google.com, pub-5012522416583791, DIRECT, f08c47fec0942fa0 google.com, pub-5012522416583791, DIRECT, f08c47fec0942fa0 Colombo Stock Market Financial Research google.com, pub-5012522416583791, DIRECT, f08c47fec0942fa0
google.com, pub-5012522416583791, DIRECT, f08c47fec0942fa0

Wednesday, November 14, 2018

Self Banking Units (SBU)


Self Banking Units (SBU)

People’s Bank introduced Self Banking Units (SBU) along with Digital Banking in place of traditional scenario of hybrid operation for customers, operate their respective accounts with the Bank by present themselves to a Branch counters to open, deposits, fund transfers, or getting others services such as applying for internet banking, SMS banking, debit cards, cheque books etc... Where, they used to stand in front of ATM only for withdrawing cash. When this setup introduced in late 2016 several other competitive banks had already in the business of Cash Deposit Machines (CDM). However, it was experienced that they too never been able to attract our customers base unless for adhoc deposit at request where beneficiary party maintain their accounts with these competitive banks. Even though it is depositing cash or use of CDM for depositing cash on the surface, real technological part had happened in the background was Electronic Fund Transfers(EFT).

Therefore, in this paper it is intended to discuss adoption to EFT rather than adoption to SBU, CDM, or Digital Banking because potential and prime  requirement of the customer was remote depositing or transfer of bulk money to third party or their own accounts at a late time of the day.  However, in addition to banking competitors, other potential set competitors emerging in the market for Remote Deposition (RD), not only in Sri Lanka but also in entire globe, which could have been identified as potential threat to entire banking sector. They were none other than Telecom Operators (Telcos) who are known threat in European Union, Africa and Eastern Asia.

Here in Sri Lanka in the given time only two Telcos were operating and potentially gained some stake of the market, products namely were EzCash and mCash where they have been able to compete with us who boasted for biggest network of customer touch points.   Biggest advantage People’s Bank entertain at that time was these service points operated all over the island even during the time of war and the amount of customers counted on us for their fund transferring requirements not only by the means of ability to transfer them into any corner of the country but also reliability and swift transfers virtually happen within the same day. However, the biggest disadvantage it of the scenario was the operating time, generally bank had never gone beyond 8:00PM in the evening which had identified as the maximum. Since it was located in the city of Borella, which have been famous for huge traffic jams, customer convenience were very low for approaching the location. Again it provided the facility to limited number of customers in neighboring cities. With the presence of Telcos like EzyCash or mCash they too competed with extended hours of operation and scattered serving points they had were comparatively larger than entire banking sector. Where they transfer funds from one mobile to another without having a bank account their EFT was preferred mostly by lower class earners who only concerned about their requirement rather than the way of operation.

How People’s Bank attracted customers for EFT

1.      By the attraction of the Self Banking Units: Even though few other banks operated SBUs prior to us, they did not focus on attraction where many people fallen love with first impression. These colourful units were well attracted by almost all sectors of the customers even though it had great criticism for cheaper look which said to be not suitable for a bank mostly by our own staff and unions. But User Experience (UX) shown it was otherwise. The
size, number of machines at a point (2 ATMs, 1-2 CDMs, 1 Kiosk).  In parallel, bank had been changed the corporate colours and its logo. This was a radical change where most of our internal parties started criticizing. However, management did not allow any public criticism to staff.  After gone through Research Papers on Technology Acceptance Model(TAM), it seems easiest way attracting customers  these developments would be introduction of  better user interface, vibrant euphoria at SBUs with our experience had played a major role. .

2.      Effective Marketing efforts in Parallel:  If bank let word of the mouth or attracting customers who travelled or walked by these few units, it would not work where our competitors at that point had more SBUs than ours will easily beat us. When these SBUs were in the media, customers had been started to ask about when they could use these facility. In videos usually use of the new technologies show very much easier than real. Therefore, user’s enthusiasm towards this has enhanced even before they really used them. Actually it did some physiological part changing the mindset of the customers. 

