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This is the term report for my Business Systems course and this is the main reason for writing it. The purpose of the report was to carry out an analysis of ABN AMRO's Consumer Banking department. When I chose consumer banking as my topic there were certain problems that I faced while writing this report. Some of them are listed below:
It was very hard to choose a business organization because there aren't many organizations that have a full fledged and well-maintained consumer banking. Although it covers the largest number of customers of any bank.
Most of the banks were not willing to share information because they considered it to be confidential.
However there were certain positive facts that I learned from this report. I was able to analyze the whole consumer baking process by splitting it into small segments and that way I was able to understand the process in a more comprehensive manner.
I would recommend that whenever a research on a topic such as consumer banking then it is better to decide the targeted organization first. Secondly make sure that they are willing to provide all the necessary information. Otherwise drop that organization because it's of no use.
First, I would like to thank Almighty Allah who provided me with the ability and the skill to carry out this project.
Secondly I would like to thank Nabeel Ahmed in ABN AMRO. He provided me wityh all the information I asked for and has a hand full of credit to his name.
ABNÂ AMRO is a prominent international bank; its origin goes back to 1824. ABNÂ AMRO ranks 10th in Europe and 22nd in the world based on the international ratings, with over 3,400 branches in more than 60 countries, a staff of 110,000 employees and total assets of EUR 556 billion (as per end December 2002). ABNÂ AMRO is listed on several exchanges, including the Amsterdam, London and New York Stock Exchanges.
The goal of ABNÂ AMRO is to create value for its clients. Key in their relationship approach is a constant focus on the financial services that are according to the needs of their clients. It is through the professionalism and motivation of their global staff that they realize this value, resulting in maximum economic value for their shareholders.
They are active in three principal customer segments: Consumer & Commercial Clients, Wholesale Clients and Private Clients & Asset Management. The objective is to maximize the value of each of these businesses as well as the synergies between them. Excellence of service to our clients and leadership in our chosen markets are of supreme importance to our long-term success.
Three global Strategic Business Units (SBUs):
Consumer & Commercial Clients (C&CC)
This service is provided mainly to individuals and small to medium-sized enterprises requiring day-to-day banking. They serve approximately 15 million clients, mainly through their major presence in the three markets: the US Midwest, the Netherlands and Brazil. The Business Unit for New Growth Markets is also expanding its consumer and commercial operations in selected countries.
Private Clients & Asset Management (PCAM)
This service is provided to individuals and institutional investors. This SBU has Assets of EUR 150 billion and strong positions in several markets.
Wholesale Clients (WCS)
This service is mainly for major international corporations and institutions. It is one of the largest Europe-based wholesale banking business with around 10,000 clients, 20,000 staff and operations in over 40 countries.
DEPARTMENTS & HIERARCHY
ABN AMRO follows a functional structure in which the head of the organization is always the CEO (in this case it's the Country Representative) and the different departmental heads follow him. There are nine departments, which are illustrated below:
Trade and Finance
Trade and Finance, Marketing, Treasury, Human Resource, I.T and operations are considered to be supporting departments since they cater both Corporate Banking and Consumer Banking. These supporting departments are therefore included in the hierarchy of the respective departments.
The organization chart of ABN AMRO in Pakistan is given below:
Head of Consumer Banking
Head of Corporate Banking
Head of Marketing
Head of Trade Finance
Head of I.T
Head of Operations
Head of Treasury
Head of Human Resource
Head of Administration
ABN AMRO offers a variety of consumer banking services. It is considered to be their main area of focus. They believe in providing the best available services. However, before discussing the variety of products that they offer lets just discuss that what is consumer banking.
Consumer Banking basically deals with the day-to-day banking services that are offered to small investors and individuals as per their needs. There are a variety of products that the consumer-banking department offers which are listed below:
These products are mainly of three types:
Personal Installment Loans
Balance Transfer Facility
Cash Near Cash
Personal Installment Loans
These are short-term loans that are offered to individuals who satisfy ABN AMRO's eligibility criteria. They can borrow loans ranging from a minimum amount of Rs. 50,000 to a maximum amount of Rs. 500,000. They can choose their repayment period, which can be of 1, 2, 3, 4 or 5 years depending on their convenience.
