CASE STUDY REPORT

“Critiquing the centralized organizational structure of Askari Bank, and

recommendations for their strategic planning using SWOT.”

Background:

Pakistan Armed Forces have established organizations such as Army Welfare Trust, Fauji
Foundation and Shaheen Foundation for running industrial and commercial enterprises.
These organizations have been established with the aim to provide employment for ex-
servicemen, besides creating job opportunities for others. Army Welfare Trust is working
on going beyond the frontiers in agriculture, cement, pharmaceuticals, leasing, insurance,
banking, energy, information technology and many other fields. We chose Askari Bank
because its handled by the Army Welfare Trust, which intrigued us to gain knowledge
about this bank and to know what influence the army has in the organization. Being one
of the most trusted banks, we wanted to know how Askari Bank operates and competes
with other banks in the market.

Introduction:

Askari Bank Ltd. is a commercial and retail bank in Pakistan and currently owned by Fauji
Foundation. It was founded in October, 1991 as a public limited company. In June, 2013
the bank was acquired by Fauji Group. The Bank is registered on the Pakistan Stock
Exchange (PSX) with stock listed as AKBL.

Awards and Recognitions:

Askari bank has achieved several awards and recognitions such as:
• The Asian Banker awarded twice the Best Retail Bank in Pakistan award in
years 2004 and 2005.
• Global Finance Magazine awarded the Best Consumer Internet Bank award
in years 2002 and 2003.
• Management Association of Pakistan awarded the Corporate Excellence
Award for the years 2002-2004.

Vision Statement:
“To be the bank of first choice in the region.”

Mission Statement:
“To be the leading private sector bank in Pakistan with an international presence,
delivering quality service through innovative technology and effective human resource
management in a modern and progressive organizational culture of meritocracy,
maintaining high ethical and professional standards, while providing enhanced value to
all our stakeholders, and contributing to society.”

Core Values:
Askari Bank’s essential core values consist of:

Commitment Being passionate about our customers’ success

and delighting them with quality of our service
Integrity A distinctive investment, delivering outstanding
performance, return and value
Fairness Exemplary compliance, governess and business
ethics
Teamwork Caring for our people and helping them to grow
Service Dedication towards social development and
improvement in quality of life

Branch Network:
Askari Bank has a vast network of over 500 branches in Pakistan. These branches provide
the services of debit card, master card, mortgage and personal finance, monthly saving
account, traveler cheques and agricultural and investment banking.

Competitors:
Askari Bank’s main competitors in the private sector are:
• Allied Bank (ABL) 1253 branches
• Muslim Commercial Bank (MCB) 1446 branches
• Habib Bank Limited (HBL) 1677 branches
• Silk Bank Limited 130 branches
• Soneri Bank Limited 285 branches
• United Bank Limited (UBL) 1340 branches
• JS Bank 323 branches

Askari Bank Products:

Askari Bank offers a wide range of products and services, keeping in view the needs and
wants of customers. In order to facilitate the demands and the expectations of customers
that are attached with the financial institutions, Askari Bank offers the following products:

1) Deposit Products:

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Amongst the fundamental functions of commercial banking, receiving deposits is the
primary one. Askari Bank has the following products in the deposit category:

• Askari Current Account

This account can be opened with no minimum balance requirements. It
comes with the issuance of free cheque book, SMS alerts, and banker’s
cheque etc.

• Askari Bachat Account

ABA is a term deposit account. It is designed for individual customer who
have an appetite for investment and who want monthly based profits.

• Askari Asan Account

The AAA is easily accessible to unbanked individuals. This account can be
opened by anyone with RS. 100. These may include all types of workforce,
women, pensioners etc.
• Little Champs Account
This account is designed for minors in order to inculcate the habit of saving
money. It offers plenty of benefits including welcome gift, surprise gifts etc.
• Askari Waqar Account
AWA is designed for senior citizens (55 year and above) who are looking for
monthly profits.

2) Consumer Products

Askari Bank aims to grow its existing product portfolio by introducing a wide range of
consumer products which include:

• Ask4Car
For the financing of new, used and imported vehicles.
• Personal Finance
Through this one can avail unlimited opportunities with incomparable
features in terms of loan payment, payback period and the most reasonable
monthly installments.
• Mortgage Finance
There are different categories of offerings under this such as: build a home,
buy a home, buy a plot and construct, and renovation schemes etc.

