Post on 07-Nov-2014
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Executive Summary
Customer satisfaction is a measure of how products and services supplied by a company meet or
surpass customer expectation. Customer satisfaction is defined as "the number of customers, or
percentage of total customers, whose reported experience with a firm, its products, or its services
exceeds specified satisfaction goals.
Banking industry is playing a vital role in the economy of our country and customers are the
heart of a bank. To be successful in such competitive market a bank must satisfy its customers
properly with its various services.
To do a study on the customer satisfaction towards the services of a bank I‟ve selected United
Commercial Bank Ltd. (UCBL) as its one of the old and successful local private bank. The Bank
is primarily oriented towards extending financial assistance in the trade and the commercial
sector besides lending in the industrial sector. The Bank, aiming to play a leading role in the
economic activities of the country, is firmly engaged in the development of trade, commerce and
industry thorough a creative credit policy.
The objective of this study is to determine whether the customers of UCBL are satisfied with the
services of UCBL or dissatisfied. In my study I‟ve tried to find out in which area of services
customers are mostly satisfied and dissatisfied; customers‟ preference level about UCBL; which
services are demanded by the existing customers base and also which services are required to
achieve more customers; and the relative position of UCBL compared to other banks. From the
company‟s perspective this study will help UCBL to understand its position in terms of
satisfying its customers. It will help them to know which service attributes are most important for
the customers. They will be able to understand in which area of services UCBL lack most and
thus improve the quality of their service. They will understand which customer groups are more
potential. They will also be able to know which products of UCBL are mostly preferred by the
customers. This study will also help other banks and service and financial organization to
understand the factors that affect the satisfaction level the customers and thus they will be able to
improve their services.
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Chapter # 1: Prefatory
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1.1 History of Banking in Bangladesh
After achieving independence in 1971, the government of the newly-found Bangladesh declared
the Dhaka branch of 'State Bank of Pakistan' the new Central Bank and named it the 'Bangladesh
Bank'. Bangladesh Bank was responsible for controlling currency and credit and monitoring
exchange control. It was also the official foreign exchange Reserve. The government took over
all the existing national banks and renamed them. The existing foreign banks were given
permission to continue their business in Bangladesh.
Bangladesh Bank has been entrusted whit all of the traditional central banking functions
including the sole responsibilities of issuing currency, keeping the reserves, formulating and
managing the monetary and credit policy, regulating the banking system, stabilizing domestic
and external monetary value, preserving the par value of Bangladesh Taka, fostering economic
growth and development and the development of the country‟s market.
The Bangladesh Banks (Nationalization) Order enacted in 1972 nationalized all banks except
foreign ones. Six nationalized banks were formed through merging the existing banks of the
period.
The rate of growth and development of banking sector in the country was extremely slow until
1983 when the government allowed to establish private banks and started denationalization
process: initially, the Uttara Bank in the same year and thereafter, the Pubali Bank, and the
Rupali Bank in 1986.
Modern banking system plays a vital role for a nation‟s economic development. Over the last
few years the banking world has been undergoing a lot of changes due to deregulation,
technological innovations, globalization etc. These changes in the banking system also brought
revolutionary changes in a country‟s economy. Present world is changing rapidly to face the
challenge of competitive free market economy. It is well recognized that there is an urgent need
for better, qualified management and better-trained staff in the dynamic global financial market.
Bangladesh is no exceptions of this trend. Banking Sector in Bangladesh is facing challenges
from different angles though its prospect is bright in the future.
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History of Private Banks in Bangladesh
There were no domestic private commercial banks in Bangladesh until 1982; When the Arab-
Bangladesh Bank Ltd. commenced private commercial banking in the country. Five more
commercial banks came up in 1983 and initiated a moderate growth in banking financial
institutions. Despite slow growth in number of individual banks, there had been a relatively
higher growth of branches of nationalized commercial banks (NCBs) during 1973-83.
