Respondent 6: It has reduced delays, increased the efficiency of processing transactions and aligned our digitisation strategy with national goals.
Qn 2. How Has Digital Banking Affected the Efficiency of DIBs Operations?
Respondent 1: Digital banking has helped to provide indirect services to customers, such as updating personal documents, with significant gains in time.
Respondent 2: It has helped save time by reducing the number of customers who physically visit the bank.
Respondent 3: Digital banking has helped to improve our speed of information exchange, thereby increasing time and cost savings.
Respondent 4: Although some services need the presence of the customer at the branch, digital banking has created significant gains in time and energy savings.
Respondent 5: e-Banking has helped to improve the efficiencies of cost management by reducing the need for data-to-day processing.
Respondent 6: Digital banking has lowered the turnaround time for processing transactions via automation and paperless banking.
Interview Transcript (Qn 3)
Qn 3. How Has Digital Banking Influenced Customer Satisfaction At DIB?
Respondent 1: By digitizing some of our services, we have seen an increase in customer satisfaction, which has also resulted in improved levels of customer loyalty.
Respondent 2: Customer satisfaction levels increased when services and transactions become easier for most customers to complete through digital banking.
Respondent 3: So&.I believe that when digital banking is fast, friendly, and easy to use, it helps most of our consumers to complete their daily or monthly tasks Respondent 4: Recently, I had a discussion with our marketing team and they said customer satisfaction levels have recently improved because of an increased trust in online banking services.
Respondent 5: Increased awareness about electronic banking has made some clients comfortable about completing their transactions away from the bank.
Respondent 6: Since customers do not have to go through the hassle of visiting the branch, they are more satisfied with our services.
Interview Transcript (Qn 4)
Qn 4. To What Extent Does Digital Banking Reduce Employees Pressures?
Respondent 1: digitisation has helped ease the daily work of bank employees.
Respondent 2: The pressure of digitally completing tasks has been less than that of dealing with customers physically. So, employees are enjoying.
Respondent 3: Since many tasks can be done without having to deal with bank employees most of them have had time to focus on other important tasks Respondent 4: Online banking has helped both customers and employees to reduce the pressure of work but within certain rules and constraints.
Respondent 5: We recently did a study that involved 200 customers and 25 employees regarding the relationship between the two parties and it was mentioned that digital banking reduced the pressure on employee work.
Respondent 6: Employees have experienced a reduced amount of pressure and better control of work through digital banking.
The Bank of Toroda is a financial institution that provides various banking services such as :
Receiving and issuing of deposits,
Microfinance services,
Loans with lower rates.
What is a Stakeholder?
Freeman (2004) defines stakeholders as groups that are significant for continuity and success of any institution.
Freeman (1984) describes stakeholders as any individual, or organization which can have an impact or experience an impact, due to the attainment of the institution objectives.
How does the Bank of Toroda Define a Stakeholder?
Stakeholders are persons, organizations and groups that have to be considered by managers, directors as well as front office workers.
Stakeholders may influence the activities of a bank.
Stakeholders may have an impact or experience an impact, due to the attainment of the organization objectives.
Stakeholders are involved in formulating the banks strategic directions.
Identify Stakeholders at the Bank of Toroda and what makes them Stakeholders at the Bank
The Employee
Employees at the Bank of Toroda play a significant role in ensuring that the organization attains its long term goals through enhancing performance in the organization.
Employees must be involved in formulating the organization strategic direction, since the role of executing strategies becomes entrusted to the employees.
Employees have direct contact with customers, and thus, they can easily identify customers needs.
Unless the employees conduct their roles adeptly, the bank cannot obtain its profit and revenue potential.
The Supplier
Suppliers at the Bank of Toroda obtain complete integration into the strategic planning process.
Suppliers are significant in this organization as they create a customer relationship which is extremely beneficial.
The ability of the bank to provide for services ordered by customers on time and create quality products depends on the competence of suppliers and service providers.
Another role of service provider entails introducing new solutions and systems to the bank.
Suppliers can make the bank incur reduced cost while offering more efficient services, which boosts its profit and revenues.
The Customers
Customers are significant stakeholders at the Bank of Toroda because they promote the reputation of the bank externally.
At the Bank of Toroda, we recognize that the core function of the company is to offer services and products that cater for the needs of the target customers and ensure that they gain from this product and services a significant way.
We also recognize that the position of customers is crucial to the success and survival of this institution (Philips, 2003).
