Implication of Non-financial performances (NFP) to local banks context.

Implication of Non-financial performances (NFP) to local banks context. 

Financial performances

In our local context all most all of the banks are used to measure its performances based on financial data.  They are publishing & evaluating their performances & market share by figures published in the annual report. Financial performances are measured by Return of equity / return on assets / profitability / return of employee / none performing loans & advances etc.

Financial performances are very important & regulated by the banks & the relevant authorities according to the given guidelines but in most banks NFP is less important & not practiced on regular basis.

Non-financial performances

But in this research they focused to measure the non-financial performances to gain long term competitive advantage among the competitors. In many cases NFP are considered as short term but that should be taken as long term financials as those are play quite a big role to an organization.

Employee moral increases customer satisfaction, Improve service quality, customer retention & its leads to higher return on capital & finally that will maximize owner’s wealth in the end.

The most important factor is the customer satisfaction & there is a direct impact on improving financial performances. To improve customer satisfaction the most second important factor is the quality service. This will lead to retain more & more clients to the organization & they will buy more products & services from the organization. Not only that they will give free advertising via good word of mouth to the community where finally you reduce the advertising cost. Retaining an existing customer is more cost effective to the bank rather than canvassing a new customer.

Therefore nowadays banks are concerning to improve service quality & improve customer satisfactions. As the banks are engaged in service providing sector the service delivered is depending on the person to person which couldn’t be measured properly. There are arguments for accurate measurements of different performances & techniques. However each bank uses their own strategies to measure profit driven non-financial performances.

Methods of applying to local context

CEO’s of the banks should be taken this seriously & have to implement systems   by improving future cash flows of the company. This could be done through random interviews, Questioners, online surveys, placing self-rating devices at the counters, Telephone calls, creating job profiles for customer relationship managers to give extra attention to the clients, Private banking facility for prime clients, offer service to the clients door step, etc. However bank should retain/increase loyal clients with relationship @ a minimum cost to get the maximum benefit.

In addition according to the research if the bank can improve moral level of the staff that will lead to increase customer satisfaction & finally increase the return on capital. Employee morale is most essential element for achieving superior profits. Because such employees produces satisfied & loyal customers who creates long term positive financial performances.

In simple way CEO of a bank should think satisfied customer is the most important to the organization & to achieve this, quality service must establish & that service is delivered by employees of the company. (Also new technology & devices should introduced)

Opportunities to the bank

This will be very important to bank as discussed earlier coz with the improving service quality & customer satisfaction leads to retain customers, cross selling & up selling, reduces advertising cost, long term client knows the banks methods & how to work with bank staff (filling forms, what documents to submit, avoid busy times, who is the exact person to contact service vice etc) & it save the time. This will reduces customer waiting time & bank staff can give additional service by using this time. When you have enough time to serve existing clients as well as new clients they will compare the time saving & the speedy service of our bank, they will compare with other banks & recommend to others too. When the client is recommending our service to someone else that is the most power tool that we can use to grab new businesses & maximize the wealth & the market share.

Challenges / barriers of to improve Non-financial performances in a bank to improve profitability

Main challenge is the way how to measure employee morale, service quality, customer satisfaction level etc.. Financial data are quantitative & in a society figures are being monitored & those are mandatory requirements by the authorities. As the governing bodies are very keen on financial status of a bank & annual reports published. Banks are also stick to financial reporting but slightly neglecting non-financial benefits in a bank.

Also to measure this NFP ‘s current economic condition also should be considered, If the economy shows a downward trend automatically we are focusing only on financial performances rather than thinking of quality service, employee morale & customer satisfaction.

Also service is delivered by individual staff & that will depend on the situation, education & confidence level, mood & the schedule of the day of employee & the customer. That will vary day to day & unable to measure accurately.

Therefore bank needed to do surveys via calls, emails, online, establish self-rating devices where additional cost incurred to the organization. Banks CEO’s are very reluctant to spend additional money because that directly impact to financial performances immediately, Also improve employee morale some instant needed to give salary increments, allowances where hit P & L.