These are long term loans offered to individuals who are looking for a new accommodation. These loans range from a minimum of Rs. 300,000 to a maximum of Rs. 5,000,000. This amount can be repaid over a period ranging from 3 years to 15 years.
Balance Transfer Facility
Probably the most dynamic product offered by any bank since the invention of plastic money. BTF is designed for people who have a good credit history on their respective credit cards for more than a year. The bank pays off the customer's credit cards bill, and gives the customer back his credit limit so that he is free to spend his card again. Since his credit card loan is transferred into his BTF account with the bank, he pays them what he has been paying on his credit card every month.
Cash Near Cash
It is another very innovative product. It is similar to personal installment loans but the payback scenario is different. When a customer avails this loan he has to provide an asset which is the worth the amount of loan he is availing. This loan is more secure from the bank's point of view because even if the customer runs away with the loan amount, there is always a chance for the bank to recover that loan amount from that collateral which was provided by the customer at the time of disbursement.
The deposit products refer to the different kinds of account facilities that are provided by the bank. These products are of four types:
Foreign Currency Account
Term Deposit Account
This type of account offers the facility of unlimited withdrawals (up to the extent of the balance in the customers account) while accruing profit on the depositor's account everyday. The depositor can have the profit paid to him monthly, quarterly, annually or bi-annually, as per his requirement.
This type of account offers the facility of unlimited withdrawals (up to the extent of the balance in the customers account). However there will be no tax deduction on the funds that the depositor chooses to keep in his account.
Foreign Currency Account
This account offers the depositor an option of opening Current, Savings and Term Deposit accounts in four different foreign currencies - US Dollar, Pound Sterling, Japanese Yen, and Euros. This entitles the depositor to avail the convenience of local currency accounts.
Term Deposit Account
The ABN AMRO Rupee Term Deposit offers the depositor the dual benefit of attractive returns with high liquidity and with options to take his profit monthly, quarterly, bi-annually, annually or at maturity.
The ABN AMRO Debit Card is an innovative, convenient and secure payment tool that gives a whole new meaning to spending. It completely eliminates the need to carry cash and make payments through it. It is slightly different from credit cards. In credit card the customer can pay up to his prescribed credit limit and he has to pay the amount he has spent back to the bank. In this facility, the depositor can now make instant and cash-less payments directly from his ABN AMRO Current or Savings Account.
DEPARTMENTS IN CONSUMER BANKING
As it was discussed earlier that Consumer Banking is a separate Strategic Business Unit (SBU) of ABN AMRO Bank. The department has its own very diverse set of operations, which makes it very difficult to understand. Therefore it is better to follow Consumer Banking in terms of its sub departments. There are mainly two departments in Consumer Banking which are illustrated below:
Front End Office
Back End Office
However the Back End Office department can be further divided into four sections:
As it was discussed earlier that there are certain sections, which cater both Consumer Banking and Corporate Banking. These sections are listed below:
Trade and Finance
OPERATIONS IN CONSUMER BANKING
Before discussing the different operations that are performed in the consumer banking department one thing must be made clear all the operations here usually start from the front end office. This is because when a customer comes up with either a request or a query and the department that receives him is the front-end office. In other words front-end office also serves the purpose of reception. The different departmental activities that are performed in consumer banking department are illustrated below:
When a customer comes up with either a request or a query he informs the Front End Office or the Reception about it. The Front End Office transfers the request to the Back End Office by directing the customer to the appropriate person responsible for that particular job in the back end office.
The back end office is the one that executes and receives the request forwarded by the front-end office. There are a number of operations that are performed in the back end office. Due to this reason the back end office is divided into sections. These sections are listed below:
This department takes care of all the credit operations that are carried out. The department keeps a proper record of all the customers who are availing their various products. It also carries out the investigation process of determining the profile of a customer. That is to ask other banks for that particular customer's payback record so that they can ensure that the customer does not have a bad credit history or even if he has his application will get disapproved and the loan will not be disbursed.