3) Consumer Banking Products

Consumer banking products include Askari debit cards and Askari credit cards.
• Askari Debit Card

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 It is a payment card used at the time or purchase instead of cash. The
money comes directly from the customer’s account during transaction.

• Askari Credit Card

This payment card is used by consumers to pay for goods with a promise to
the card issuer to pay the amount later. Askari Bank offers a wide range of
Mastercard credit cards which include: Classic, Gold, Platinum and
Corporate.

Askari’s Organizational Structure:

Askari Bank organization structure is very centralized as compared to other banks in

Pakistan. Most of the power resides at top management level with the Board of Directors,
which comprises of the Chairman and the Board. The Board overlooks the Executive
Committee, Audit Committee and President or Chief Executive. Askari Bank has a chain
hierarchy structure. Most of the important decisions are made by the top management.
The code of conduct of Askari Bank is also set by the Board of Directors.

Overview of Structure:
At corporate level, the executive committee is responsible for the performance of the
bank. The President or CEO supervises a team with direct reports of:
1) Corporate & Investment Banking (Group Head)
2) Operations and Credit (Group Head)
3) Regional Branches (Group Head)
4) Retail Banking (Group Head)
5) Risk Management (Country Head)
6) Human Resource (Country Head)
7) Finance (Country Head)

How it differs from other banks?

The type of structure which a particular bank adopts usually depends on their size,
number of branches, and volume of their products and services etc.

• For example, Silk Bank has around 130 branches whereas Askari Bank has
around 500 branches. Silk Bank has a single division which handles both
operations and branches of a region. Askari Bank has separate divisions for
bank’s operations and regional branches.

• Askari Bank has the advantage that its Board of Directors are Army officials
which builds a level of trust for customers. Whereas, most other banks
including Silk Bank have private Board of Directors.

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Comparison of Askari Bank vs Silk Bank:
Critical Analysis of Structure:
Taking into consideration the centralized structure of Askari Bank, we can summarize the
positives and negatives of this type of structure for Askari Bank as follows:

Positives: Negatives:

Driven by the Askari Bank’s values of Centralized structure leads to a

Stability and Reliability. Ensures the bureaucratic system at Askari Bank
decisions taken at all levels are in making some tasks complicated and non-
accordance with bank policies. routine tasks take time to implement.

Helps in effectively managing over 9,000 Communication delay along the hierarchy
employees in more than 500 branches as the messages have to pass through a
through formal control systems. lot of levels in management.

Supports the strategy of increasing Delayed feedback to important decisions

number of stores and emphasis on quality made by the Board of Directors of Askari
of work than on innovation to enhance Bank and concerning its response at
the bank’s overall ranking in operations. branch level.

Ensures the resources are always Employees opinions are not taken into
available department and that work is consideration leading to an inflexible
done at branch level with low work environment with little focus on
uncertainty, leading to stability. innovation and creativity.

Centralized structure helps the top

management in effective risk
management and adapting to changes in
external environment.

Recommendations:

• Design an organizational structure that promotes the spirit of participation of

people in making the decisions that matter to them and how they carry out
their specific tasks. This can help in increasing productivity and quality of their
work.
• By allowing certain level of flexibility in work, Askari Bank can quickly achieve
its ambition of being the ‘bank of first choice’ in Pakistan as through it,
employee turnover rate and employee motivation can be improved.
• Promote an organizational structure with effective feedback systems for all
levels in the organization. IT systems can be used to make the process of
collecting feedback more efficient and streamlined. Surveys and assessments

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 can help with accurate evaluation of decisions made by top management.
• Encourage Branch Managers to send suggestions concerning restructuring at
branch level if a certain branch has to usually deal with a higher number of
customers from a certain department.
• Establish liaison roles tasked with job of linking a certain number of low-level
managers with upper-management and to involve them in the decision-making
process.

Final words: Askari Bank should stay with centralized structure as it has more merits
than demerits. However, the downsides can be compensated by bringing changes in the
structure that promote flexibility, productivity and innovation.

PEST Analysis:

This section discusses some of the major environmental factors which affect the working
of Askari Bank in light of the PEST framework.

Political and legal:

Political situation in Pakistan is characterized by weak government, corruption, terrorism
and military opperations fo fight them, high taxation and frequent changes in its policies.
Over time Pakistan has increased its minimum wage rate and increased rights given to
minorities. Due to this poltical situation foreign investment have decreased due to less
trust in Pakistan economy. However Askari has managed to get and maintain its
relatively high customer base due to it being operated under Askari Welfare Trust.
Askari is considered a safe bank and is precieved as being independent of government
interferences.