Above facts are the challenges to implication of NFP’s in local context.

Advantage or disadvantage to a bank by improving Non-financial performances

As we discussed above if we have strong morale staff in our organization they work hard & loyal to the bank. They will give the maximum output to retain clients as well as grab new clients. Maintain good relationships with clients & provide long standing loyal customer base to the organization. These clients are stick to the organization & buy products regularly, you can cross sell & up sell. Loyal clients are not running behind prices of the products as they love to have better quality service. They recommend your bank to others. When you have more loyal satisfied clients automatically your marker share will increase due to cross/up selling & most of them are not price sensate so in the long run this will directly impact to your financial performances positively. Also loyal staff never left the organization & your staff turnover ratio will reduced & bank doesn’t need to recruit new staff regularly & that recruitment & training cost also reduced.

Disadvantage observed is the immediate cost incurred to establish new devices, carry surveys, staff trainings to improve morale etc. To mitigate same bank could distribute the cost among 2 -3 years proportionately with lesser impact to the P & L.

Online Banking System (OBS)

 Online Banking System (OBS)

In this study to explain the TAM model by using my knowledge and experience on the usage of Online Banking System (OBS) of Commercial Bank of Ceylon PLC (CBC). OBS of CBC enables its users with a wide spread of facilities i.e. Opening of accounts, Opening of LC’s, Fund Transfer facilities within the bank and to other banks on real time basis, Bill payment facilities for CEB, Water Board, Mobitel, Dialog, Hutch,.., Other Bank Credit Cards, Balance inquiries, Rate Payments, School Admission/ Fees for selected reputed schools etc. It enables you to perform the transactions available on 24 hours a day, from anywhere any time tendering greater convenience. The present OBC in CBC was launched in 2000 and was upgraded in 2012.

With the rapid growth of internet and IT, Online banking has become an integrated e service provide by CBC when dealing with its customers. Through the operation of OBS, CBC has reduced its operational cost and widen its market to IT savvy millennials who are the future of the country. OBS enables customers more convenience as they have access to complete banking service even after office hours and without even dropping at a physical bank branch.

Year 2000 is a memorable year for all of us specially for the IT experts in dealing with the Y2K issue. It is the year that CBC initiated and launched its Online Banking System, precisely a decade after the US introduced the mobile banking concept in 1990’s. This is the era where Sri Lanka’s IT literacy started to pick up. At this stage the house hold computer ownership and IT Literacy was at very low level. Thus, a considerable effort was to made to convince the customers to start using the same. We all know operating such a platform is costly to the organization. But such technology was introduced to cater the future with the intention of implementing do it your self-concept and to streamline the operational cost. After automating the systems, one of the major challenges faced by the bank was to arrest the counter rush. When analyzed the majority of the customers were occupying the banking lobby to perform operational work which is time consuming and the bank had to deploy additional staff to cater the increasing requests of the customers with the increase in the customer base. With the launch of OBS in CBC, bank expected to arrest the counter rush by enabling customers to attend to its requirement without dropping in to the bank.

Anchors are the obstacles faced by the customers or staff in adopting to the new technology. Lower the anchors, higher the ‘Perceived Ease of Use”.

Reasons for Success and Failure - Challenges Faced in launching OBS

Sri Lanka is a small country with a population of 22.4 Million. According to Department of Census and Statistics, percentage of computer owned households is 23.5% by the end of Year 2017 (Highest-Western Province 37.1% and Lowest- Uva Province 9.7%) and the Computer Literacy rate was 28.3% by end of 2017. CBC has a customer base more over 3.0 Million and is expanding at a higher pace.

Most elderly population is not that tech savvy and their computer anxiety levels are low. The majority of the customers are falling under this category. Thus, it is challenging and time consuming to get this group of customers with the required technical knowledge to perform the transactions/ get the services done via OBS.

Though CBC’s initiative to launch OBS in 2000 was encouraged, it was a challenging task. Initially, it was made compulsory for the staff to use the OBS and submit its feedback on the system. There were promotional campaigns to customers to offer OBS free of charge and usage base weekly winners were rewarded to encourage usage.