This department takes care of the recovery of outstanding amount from the defaulters. As it was discussed earlier that ABN-AMRO offers a variety of loan products and there are customers who avail the facility and do not pay it back. So the collection department deals with recovery of loans from such customers.
This department handles the transfer of accounts and payments, which can be from one place to another place, as well as the collection of utility bills. This account also receives payments from overseas countries and transfers it to the appropriate customer's account that is the receiver.
It is similar to Front End Office with the only difference being that this department takes the request of customers via phone and if possible executes it immediately or refers the customer to the appropriate person or department. For instance if a customer wants to pay utility bill he will call up ABN AMRO phone banking and ask them to deduct the amount mentioned in the bill from his account. The phone-banking department will ask the customer for his account number to check his account status and then deduct the appropriate amount from his account.
PRELAUNCH WORK PROCESS
Now that the departments of Consumer Banking have already been defined lastly it would be appropriate to discuss how they launch a product in the market. The step-by-step procedure of how a product is launched is given below.
A brain storming session is held in which all the senior members of they organization participate. They all come up with their own ideas so they present their ideas. These ideas are usually those, which the customers demand.
The upper hierarchy views all the ideas and selects the one, which it considers to be the best in terms on innovation.
The cost and feasibility analysis of the product is carried out to check whether the cost on the product fits in the budget or not.
The advertising strategies are planned that is how the product will be advertised on different media.
Then a test advertisement is carried in which they do not mention the name of the product and all they mention in it is that what the product has to offer. The reason for this test advertisement is that this way people will be more curious about the product. In order to check the response of the people they do mention their contact number in the advertisement.
The other purpose of this test advertisement is that they can judge
the response of the people about their product.
Lastly the proper advertisement is carried out on different newspapers so that people can know the organization behind the advertisement.
Block Diagram of the Prelaunch Work Process
Ideas are gathered
The best idea is selected
Cost and feasibility analysis is carried out.
Marketing Strategies are planned
Test advertisement is made
The final advertisement is carried out and the product is launched for sale
CONCLUSIONS & RECOMMENDATIONS
ABNAMRO is a prominent international bank and comprises of three SBUs. However its prime focus is on consumer banking. Consumer Banking is deals with the banking services required by small investor and individual who wish to acquire day-to-day banking services.
They have a variety of product and services to offer and their strength is in the customer services they render. That is mainly due to the working environment within the organization and the behavior of their employees with the customers.
Despite these strengths there are certain weaknesses they should concentrate on. They claim that Standard Chartered is their prime competitor. They might have overpowered them in the services sections but even though they both share similar target markets, SCB has way more customers than ABN AMRO.
This primarily is because of two reasons with the first reason being the cause of the other. The first reason is that they are unable to attract the target market towards their product because ABN AMRO has only three branches in Karachi as compared to SCB's eight. Now assume that if a person lives in Clifton and he wants to avail some sort of banking service, then the odds of him going to Abdullah Road are very as rather than going to any one of the two SCB branches in Clifton.
This therefore also acts as a recommendation for ABN AMRO that they should try and open a few more branches in Karachi. It is very likely due to the high standards they have set in the services section that their number of customers would increase.
This report is about ABN-AMRO Bank's consumer baking department. The bank follows a functional structure and consumer banking is its area of focus. Consumer banking deals with the banking services that are offered to small investors and individuals according their needs. They offer a variety of products that are
There are a number of operations performed in this departments therefore it was necessary to split it into segments to understand those processes in a better way.
The bank specializes in providing the best customer services, which is the goal of every bank or even organization. That is mainly due to the working environment within the organization and the behavior of their employees with the customers.
They do have some very innovative products but have not been able to disturb the clientele of their prime competitor Standard Chartered. A discussed earlier they can only capitalize on the situation by opening a few more branches. However, they have been able to achieve their goals in an efficient manner.