At the Bank of Toroda, we use customer feedback to enhance product and services offering and new solution depending on customer requirement and desires.
The Government
The government is a key stakeholder at Bank of Toroda because of its regulatory role through its various bodies.
The government, through the Central Bank, issues the bank with relevant certificates, which authorizes us to carry out diverse business activities.
The Central Bank has the mandate to oversee regular banking activities. Further, the government comes in handy using its taxation authorities, which collects taxes from all business organizations.
Local Communities and Societies
At the Bank of Toroda, we recognize the function of the local societies as stakeholders.
We ensure that the bank obtains the value from community members through helping these members to appreciate the benefit that the bank can deliver to their society.
We recognize communities as stakeholders since we source the workforce from these communities.
We know that community members, as well as media agencies, usually keep a close watch at us, in order to ensure that we are sensitive to the environment.
Business Communication with Stakeholders
At the Bank of Toroda, we follow these steps to see that efficient communication occurs:
Identifying Stakeholders
Any individual or group that interacts with the bank directly or indirectly.
Most common individuals and groups include employees, customers, suppliers, the government and local communities.
We assess the significance of every stakeholder group ahead of formulating the communication program, in order to identify the most proficient ways of reaching them appropriately.
Planning Objectives of Communication
Ahead of structuring a messaging campaign, we clarify the rationale at the back of the communication.
The communication plan usually depends on the ultimate goal of communication.
Clarifying the rationale behind communication at the bank enables us to come up with the most appropriate ways of communicating to the stakeholders.
Constructing Messages
We consider both the target audience and goals of communication.
We ensure that communication considers the concerns of every group.
Communication Design
The design to be used in communication depends on the target audience, and the goals of communication. We normally use:
Two way communications such as telephone contact, when the objective of communication is certain.
One way communication when we want to create awareness about products (such as newspapers, television, radio and advertisements).
Obtaining Feedback from Stakeholders
We conduct surveys following a critical advertisement in order to establish whether stakeholders have received the message and acted in accordance to the ultimate goal of the communication.
We carry out such surveys through emails, telephone and the customer review at the banks website.
Corporate Social Responsibility at the Bank of Toroda
The Bank of Toroda has focused on ensuring that young people get the best education possible in the world. through:
Establishing a scholarship program called Flying Eagles.
The program aims to provide 20, 000 secondary school scholarships by 2017.
Other supporters of this program include USAID, UKAid and KFW.
The program has benefited over 4200 students.
Establishing a university scholarship program.
The program pushes the best boy and girl in every province to the next level.
Offer graduate jobs.
Provides rigorous internship and leadership development program for top-achieving Australian students.
Established a program on entrepreneurship.
Aim: to see one million Australians receive 13 weeks of financial literacy training for free.
A new mentorship program.
Aim: to offer training and mentorship to small and medium sized businesses for one year.
Other Areas of Social Corporate Responsibility
We comply with all state and local regulations.
We comply with environmental regulations regarding noise pollution and general protection of the environment.
We provide for the needs of the society by offering banking services at affordable prices.
All activities of the bank become implemented in a manner that is regular with expectations of communal mores and ethical principles.
Social Issues Facing the Bank
Managing waste
Last month we faced a lot of criticism from the media and environmental bodies because of how we dispose paper waste.
Robbery after customers withdraw money from the bank
Most customers, despite having security systems at the bank, report cases of robbery immediately after they leave the bank.
Valuable Solutions
Efforts to train aged customers on using computerized systems are ongoing.
Security systems have been deployed to escort persons who withdraw large sums.
References
Freeman, R.E. (1984). Strategic management: A stakeholder Approach. Boston,MA: Pitman.
Freeman, R.E. (2004). A stakeholder theory of modern corporations. London, England: Sage.
Philips, R. (2003). Stakeholder theory and organizational ethics. London, Englan: Berrett-Koehler Publishers.
The banking system is currently in need of urgent reforms after the crisis. The reforms in banking regulation are largely caused by the need for market discipline of banking organizations. It is necessary outline the main points that will change the banking system unprecedentedly.
One of the foremost changes is leveled up costs within the banking system in order to meet new regulations. Many banks will have no chance to cross subsidise operations and, so, they will hold up a firewall between investment and retail banking operations. This all will lead them to increase the costs. Furthermore, the increasing costs of the banking altering systems will have their impact on the 10% maintenance by banks as a profit reserve. The latter in its turn will influence the profitability. In case the banks decide to keep their margins, there have to be efficiency savings made.