Continuous Adjustments, Value Additions and Upgrades

In year 2000 technology was frequently changing and there were frequent updates to the operating systems. The bank has to update the OBS platform more frequently in line with each windows operating system upgrade to retain customer confidence in using the system.

Options available under the new technology i.e. OBS needs to be reviewed frequently as in case with the change in technology and consumer taste and you need to add frequent developments increasing the ease of use and to compete with the competitors.

Customer Experience

At the initial phase customers lack experience on the new technology. These communication gaps prevent users or make users hesitant to use a new technology. How ever with the gradual use of same and after getting failure, the users tend to use it more frequently as they will whisper that they knew that the new technology will be a success. At the initial stages bank deployed additional PCs in branch lobbies to assist and enable the users to get enroll and try the system with the guidance of trained branch staff. Satisfied customers spread the word of mouth favorably which attracted more and more users to try the same. With the evolvement of technology and wide availability of laptops, iPad, Tabs and smart phones, the frequency in using the facility increased.

Security and Customer Confidence

One of the key success factors in implementing OBS is building customer confidence on the new technology. A single deviation of information and failure of the platform at the initial stages were very costly. It is very difficult to convert a customer with a bad experience or system failure to use the system again. Also, the security aspect plays a vital role. We have to provide information security to safeguard the customers interest. Also, we have to take precautionary measures to prevent the hackers to enter in to your system. Convincing this to an average customer is very difficult with regard to as security breach or a information breach. Thus, the security on the system is utmost important.

Unavailability of Infrastructure facilities (Internet)

In early 2000 the availability of internet was scarce as the case of portable devices. Thus, the adaptation to the new technology was not at a greater pace. Internet is an essential infrastructure facility needed to use the OBS. Thus, unavailability or interruptions to the internet facility is affected the usage of the facility adversely.

Customer Convenience

With the OBS facility customers saved time they spend on traveling to a physical bank branch to perform a transaction. All the fund transfers and inquiries done using the OBS facility was availed free of charge. Moreover, the end users can do its preferred transactions even after the branch is closed. With the Availability of CEFT transfer facility in CBC’s OBS, users can cow transfer funds to any bank, branch account within Sri Lanka on real time.

The above facts endorse ‘Perceived ease of use’ and ‘Perceived Usefulness’ of Commercial Bank’s Online Banking Service Facility, where the end users have adopted favorably in to enrollment of the facility.

Explanation of TAM Model referring to Past Experience

Explanation of TAM Model referring to Past Experience

In this study I am going to explain the TAM model by using my knowledge and experience on the usage of Online Banking System (OBS) of Commercial Bank of Ceylon PLC (CBC). OBS of CBC enables its users with a wide spread of facilities i.e. Opening of accounts, Opening of LC’s, Fund Transfer facilities within the bank and to other banks on real time basis, Bill payment facilities for CEB, Water Board, Mobitel, Dialog, Hutch,.., Other Bank Credit Cards, Balance inquiries, Rate Payments, School Admission/ Fees for selected reputed schools etc. It enables you to perform the transactions available on 24 hours a day, from anywhere any time tendering greater convenience. The present OBC in CBC was launched in 2000 and was upgraded in 2012.

With the rapid growth of internet and IT, Online banking has become an integrated e service provide by CBC when dealing with its customers. Through the operation of OBS, CBC has reduced its operational cost and widen its market to IT savvy millennials who are the future of the country. OBS enables customers more convenience as they have access to complete banking service even after office hours and without even dropping at a physical bank branch.