3.      Deliberately Changing the Way of Operating: With introduction of SBUs all customers waited at the counters for deposits were diverted to these SBUs where well trained staff was at their help. Initially bank never let any customers operating CDMs where with different level of cognitive ability it would result big queues at SBUs where same would play a negative effect attracting potential customers. At counters deposit slips were not available unless customers with special needs insisted them, they were hidden behind. Since customers getting their service done faster at their second or third visit they themselves involved in the operation at will after experiencing the easiness of operation. After 2-3 weeks customers for deposits never preferred counter operations ahead of CDMs. Pilot CDM bank introduced needed the support of staff few months. With introduction more units all over now UX have been increased and they no more need help for CDMs. Towards  the rapid UX our competitors who operated CDMs also attributed where hardware used are same and provided by same vendors while only User Interface was the different. After introduction 100 units, it was ensured no more helped needed for 90% of the customers while some foreign (other bank customers) only insisted for support. However, still one agent there for support of the customer.

4.      Bundle of Facilities Kiosk at SBUs loaded:  Paying utility bills, Internet Banking Facility, Phone reloads are few widely used facilities out of many to name. Specialty here is customers with a card can directly transfer funds or pay for services they wish using this touch enable unit.  Kiosk even reduced the queue at the ATMs as it could use for balance inquiries. Bank had been able to reduce losing customers for Telcos by providing reloads to their mobiles where even if they used their facility to transfer funds, make sure customer would still maintain their account with us as they could transfer their money to mobile.


5.      Involvement of Specialized experts in different Areas: From beginning to end of introducing these SBUs, staff involvement are only at supervision and testing levels. Bank had identified experts in areas like interior/exterior designs, vendor for ATM, CDM, Kiosk unit’s hardware, software & interfaces, new background operation system like switching, etc make sure lesser number of failures. In short number of parties involved into these project were divided into many areas and let them handle their part effectively. Costs involved into these developments were not considered much.

6.      Effective Project Plan :  While one unit fully operated, few another locations were under construction, when they are near finish staff of the are trained at operating SBUs. When interior/exterior part is over, next teams (communications & commissioning of hardware) are in business. When these things happening at two three locations teams ended their parts are moving to next selected locations. Once the model is identified operations went very smooth way.  Frequent review meetings were held to make every location looks operated at the same level.

7.      Introduce Digital Banking along with SBUs : After SBUs have been able to gain trendsetters place at the market even though some pioneers were in the business, bank had introduced Digital Banking units coupled with SBUs. It would identify as an extensions to these units.

8.      Post implementation Reviews: After installation of every unit, all the parties involved either from technological involvement or operational involvement, got together and discussed what went wrong or right. Outcomes of these meetings were automatically become inputs to next implementation. Therefore, after each step, it was ensured that experience of previous attempt was streamlined. Any ill efforts were addressed correctly.

 Conclusion

In this effort it would quite evident that ‘intention’ of the user had been changed in many possible ways. Either it was from TV commercial or support of well trained staff, user’s impression to use of technology had been changed. It has been discussed that it would play a major role Fishbein & Ajzen, 1975 in their paper about TRA. However, bank had effectively addressed it, even without knowing about it. It was an unintentional adoption of TAM. Davis (1989) discussed “The main purpose of TAM is to present an approach to study the effects of external variables towards people’s internal beliefs, attitudes, and intentions. TAM proposes the perceived ease of use (PEOU) and perceived usefulness (PU) as the most important factors for explicating technology acceptance”. All points are discussed above had worked towards changing the attitude of the customer by changing their mindset in different approaches.

In this effort there were many External Variables either from negative perspective or positive perspective. However, they all contributed towards the success of the project. They are user experience and awareness of other banks,  Telcos involvement of the subject, where because of their radical approaches towards EFT, banks had to innovate new ways of approaching it. Therefore, it also contributed towards the success of the project. Other emerging technologies such as use of touch phone and applications like facebook also intangibly contributed towards TAM. For the success of those technologies countries pioneering approach of introduction 3G/4G also contributed. There were huge amount of criticism from staff and unions as well. It was experienced that with the success of user’s feedback of these technologies their grief had fade away merely. In fact now everyone has great enthusiasm about the project. Therefore, this project could be considered one of the best for use cases for TAM.