The banks can actually make those saving work via forming mutually beneficial relationships with outsourcing companies. The reason for such strategic partnership is reducing the costs for customer service and processing of payments which outsourcing companies are able to do. It is estimated that the outsourcers can cut the costs down to 20 percent. The banks usually use the opportunity to outsource their business partially to save their savings at least somehow. The World Retail Banking Report states that about 77% of retail banks are up to such a way out within the existing post crisis banking reformation.
Needless to say the banking debate is uncovering fiercely as per the necessity to make banks more competitive. The banking system is altering its stable traditions that emerged hundred years ago and today the course is headed towards market-like entity. The new banks are encouraged to emerge in the chain of British banks in order to offer a customer a variety of choice. However, 5 year old banks failed to enter the system because of the huge dominance of the existing banks. Nevertheless, there are those customers who seek for new opportunities and are willing to turn in their investments to the new banks. Unfortunately, the attempts to change banks are limited to 3% of adults; the rest chose to stick to the old good decision and their family banks. This pushes the banking system to be regulated differently in order to create a diverse banking environment for the customers. Moreover, if the new regulations implement separation of investment and retail activities, the new banks and the ones launched five years ago will most likely survive.
It is important not to forget the actual mean of attracting the customers the quality standards of service. Along with competitive market the quality services will give a new touch to the banking regulations and will free up the market. Just like the mobile companies launched MAC and PAC codes and created a competitive market, focusing on quality service, this will work for the banking industry, as well.
The superior quality service will drag much effort of the banks to reorganize their workforces and customer service. For example, the young people largely agree they would communicate with their bank through social networks. This and other regulations, like switching the accounts in seven days and not within unlimited time, will make the banks work on their internal staff reorganization to satisfy the diverse and modern demands of the customers.
The authors central assertion regarding corporate bias in investor-state dispute settlement mechanisms is that the World Bank Groups International Center for Settlement of Investment Disputes (ICSID) favors corporate and commercial interests. Thus, the group pursues the goals of government and non-governmental non-corporate actors. The institution does not consider non-commercial interests which include the environment and public well-being (Broad, 2015). The author purports that these biases strengthen one another making ICSID incapable of dealing with current and future challenges. The group protects investors rights to file a case against the government in instances where future profits are at risk. However, the institution is unjust and it violates human rights.
Evidence of Authors Assertion
The author presents evidence to reinforce her assertion by giving the Pan Rim Cayman LLC vs Republic of El Salvador case. The government of El Salvador was sued for refusing to grant the mining company an exploitation concession (Broad, 2015). Even though there are limited economic benefits in El Salvador, the state had numerous concerns about the environmental effects of gold mining. Some groups, such as local communities, the Catholic Church, and human rights advocates were against mining projects. Their argument referred mainly to the pollution of the Rio Lempa watershed by gold deposits (Broad, 2015). Pac Rim never received the concession for failing to fulfill all the requirements and sued El Salvadors government. ICSID allowed the case to proceed, despite Pac Rim failing to meet all the necessary conditions. This situation showed how the institution unjustly favors the organization.
My Opinion on the Authors Assertion
I agree with the authors assertion and the evidence she provides to support her argument. The institution judges the Pan Rim case neglecting the El Salvador governments views, local communities, and the Catholic Church. It does not prioritize the protection of the environment and human rights. Moreover, allowing the case to proceed despite Pac Rim not fulfilling the necessary gold mining conditions indicates the level of unfairness within the institution.
Reference
Broad, R. (2015). Corporate bias in the World Bank groups International Centre for settlement of investment Disputes: A case study of a global mining corporation suing El Salvador. University of Pennsylvania Journal of International Law, 36 (4), 851-874.
The banking sector in Creditpia consists of only three banks; Bank of Creditpia, Creditpia Commercial Bank and Framers Bank. Bank of Creditpia is in charge of 60% of the market share while the other two banks each control 20% of the banking business in Creditpia (Diane and Dann, p. 276). This is an oligopoly market because there are only a few sellers in the market. The banks belong to an organization; the Financial Service Institution of Creditpia (FSIC), which is a cartel. Because of this, they use restrictive practices in trade. These practices include colluding to work together and laying down strategies of market sharing, in an attempt to do a lot of profit and maintain their books. Through FSIC, these banks form a strong body which has the potential to develop and implement laws of the banking sector in Creditpia, while at the same time influencing the decisions of the government about banking. This has had the effect of locking out new players out of the market, and ensuring that any alien banks that try to get into the Creditpia market find it difficult to do so.