Year 2000 is a memorable year for all of us specially for the IT experts in dealing with the Y2K issue. It is the year that CBC initiated and launched its Online Banking System, precisely a decade after the US introduced the mobile banking concept in 1990’s. This is the era where Sri Lanka’s IT literacy started to pick up. At this stage the house hold computer ownership and IT Literacy was at very low level. Thus, a considerable effort was to made to convince the customers to start using the same. We all know operating such a platform is costly to the organization. But such technology was introduced to cater the future with the intention of implementing do it your self-concept and to streamline the operational cost. After automating the systems, one of the major challenges faced by the bank was to arrest the counter rush. When analyzed the majority of the customers were occupying the banking lobby to perform operational work which is time consuming and the bank had to deploy additional staff to cater the increasing requests of the customers with the increase in the customer base. With the launch of OBS in CBC, bank expected to arrest the counter rush by enabling customers to attend to its requirement without dropping in to the bank.

Anchors are the obstacles faced by the customers or staff in adopting to the new technology. Lower the anchors, higher the ‘Perceived Ease of Use”.

Reasons for Success and Failure - Challenges Faced in launching OBS

Sri Lanka is a small country with a population of 22.4 Million. According to Department of Census and Statistics, percentage of computer owned households is 23.5% by the end of Year 2017 (Highest-Western Province 37.1% and Lowest- Uva Province 9.7%) and the Computer Literacy rate was 28.3% by end of 2017. CBC has a customer base more over 3.0 Million and is expanding at a higher pace.

Most elderly population is not that tech savvy and their computer anxiety levels are low. The majority of the customers are falling under this category. Thus, it is challenging and time consuming to get this group of customers with the required technical knowledge to perform the transactions/ get the services done via OBS.

Though CBC’s initiative to launch OBS in 2000 was encouraged, it was a challenging task. Initially, it was made compulsory for the staff to use the OBS and submit its feedback on the system. There were promotional campaigns to customers to offer OBS free of charge and usage base weekly winners were rewarded to encourage usage.

Continuous Adjustments, Value Additions and Upgrades

In year 2000 technology was frequently changing and there were frequent updates to the operating systems. The bank has to update the OBS platform more frequently in line with each windows operating system upgrade to retain customer confidence in using the system.

Options available under the new technology i.e. OBS needs to be reviewed frequently as in case with the change in technology and consumer taste and you need to add frequent developments increasing the ease of use and to compete with the competitors.

Customer Experience

At the initial phase customers lack experience on the new technology. These communication gaps prevent users or make users hesitant to use a new technology. How ever with the gradual use of same and after getting failure, the users tend to use it more frequently as they will whisper that they knew that the new technology will be a success. At the initial stages bank deployed additional PCs in branch lobbies to assist and enable the users to get enroll and try the system with the guidance of trained branch staff. Satisfied customers spread the word of mouth favorably which attracted more and more users to try the same. With the evolvement of technology and wide availability of laptops, iPad, Tabs and smart phones, the frequency in using the facility increased.

Security and Customer Confidence

One of the key success factors in implementing OBS is building customer confidence on the new technology. A single deviation of information and failure of the platform at the initial stages were very costly. It is very difficult to convert a customer with a bad experience or system failure to use the system again. Also, the security aspect plays a vital role. We have to provide information security to safeguard the customers interest. Also, we have to take precautionary measures to prevent the hackers to enter in to your system. Convincing this to an average customer is very difficult with regard to as security breach or a information breach. Thus, the security on the system is utmost important.

Unavailability of Infrastructure facilities (Internet)

In early 2000 the availability of internet was scarce as the case of portable devices. Thus, the adaptation to the new technology was not at a greater pace. Internet is an essential infrastructure facility needed to use the OBS. Thus, unavailability or interruptions to the internet facility is affected the usage of the facility adversely.

Customer Convenience

With the OBS facility customers saved time they spend on travelling to a physical bank branch to perform a transaction. All the fund transfers and inquiries done using the OBS facility was availed free of charge. Moreover, the end users can do its preferred transactions even after the branch is closed. With the Availability of CEFT transfer facility in CBC’s OBS, users can cow transfer funds to any bank, branch account within Sri Lanka on real time.

The above facts endorse ‘Perceived ease of use’ and ‘Perceived Usefulness’ of Commercial Bank’s Online Banking Service Facility, where the end users have adopted favorably in to enrolment of the facility.