Economic:
An agro based economy, pakistan has a high investment potential. However with
increasing inflation, and interest rates and a high cost of living there are eithe few or no
savings and the credits business of the bank have few customers. The income gap of
pakistan is quite high so it is difficult to meet the needs of all income groups. Over time
government debt is also increasing which has caused depreciation of Pak Rupee and
hence high proces in Askar bank. The energy crisis of pakistan has affected a lot of
business most of which were customers of ABL.

Social:
Customers in Pakistan are more consious of islamic banking. Hence ABL has introduced
Islamic banking successfully into the market. As savings culture is low in Pakistan ABL has
launched other products such as Current Account and Askari Special Deposit Account to

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keep the business running. The customer adoption rate of credit cards is quite low but is
increasing slowly in Pakistan especially among educated middle class. Askari is first to
introduce internet banking by launching products such as ATM-bus service, I-banking,
Tele-banking. Askari enjoys a loyal customer base since customer precieve a sense of
security using ABL.

Technology:
Askari has heavily invested in IT to gain a competitive advantage in the market. It also
launched online banking and real time transactions. Advancements in technology has
greatly increased customer adoption of ABL.

Environmental:
Pakistan is an agro based economy and any climate and weather changes effects ABL as
well. For example the floods in Pakistan heavily damaged the economy and so ABL
helped their victims by providing funds and reaching out. Also Askari has launched
agriculture loans to farmers which has a significant potion of Askari's profit.

SWOT Analysis:

This section presents a complete SWOT analysis of Askari Bank to analyze its current
position as compared to its competitors.

Strengths:

• Highly diverse and expanded branch network. ABL has around 500 branches in
Pakistan, making them one of the largest branch networks in Pakistan. They are
also one of the few banks in Pakistan trying to expand their business
internationally. They have recently launched Askari credit cards in different
countries like Qatar, UAE and Bahrain etc.
• Use of latest technology and software for record keeping. All the branches are
fully computerized, thus reducing the manual work and providing good
customer service. Their core software is called ‘Flex Cube.’ ABL is one of the
few banks in Pakistan which are using electronic transactions.
• The way ABL treats its customers and employees and their service quality. ABL
follows a customer orientated banking with the vision “to be the bank of first
choice.” To achieve this, ABL offers highest levels of personalized banking to
match customer’s unique status. The same goes with their employees. Their
strong and experienced work force is constantly motivated by different training
and development sessions.

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 • ABL has also won awards due to their transparency of accounts and annual
reports. They follow the international accounting standards while making their
financial statements and all of their reports are available on their website.
• ABL was the first bank to introduce internet banking in Pakistan. Their current
internet banking service is considered the best among all other banks and the
most user-friendly to customers.

Weaknesses:

• One of their weaknesses is that they still record their transactions by using the
traditional ways. Although they have all the latest technology, they still write
entries in registers like cheque book delivery, vouchers and ATM card delivery.
Opening of an account is recorded manually and in computer as well.
• One of the biggest weakness of ABL is their poor marketing campaigns. They
mostly market their company through journals and newspapers, and these
mediums are not very effective in the digital age. The only good thing about
their marketing strategy are their TV commercials on different channels.
• Another flaw is in their organizational structure. ABL follows the centralized
structure due to which employees don’t feel empowered enough. One of the
interns observed delays in employee operations just because he was not given
any instructions from upper management. They also have a functional
structure in which there is lack of team work.

Opportunities:

• In Pakistan there is an increasing need and potential for leasing. ABL should
probably invest in leasing business as this opportunity will help them utilize
their skills and efficiencies in the market. ABL can also expand their market
geographically by providing its services in the rural areas of Pakistan and raising
awareness campaigns.
• Although ABL offers Islamic banking services but they are available only in few
of their branches. Making this service available in each of their branches
especially in rural areas will give them a competitive edge by being the first
mover.
• Using local promotional and marketing strategies. Most importantly, they
should try to advertise their company to illiterate people of Pakistan. They can
accomplish this by running audios in local languages on radio, written
instructions in Urdu on cards or even banners in local languages.
• In today’s digital world computer literacy rates are growing rapidly. ABL should
try to hire such people as they are well informed in this area and will be

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 attracted to the innovative products of Askari Bank. They can also hire
experienced MBA graduates to make their HR more experienced and stronger.