IT Expenditure/ Investment, Productivity, Competitive Advantage


IT Expenditure/ Investment, Productivity, Competitive Advantage & Bottom line performance

People’s bank has heavily investing in IT development during reason past in view of achieving higher productivity, gaining competitive advantages and to bubble with bottom line performances in the banking industry. Mainly increasing the productivity among the staff, to face the rival competitiveness successfully with inclusion of latest IT infrastructures in view of  achieving competitive  advantages and increasing  market share portfolio and finally to maximize its bottom line performances.
So far this journey was successful and the steps taken have given green light signal to further move forward. Bank didn’t try any labor reduction at first with this IT infusion but wanted the productivity level of the employees at a highest level. Further banking industry in Sri Lanka highly competitive and retaining the market share is not an easy task and meanwhile to gain growth need to increase the business volume, portfolio and market share to strengthen the bottom line performances.
IT investment has become vital elements in application of corporate strategies to enhance the shareholder value. In the banking industry, IT strategy and performance measurement are important factors in Balance Scorecard approach. Investment cost in IT is very high, it is time consuming too and has to face lot of hurdles to overcome the obstacles.
Balance scorecard concentrated Financial, Customer, Internal business and Innovation & learning perspective. People’ bank has successfully identifying the above factors well and address them by giving more weigh on those. Financial perspective is the base for all these developments and everything aligned to strengthen the bank profitability by the way of increasing customer base, business growth and market share. According to BASL-111 implementation by 2019/20 all the banks have to meet new capital adequacy structure. Our owner is Govt. and they not in a position to infuse fresh capital. Options available are privatization of few segments of the bank. Exg. Security, cash transport and selling shares at share market. To overcome bank need to increase profit at large level in 2018, 2019 and 2020.
 On the other way to  attract the core subject “customers” eye catching color system, Logo changing, entire banks physical evidence changing, and Vision /Mission statement changing  everything have been done simultaneously in  the bank without keeping any room to imitate by the competitors easily  and they have become shocked/surprised  after seeing the sudden massive level changes.
Internal business process also self banking units (SBU) bank wanted to utilize the staff for more business promotion activities to increase market share. Internally by centralizing some processes, focused the staff towards more on customer side from internal back office functioning. Unnecessary internal processes were changed and more weight given on business development area.
After introducing SBU, CDM and WAVE app bank without stopping at that point concentrated more on     Research and development (R&D) side too. Bank continuously introduces new facilities to customer. Exg. Express banking, which was paperless account opening system and does not need single paper documentation. While people’s wave solving lot of requirements of the customers, other side new features gradually added through the R & D.  Professionally qualified people from universities are hired for the R & D on pre and post basis of the new developments.
Though the financial cost was very high bank managed well and within one tear achieved the milestone target by establishing of 100 self-servicing units all over the Island. Not only invested, but also bank concentrated on innovation & learning perspective too continuously went on to introduced new banking features like Digitalize banking, Express banking, People’s Wave app and corporate customer package.
While engaging such a large project always there will be barriers and challenges.Accordingly this change   was taken Media, parliament and become politicians talkative topic at that time.  Special committee was appointed to inquire about the tender procedures. Internal pressure group- unions also become panic, whether it will become threat for employees and staff also worried about their future. However, the fear of them is cleared and all are functioning smoothly.
If we look into the advantages, banks image has been heavily popularized   with this rapid changes existing customer segments and non-customer segments are unbelievable at a point. This it development made the customers convenience to enjoy banking themselves at any time (CDM/ATM/KIOSK). Bank was able to use the extra employees created from the automation to use for marketing, business mobilization and business promotion activities in view of achieving the market share.
Though bank has successfully managed all the threats and challenges there are some disadvantages in the process. Bank was lacked in the pre evaluation process, it pave path for some early breakdowns. CDM machines are produced for sophisticated currencies and not like the currencies what used in our country. Due to that frequent cash jamming reported. Further all machines are on hired basis and huge rentals have been paid. Actually bank would have purchased the machines outright as why annual rental was enough for the cost of the machines.
Further, without any survey, SBUs are opened everywhere to meet the target. Here what we saw personal agenda was placed first. Exg. We have Galle Rd, Col-6, Col-4, Col-3 and Col-2 Bank would have avoided Col-4which didn’t have much transactions.  While we are developing digitalization banking business, we have to reduce the brick and motor systems.
Anyhow as per to BSC application, the perspectives are properly addressed   by the bank. Bank without limiting the BSC to performance appraisal, applied the BSC norms perfectly for strategic implementation in the bank.