Financial sector reforms to strengthen the regulatory and supervisory framework for banks made
headway in 2006 although at a slower than expected pace. Overall health of the banking system
showed improvement since 2002 as the gross Non-performing Loans (NPL) declined from 28
percent to 14 percent while net NPL (less Provision) reduced to 8 percent from 21 percent. This
led significant improvement in the profitability ratios. Although the Private Commercial Banks
(PCB) NPL ratio registered a record low of 6 percent, the four Nationalized Commercial Banks
(NCB) position are still weak and showed very high NPL at 25 percent. The NCBs have large
capital shortfalls with a risk- weighted capital asset ratio of just 0.5 percent (June 2006) as
against the required 9 percent. For the PCBs risk-weighted capital asset ratio stood at 10 percent.
Bangladesh Bank issued a good number of prudential guidelines during the year 2006 and the
first quarter of 2007 which among others relate to:
• Rationalization of prudential norms for loan classification and provisioning,
• Policy for rescheduling of loans,
• Designing and enforcing an "integrated credit risk grading manual",
• Credit rating of the banks, and
• Revisions to the make-up of Tier-2 capital.
Bangladesh Bank has also taken up the task of implementing the Basel II capital accord. Further,
the recent enactment of the Micro-credit Regulatory Authority Act (MRAA) for the regulation of
the Micro Finance Institutions (MFI) has been a major development in the year 2006. Since 1998
CAMEL rating of banks gradually improved and in 2006 Bangladesh Bank updated this rating
model by incorporating the market risk and the new model is known as CAMELS.
Modern banks play an important part in promoting economic development of a country. Banks
provide necessary funds for executing various programs underway in the process of economic
development. They collect savings of large masses of people scattered through out the country,
which in the absence of banks would have remained idle and unproductive. These scattered
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amounts are collected, pooled together and made available to commerce and industry for meeting
the requirements. Economy of Bangladesh is in the group of world‟s most underdeveloped
economics. One of the reasons may be its underdeveloped banking system. Government as well
as different international organizations have also identified that underdeveloped banking system
causes some obstacles to the process of economic development. So they have highly
recommended for reforming financial sector. Since, 1990, Bangladesh government has taken a
lot of financial sector reform measurements for making financial sector as well as banking sector
more transparent formulation and implementation of these reform activities has also been
participated by different international organization like world Bank, IMF etc.
1.2 Current Structure of Banks in Bangladesh
Bangladesh Bank (BB) has been working as the central bank since the country's independence.
Its prime jobs include issuing of currency, maintaining foreign exchange reserve and providing
transaction facilities of all public monetary matters. BB is also responsible for planning the
government's monetary policy and implementing it thereby.
The number of banks in all now stands at 49 in Bangladesh. Out of the 49 banks, four are
Nationalised Commercial Banks (NCBs), 28 local private commercial banks, 12 foreign banks
and the rest five are Development Financial Institutions (DFIs). Sonali Bank is the largest among
the NCBs while Pubali is leading in the private ones. Among the 12 foreign banks, Standard
Chartered has become the largest in the country. Besides the scheduled banks, Samabai
(Cooperative) Bank, Ansar-VDP Bank, Karmasansthan (Employment) Bank and Grameen bank
are functioning in the financial sector.The number of total branches of all scheduled banks is
6,038 as of June 2000. Of the branches, 39.95 per cent (2,412) are located in the urban areas and
60.05 per cent (3,626) in the rural areas. Of the branches NCBs hold 3,616, private commercial
banks 1,214, foreign banks 31 and specialised banks 1,177.
Bangladesh Bank (BB) regulates and supervises the activities of all banks. The BB is now
carrying out a reform programme to ensure quality services by the banks.
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1.3 Background of the Research
United Commercial Bank Ltd. (UCBL) was incorporated in Bangladesh as Banking Company
under the Companies Act 1913 and commenced operation on June 26, 1983 when the
Government allowed some commercial banks to operate in the private sector. As a scheduled
bank of the country the bank‟s activities are subject to the effective control, supervision and
guidance of the Bangladesh Bank. The Bank is primarily oriented towards extending financial
assistance in the trade and the commercial sector besides lending in the industrial sector.
UCBL started its operation in mid-1983 and has since been able to establish one of the largest
networks of 124 branches as on 31.12.2011 among the first generation banks in the private
sector. With its firm commitment to the economic development of the country, the Bank has
already made a distinct mark in the realm of Private Sector Banking through personalized
service, innovative practices, dynamic approach and efficient Management. The Bank, aiming to
play a leading role in the economic activities of the country, is firmly engaged in the
development of trade, commerce and industry thorough a creative credit policy.