Threats:

• One of the biggest threats that ABL can face in current time is political
instability and inflation. It’s evident that unemployment rates and inflation is
increasing side by side in Pakistan. Higher prices of products are decreasing
nation’s savings, and this will lead to lower deposits in banks.
• Nowadays there are multiple foreign and local banks who are trying to offer
much innovative and specialized services, promoting their services through
highly attractive campaigns. Other than that technology is advancing globally,
and banks are adapting the modern styles of management.
• Highly complicated bank procedures pose another threat to ABL. The general
public finds it difficult to understand them and are interested in other ways of
investment like buying shares of companies. Due to this it becomes hard for
ABL to attract small investors or deposits from local people.
• ABL charges higher fees, as compared to their competitors, to its customers for
their services. Moreover, although ABL has over 500 branches but many of its
branches are rental, resulting in increased expenses and the constant fear of
these branches being taken over.
• ABL’s centralized structure leads to strict managerial policies, and low career
growth leaves employees with no other option than to find jobs in other
companies. High employee turnover calls for new recruitment which is an
expensive, complicated and time-consuming process.

Strategic Planning Recommendations:

Using the results of SWOT and PEST, following are some recommendations that ABL can
follow to increase their share in market, attract new customers and increase revenue.

• It should expand to rural markets considering the fact that rural population
comprises 60% of the Pakistani population. Reaching out to them can
drastically increase ABL’s share. ABL should focus on simplifying the banking
procedure for them, conducting awareness campaigns and decreasing the
charges. This can be worth it for the amount of new customers it attracts.

• They need to maintain their current differentiation strategy on the basis of

quality. For example, HBL bank account opening is sometimes a time taking
process due to their volume of customers and long procedures. However,

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 Askari bank is able to provide quick bank opening service to its customers.
They should maintain this differentiation in future.

• Askari Bank needs to sell on its competitive advantage of military ownership

to enhance the level of trust for bank account holders, give them a sense of
security for future and retain them. Retaining current customers is just as
important as attracting new ones. A recent bank online bank security breach
in October, 2018 affected almost all of the banks in Pakistan. However, ABL
was not affected by this breach.

• ABL should try to bring changes in organizational structure and make it more
flexible. For example, create a friendly environment where employees feel
confident in giving their opinions. Other than that, team work should be
promoted to make the work force more efficient.

• Should innovate and introduce new services and products like leasing
schemes, customized services for customers, and partnerships with e-
commerce companies to collaborate and introduce new payment methods
convenient to customers. The current retail banking market is now saturated
with around 46 banks offering the same banking products in Pakistan.

• Although ABL has the latest technology but it should work on using it to its
full potential. For example, all the information should be documented and
maintained using computerized methods. Files and paperwork should be
avoided wherever possible. This will not only save them a lot of time but the
employees can devote their time doing other important tasks.

• Should use visual media as tool to market themselves as this will help them
gain customers from all kinds of age groups. Askari bank’s marketing budget
is not frequently increased and it needs a little attention from the upper
management.

Conclusion:

Askari Bank Limited is amongst one of the most distinct and leading banks in
Pakistan. It has established its place amid the market, all thanks to its unparalleled
services and military ownership advantage. The report analyzes and appraises its
performance through various frameworks of study. These include the SWOT and
the PEST analysis. Furthermore, it also studies the comparison of Askari Bank
Limited with some other banks and shows how it has excelled in the field by its
differentiation strategy on the basis of quality. Not only this, it also evaluates and
discusses all of its different products and services briefly. The report is concluded
with a critical analysis which gives a complete overview of the performance of the

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 bank and how the bank is affected by changes in external environment. Moreover,
it also discusses the ways in which they could improve some of their services in
order to become the most prominent bank in market, expand their market share
and ultimately realize their vision of being ‘the bank of first choice’ in Pakistan.

References:

Online resources:

▪ Askari Bank Annual Report 2017 - (accessed from akbl.com.pk).

▪ Askari Bank Company Profile 2016 - (accessed from akbl.com.pk).
▪ Askari Bank Branch Operations Handout - (internship document)
▪ Official Website of Askari Bank: http://akbl.com.pk/
▪ Top Private and Islamic Banks in Pakistan (2016) | Rightjobs.com
▪ Final Askari Bank Report (2015) | Slideshare.net

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