Porters Five Forces Model application on my organization –People’s Bank.


Porters Five Forces Model application on my organization –People’s Bank.
World renowned marketing philosopher Michael Porter has introduced the “Porters Five Forces Model” in 1979 at Harvard Business School. It is well known framework for enhance competitiveness and to increase its competitive edge in highly competitive business environment. Porter identified the forces that influence competitive advantage in the market place. This model is vital tool for organizations to measure their position and identify factors which are needed development or changes.
My Bank is established in 1961 as a Govt. bank and successfully completed 57 years of journey. Banking industry in Sri Lanka is highly competitive and rapidly growing too. Banks are represented in the top business in the country. Here I’m going to apply the Porters five forces model to my bank and to find out how factors effected to success. Porters, five forces are Threats of new entrants, Bargaining Power of Customers/ Buyers, Bargaining Power of Suppliers, Threat of Substitute Products and Rivalry from Competitors within the Industry. There are several competitive strategies for the success of the five forces application. Those are, Cost leadership Differentiation, Innovation, Growth and Alliances.
1. Threat of new entrants
Our regulator (CBSL) has strengthened the easy entrance by imposing new capital requirements for establishing a bank from Rs.5Bn (Previous) to Rs.10Bn presently and further increased to Rs.20Bn year 2020 onwards. Meantime according to the BASEL 111 accord banks are compelled to increase the capital structure by 2019/20 to survive in the business. Due to high regulations, controls, monitoring and procedures starting a bank and surviving in heavily competitive industry is not possible. This industry is highly competitive in Sri Lanka due to high profitability. But with recent finance companies collapses entrance to banking business is very strict. More importantly a new comer cannot survive as banking density very high. In a small country SriLanka, which has around 15Mn bankable population there are 26 Licensed commercial banks,7 licensed specialized banks,43 licensed finance companies,65 registered finance leasing companies, 15 primary dealers, many more money brokers  and plenty of unauthorized money lenders are competing to grab those customers. But Govt.is already granted permission to Bank of China to open branch. Further Govt. wanted to establish an Import/Export bank and another SME bank. So little threat is also developing. But being Govt. bank we are in safe position with Govt. ownership, stability and trustworthiness banners. Further Govt. planning curtail no of small banks in the country via consolidation to create few large scale banks to mitigate unnecessary competition. Further PB have more than 865 branch/Service centre’s, around 13Mn customers, more than 500ATMs, around 110 SBUs and more than 12000 human capital strength  & any threats can be easily managed with 57 years of experience. Hence threat of new entrance is quiet low.