In the 1972 the entire banking sector of Bangladesh was taken under nationalization in
accordance with the avowed policy of the Government. The objectives of the nationalization of
the banking sector was to create mass banking service is to the general people both in the rural
and urban areas are in the inadequacy of the physical and social infrastructure, a low industrial
and technological base, lack of private entrepreneurship and an under developed market provided
the ground for active participation of the public sector in the developed process. But over the
years, it has been experienced that public sector has become inefficient and continuous loosing
concern. As a result, there has been a visible change in the policy of the Government, which was
more favor of privatization, and a number of banks were launched as private commercial bank.
UCBL was one of the oldest and leading private commercial bank which started its operation on
mid-1983.
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1.4 Customer Satisfaction
Customer satisfaction is a term frequently used in marketing, is a measure of how products and
services supplied by a company meet or surpass customer expectation. Customer satisfaction is
defined as "the number of customers, or percentage of total customers, whose reported
experience with a firm, its products, or its services (ratings) exceeds specified satisfaction
goals." It is seen as a key performance indicator within. In a competitive marketplace where
businesses compete for customers, customer satisfaction is seen as a key differentiator and
increasingly has become a key element of business strategy.
Customer satisfaction ratings can have powerful effects within organizations. They focus
employees on the importance of fulfilling customers‟ expectations. Furthermore, when these
ratings dip, they warn of problems that can affect sales and profitability. These metrics quantify
an important dynamic. When a brand has loyal customers, it gains positive word-of-mouth
marketing, which is both free and highly effective. Therefore, it is essential for businesses to
effectively manage customer satisfaction. To be able do this, firms need reliable and
representative measures of satisfaction.
Customer satisfaction provides a leading indicator of consumer purchase intentions and
loyalty. Customer satisfaction data are among the most frequently collected indicators of market
perceptions. Their principal use is twofold:
a. Within organizations, the collection, analysis and dissemination of these data send a
message about the importance of tending to customers and ensuring that they have a
positive experience with the company‟s goods and services.
b. Although sales or market share can indicate how well a firm is performing currently,
satisfaction is perhaps the best indicator of how likely it is that the firm‟s customers will
make further purchases in the future. Much research has focused on the relationship
between customer satisfaction and retention.
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1.5 Measuring Customer Satisfaction
In researching satisfaction, firms generally ask customers whether their product or service has
met or exceeded expectations. Thus, expectations are a key factor behind satisfaction. When
customers have high expectations and the reality falls short, they will be disappointed and will
likely rate their experience as less than satisfying.
To measure customer satisfaction, face-to-face interview or survey with a structured
questionnaire is widely used in most of the companies now-a-days. A sample size of the
respondents is usually used by the organizations for conducting such survey/interview. Kano
Model and Multiple Linear Regression Model are the widely practiced models to analyze the
customer satisfaction from the data collected from the surveys.
Kano Model
The Kano Model of Customer (Consumer) Satisfaction classifies product attributes based on
how they are perceived by customers and their effect on customer satisfaction. These
classifications are useful for guiding design decisions in that they indicate when good is good
enough, and when more is better.
Project activities in which the Kano Model is useful:
Identifying customer needs
Determining functional requirements
Concept development
Analyzing competitive products
Other tools that are useful in conjunction with the Kano Model:
Eliciting Customer Input
Prioritization Matrices
Quality Function Deployment
Value Analysis
The Kano Model of Customer satisfaction (Figure: Kano
Model) divides product attributes into three categories:
threshold, performance, and excitement. A competitive
product meets basic attributes, maximizes performances
attributes, and includes as many “excitement” attributes
as possible at a cost the market can bear.
