COMMERCE BANK

Group No. 8:
Vijay Jain (60)
Yamini Kalra (65)
Renu Pathak (68)
Shakti Tandon (70)
AGENDA
Overview of Banking Industry
Commerce Story
Key Leanings from the case
Product Differentiation
Employee Training and Its Impact
Brand Building Strategies
Customer Satisfaction and Value
Individual Assignments
OVERVIEW - BANKING INDUSTRY
Retail banks offered commodity Products i.e.
Deposit and Loan Products
Two important trends in the industry :
1) Push to increase the cross sell of products
2) Growing Revenues from fees customers paid for
certain transactions and functionality
Customer Satisfaction with banking industry had
been quite low
Customers selected their bank for variety of
reasons such as proximity of a local branch, large
ATM networks
OVERVIEW contd.
Front line employees in retail banks were
often selected for their ability to perform
repeated tasks, interact with customers and
their willingness to accept low wages
Compliance with Processes and Product
attributes were paramount in the industry
Commerce Story
Commerce Bank was very different from other
banks in the industry
They compare themselves with a retailer more
than a traditional bank
Their service delivery system is based on
guidelines and standards for their products,
branches and employees, and focused on
customer centric programs
Services were based on personal contact, with
branches opening longer on working days and
modified hours on the weekend
KEY LEARNINGS
Product differentiation in service industry
Importance of customer satisfaction and
value
Employee training and its impact on service
quality
Brand building strategies in service industry
Product Differentiation
Instead of several products they offered just a
few and replaced high interest rates with
extraordinary friendly service
They also had a big branch network and
generated deposit growth rate on a store
level

Employee Training and Its
Impact
Internal system of cultural training and incentives
WOW!ing customers included awards,
commendations and compensation, as well as
intense training and education
Mystery shopping, the WOW shops, was a
significant component of performance
measurement
Leagues were organized whereby branches in
different regions might compete against each
other for the most impeccable service report
Brand Building Strategies
Building every branch itself and didnt go
through mergers and acquisitions because of
cultural differences and brand weakening
High service quality standards
Customers as fans
Drive through window for faster service
10- minute role
Spent a lot of money on big promotional
activities and giveaways
Wow terminology to measure service excellence
Customer Satisfaction and
Value
In 2001, cumulative deposit growth rate in the
united states was 5% while Commerce deposits
alone grew by almost 40% and households grew
by 20%
Commerce model was to give the best of every
channel what customers used
The big-bank sees a customer as a cost, not a
revenue generator
3% - wanted the highest rate while 62% picked a
bank for service, convenience, etc.. Commerce
targeted this 62% while others focused on 3%
What Sets Commerce Apart
ATM
Phone
COIN
Machine
Mr. C
Buzz
Dr. Wow
Mystery
Shoppers
Can May
Kill the
Stupid
Rule
IVRS Person
Easy
Retired Part
timers
Hot Dog Fire
Juggler on Fire
How far we go ?
INNOVATION-EXAMPLES
FROM INDIA & ABROAD
Banking Innovations Abroad
Netting Clearing Houses

Bundling of services one stop shop for all financial needs

ATMs

Direct Debit Pay Monthly Bills

Global Banks

Online Banking - anytime

Cash withdrawal at Retail Counters

Mobile Banking Apps world Anytime / Anywhere




Banking Innovations - India
Adoption of Global Innovations

Drop Boxes

Utility Payments

Door Step Services Cash, Drafts, New Accounts, Cheque Books

Welcome Kit - ICICI

High Interest on SB accounts Kotak Mahindra / Yes bank

Gold Deposits

Any ATM Withdrawals

SMS Alerts
Futuristic Perspective
What Business I am in?
Deposits?
Loans?
Payments?
Risk Management?
Financial Intermediaries?
Can someone else do this?
Retail outlets?
100% Virtual bank?
Insurance?
Why customers deposit?
Interest?
Safety?
Convenience?
What customers want?
EMI AMI (Adaptive % )?
Spending Pattern analysis and
AI based Advice
Inflation Linked Rates
Technology Trends?
Bit Coins ?
Big data?
Social Banking?
?
CO-CREATION:
CURRENT EXAMPLES AND
FUTURE POSSIBILITIES

Co-Creation Current Examples
Branch network optimization (number and size
of branches), reviewing network architecture (i.e.
hub and spoke model)
Basic multichannel integration, alignment of
channels and integrated governance processes
for real-time banking
Proactive and reactive management
interaction based on customer needs
Operational customer segmentation driven by
a needs based offering structure
Sales force effectiveness powered by consistent
sales behaviors and tools
Simple and clear communication with
customers
Performance management (new customer-
oriented metrics) and tailored compensation
schemes
Future Possibilities
GLOBAL BANKING:
STAKEHOLDER MAPPING AND
CURRENT CHALLENGES

Global Banking: Value Chain
Value Chain: Cyclic
Transformation
Global Banking: Stakeholders
Global Banking: Coalitions
Coalitions Explained
Stake Holder Engagement?
External vs Internal
How much power
Govt. vs Employee
Supplier vs. Customer
Allies or Opponent
+ve Collaboration or ve advertising
Management Strategy
Marketing
Communications
Media
Engaging with Stakeholders
The long-term success of our bank depends on our ability to gain and
maintain the trust of our stakeholders.
Banking business works on the basis of trust.
One of the ways we inspire trust in our stakeholders is by knowing what they
expect from us and how their expectations are changing.
We therefore regularly engage in a dialogue with clients, shareholders,
employees, regulators and NGOs, as well as other groups of stakeholders.
We gain an understanding of their needs and interests through discussions
and by conducting surveys or participating in events, as well as through our
involvement in initiatives, forums and associations. Individual groups of
stakeholders have different and sometimes conflicting interests and
consequently have their own specific expectations of us as a bank.
By exchanging our views with these stakeholders, we gain a more detailed
understanding of our responsibilities in our core business of banking, as well
as our responsibilities toward our employees, society and the environment.
At the same time, this dialogue enables us to identify potential issues at an
early stage, offer our perspective and help to develop solutions to current
challenges wherever possible.

Strategic & Regulatory
Challenges
Strategic challenges:
Private banking industry professionals need to reinvent themselves in
order to reinforce themselves as a leading pole in private banking
services.
Retail bankers also have to face a growing competition from abroad
as well as from non-traditional institutions. Asset management and
investor services institutions need to prepare themselves for
significant changes in infrastructures, regulatory frameworks and
their competitive landscape.

Industry regulatory challenges
The constant evolution of local and international regulations is a
major driving force in the banking and securities industry.
The likely introduction of Basel III standards, as an example, will have a
major impact on the way institutions run their business. There is likely
to be an increased focus on capital efficiency. Implementing all these
rules can be an issue, yet the real challenge is more about optimising
your regulatory investments than merely complying.


Operational Efficiency
Challenge
Industry operational efficiency challenges

To appropriately address strategic and regulatory
challenges, impeccable execution is a must. Constantly
improving operational efficiency has to be high on the
agenda of bankers. Now more than ever, institutions have to
optimise their processes, control their cost structure, and
explore new operating models using all the tools now at their
disposal.

Analysing the opportunity to mutualise operations or IT
systems across entities or geographies, outsourcing non core
activities, improving risk management frameworks and
tools these are some of the areas where financial
institutions can find the levers to reach excellence.

TECHNOLOGY IMPACT ON
BANKING SERVICES AND FUTURE


http://www.youtube.com/watch?v=oYPtBhkn_HU
http://www.youtube.com/watch?v=LsEV5wdh3EE
THANK YOU