2. Bargaining Power of Customers/ Buyers
Customers are the live wire of the banks. Due to heavy competition prevailing in the banking industry, customers are well aware of banks, products, norms, procedure, rates/commission and other factors. Hence present days customers are always with bargaining characteristic. Specially corporate or large level customers are always demanding to get the maximum and they are utilizing the huge banking competition well for their betterment. They used to ask for higher rates for deposits and very lower rate for borrowings and used to demand time period for borrowings. In SriLanka switching cost is not high except to early settlement charges of loans. Except loyal customers others are always having relationship with other banks too. Some customers are mostly wanted better service and convenience in operations and if failed to deliver they move to others. Except to rural and small level customers it is difficult to handle large or corporate level customers presently. Due to this demanding, banking industry margins narrowing continuously from 7%/8% in the past to presently 2%/3% range. Our bank also facing this threat but our customer base is mixed category such as rural level small customers, Govt.& other sector employees, small scale traders/entrepreneurs, medium/SME customers ,Govt.instituions, co-operatives, corporations and corporate level customers etc…..Our bank has changed physical evidence, SBUs, CDMs, ATM/Kiosk, Wave app, Express banking likewise so many extra features are added to serve customers. Therefore the bargaining power is not very higher level and even demands are raised we under Govt.bank shelter mitigate those threats successfully.
3. Bargaining Power of Suppliers
Not like other businesses, banking concern suppliers are depositors, shareholders, other lenders, and vendors. Our bank is the largest in the country and well expanded. Our share holders are Govt., very little co-op and EPF. Majority is the depositors. No threats from Govt.,Co-op and EPF as shareholders but threats are from depositors and from vendors to some extent. EPF, ETF, Lotteries board (NLB), TRC and Armed forces are very large level depositors of our bank and they utilize Govt. label and demand for very high rates. Exg.EFF invests Billion rupees for 12.5% pa it is equal to lending rate of some scheme landings. Depositors are looking high return, less risk, stability and liquidity & the other side we go for low cost funds.
Other side our bank is depending on heavily on vendors and service providers. Ex. Our core banking IT system was from a Malaysian company and bank pushed to depend on them. They charging heavily for updations and those not done as it is and mostly they have to visit here. Also present banking businesses are totally depending on the telecommunication service providers and their demands also increasing. Specially to get done a breakdown from Dialog is huge task and never turn-up in time due to this our bank is moving from them to SLT.  Same as other service providers too lacking in their obligations we are depend on them. Meantime threat is under control from other stationary suppliers, advertising firms, CDM company, insurance and   logistic providers etc….
4. Threat of Substitute Products
This threat is gradually increasing in the banking industry. There are 141 legally registered bank/financial institutions; those are well spread all over the country. Many more unregistered Microfinance institutions, illegal money lenders, Poli mudalali, Telecommunication providers, Insurance companies, Western Union agents, Sub post offices. Pawn brokers, Money exchangers, Undiyal system and Welfare societies are catering the banking services. Ex. mCash-SLT, EzyCash-Dialog, western Union, Insurance guarantees-Insurance companies. Our bank is the pioneer in the pawning business and now it is done by everyone. All leasing companies started to give personal and mortgage loans, open savings & foreign currency accounts, Money exchangers are given authority sell currencies. Our pawning portfolio was decreased from Rs.220Bn to Rs.120Bn presently. This threat is not only for our bank for entire banking industry become high threat. Factoring for cheques and .PD cheque discounting facilities are only available facilities created by finance companies. Hence this kind fake products are becoming very famous in the market.
5. Rivalry for Competitors within the Industry
There are 26 licensed commercial banks, 7 licensed specialized banks, 43 licensed finance companies, 65 registered finance leasing companies, 15 primary dealers, many more money brokers and plenty of unauthorized money lenders are competing to grab the 22Mn population.  Sri Lankan bank industry is well developed and competition is rocketing in the market. Around 6800 bank branches and more than 1350 leasing /finance branches are competing and it is too high for small country like Sri Lanka. (Saurce-www.cbsl.lk and CBSL annual report 2018). All are trying to grab the little customer base. Our bank also facing numerous threats from banks and financial institutions and some products introduced by us are imitated by others and we have lost market share. Ex. Pawning, Children’s Accounts (Sisu Udana, Isuru Udana), Parinatha(Senior Citizen), Gurusetha Loan (teachers) This threat is going to increase more and more and banks are applying various strategies to gain competitive advantage. Our bank too introduce lot of strategies like Self banking units (SBU), Cash deposit Machines (CDM), Express banking, Peoples Wave app, Digitalized banking and  Extended banking hours etc…

https://kenngun.gumroad.com/l/bavlr Research Proposal for Emotional Influence of Neuromarketing on Consumer Brand Loyalty for Luxury Fashion

 https://kenngun.gumroad.com/l/bavlr The luxury fashion industry has long been synonymous with exclusivity, aspiration, and status. However,...