This market has a variety of clients who include farmers, employees and self-actualizing businessmen. It also has unemployed people, which makes it a realistic market in terms of customers. As a result, it has a wide range of customers basing on their financial position. Although the three banks in Creditpia are interdependent through FISC, there is still remarkably fierce competition between them. This is because of a large number of none-performing loans. The main source of profitability for banks is interest paid for loans. A high number of credit defaulters thus mean a reduction in the banks profitability. Creditpias banking sector is facing a tough financial time with many non-performing loans. Each bank hence has to fight hard to make sure that it does not fall out of the race due to losses. This situation in the banking business of Creditpia may lead to a perfectly competitive market. CEOs decision to lead the market is a critical step towards helping the banking sector in Creditpia to stabilize and continue making high profits.
CEO may hence be tempted to dominate the market so that he can help in reducing the number of non-performing loans, which will eventually lead to an increase in profitability of banks, in form the interest they shall have earned from repayments from loans. CEO may also be tempted to control the market in a bid to prevent new sellers from taking advantage of their situation and getting into the market. If the CEOs decide to control the market, they may do it in a manner that they all benefit from the scheme. First of all, they will set a target to reduce or eliminate the problem of non-performing loans in the banking sector (Diane and Dann, p. 298). This will take place through the setting up and implementation of new loan guidelines and rules, which will help combat this problem. This may include policies that will act as the main basis for qualifying loan-applicants. People who apply for loans will have to take a credit-history examination to validate their credit records. They may also decide to give loans to people who have substantial collateral only, hence avoid non-secure and highly risky loans.
Before banks give loans, they will first have to establish the sources of finance of the loan applicants. This is critical to investigate if the loan applicants have the capability to repay these loans. There are a number of public policies that may apply here, as described in the book. Banks in Creditpia will have to take the first step of controlling the amount of money in Creditpias economy through the use of interest control policies. Banks will impose high interest rates to loans so that only few people, who have the ability to repay, can take loans. High interest rates will help them to recover part the lost loans. At the same time, it will be reducing the amount of money flowing in the market as banks recover from a session of reduced profit. It is mandatory for people to pay their loans; non-performing loans result from loan defaulters and irregular payments of loans. To curb this situation a number of policies may be employed; banks should write letters to citizens who have non-performing loans and ask them to complete their loans; as per the loan agreement they made with the bank, when they were borrowing their loans. If this does not work, banks in Creditpia can then resort to other policies that are applicable. This includes possessing the material belongings of loan defaulters, which were acting as a security against loans. Banks should then auction these goods in a bid to recover some money to cover up for the loans. This is especially applicable for people who have small loans.
On the other hand, banks can sue those individuals or businesses who took jumbo loans and did not bother completing their loan repayment. In this case, the court will have to make a ruling which may include giving banks the power to posses the personal material and other goods belonging to loan defaulters, which can act as a cover up for their loans. Through the court, some people or businesses may also turn out to be bankrupt, which will mean a loss to banks. Banks in Creditpia should also learn to take insurance cover, so that they can avoid suffering heavy losses in such cases. The government of Creditpia has the responsibility of creating a favorable operational environment for businesses. The government should set in strongly to help make the banking business less risky, and help them to establish a capitalized base for their operation. This support will, however, depend on the health of individual banks and will target certain areas of operation in these banks. Direct financial support may be necessary depending on the severity of the situation of individual banks. However, direct regulatory forbearance may also set in to control the situation. The government, on the other hand, may buy preference shares from FISC to help fund the banking sector of Creditpia. Soundness of the banking sector of Creditpia can be promoted by the government through setting sensible standards, and taking the initiative to reinforce legal infrastructure.
Bank of Creditpia is likely to receive the greatest support from the government considering that it has the largest market share of the market. This is because a failure in the operations of this bank will have extremely heavy implications on the economy of Creditpia. However, it should also consider supporting Farmers Bank and Creditpia Commercial Bank, so that it can help revive the whole banking sector, while also avoiding future possibilities of a monopoly market, should the two banks collapse. This situation is wanting and should be addressed without delay and save the banking economy of Creditpia.
Works Cited
Diane Swanson and Dann Fisher. Business Ethics Concepts and Cases. New York: Cengage publishers. 2011. Print.