Figure: Kano Model
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o Threshold Attributes: Threshold attributes are the expected attributes or “musts” of a
product, and do not provide an opportunity for product differentiation. Increasing the
performance of these attributes provides diminishing returns in terms of customer
satisfaction; however the absence or poor performance of these attributes results in
extreme customer dissatisfaction.
o Performance Attributes: Performance attributes are those for which more is generally
better, and will improve customer satisfaction. Conversely, an absent or weak
performance attribute reduces customer satisfaction.
o Excitement Attributes: Excitement attributes are unspoken and unexpected by customers
but can result in high levels of customer satisfaction, however their absence does not lead
to dissatisfaction. Excitement attributes often satisfy latent needs – real needs of which
customers are currently unaware.
o Other Attributes: Products often have attributes that cannot be classified according to the
Kano Model. These attributes are often of little or no consequence to the customer, and
do not factor into consumer decisions.
Multiple Linear Regression Model
Multiple linear regression attempts to model the relationship between two or more
explanatory variables and a response variable by fitting a linear equation to observed
data. Every value of the independent variable x is associated with a value of the
dependent variable Y.
Formally, the model for multiple linear regression, given n observations is:
Y = 0 + 1 X1 +2 X2+ + n Xn + I
Where,
Y = Dependent Variable
X = Independent Variable
Unknown Parameter
Error Term
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1.6 Objective of the study
The main objective of this study is to determine whether the customers of United Commercial
Bank Ltd. (UCBL) are satisfied with the services of UCBL or dissatisfied. In my study I‟ll try to
find out in which are customers are mostly satisfied and dissatisfied; customers‟ preference level
about UCBL; which services are demanded by the existing customers base and also which
services are required to achieve more customers; and the relative position of UCBL compared to
other banks.
As customers are the heart of a company to be successful in such a competitive industry where
competitors are availing same quality services to the customers to increase their customer base,
this study will be very helpful for UCBL to learn about their current status of services from the
customers‟ point of view. UCBL can understand its position in satisfying customers compare to
other competitors. It will help them to know which service attributes are most important for the
customers. They will be able to understand in which area of services UCBL lack most and thus
improve the quality of their service. They will understand which customer groups are more
potential. They will also be able to know which products of UCBL are mostly preferred by the
customers.
This study will also help other banks and service and financial organization to understand the
factors that affect the satisfaction level the customers and thus they will be able to improve their
services. Also a belief in customers‟ mind will settle that such study can help them to express
their complaints and satisfaction to the company authority so that the company can overcome the
drawbacks in providing services and provide better services to its customers.
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1.7 Methodology
To do my research and to accomplish my objectives I have to go through different sources
and I will use the both primary and the secondary sources to collect the most appropriate
information.
The "Primary Sources" are as follows Face-to-face conversation with the customers and
if possible find their responses through questionnaire survey.
The "Secondary Sources" of data and information are:
a) Website of United Commercial Bank Ltd. (UCBL): www.ucbl.com
b) Various book, articles, compilations etc. regarding banking functions.
To prepare the research report and to find the output of my research I will use MS Excel
& SPSS software.
For doing the quantitative analysis of the data, I have used the Multiple Linear
Regression Model.
Hypothesis
o Hypothesis: The customers are satisfied with the services of United Commercial Bank
Ltd. (UCBL)
o Alternative hypothesis: The customers are not satisfied with services of United
Commercial Bank Ltd. (UCBL)
Independent variables:
There are huge factors which can act as a independent variables like- Age, gender, profession,
monthly income, environment of the bank, behavior and manners of the staffs, promptness and
capability of the staffs in solving customers‟ problems, knowledge of the staffs regarding various
services and banking system, waiting time for the customers to get the service, features of
different offers and packages, location of the branches, number of branches, ATM card facility,
service charges, interest rate of loans, interest rate of savings schemes, online banking, Credit
(Visa) card service, website, advertisement, security system etc.
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For this study I’ve selected few of those mentioned above as the independent variable for this
study and those are – behavior and manners of the staffs, waiting time, service charges, interest
rates against loans, promptness and capabilities of staffs in serving the customers.
All these independent variables will determine the Dependent Variable: “Customer satisfaction
towards the services of United Commercial Bank Ltd. (UCBL)”.
Limitations:
Most of the time customers are not that friendly to fill up questionnaire or to talk for a
little while as they are very busy during office hours.
To measure the visibility, a sample survey is conducted which may not represent the
entire population.
Focus on limited factors and leaving out some other relevant factors which has been
discovered after collecting the data.
As I‟ve to do this survey by my own it was difficult for me to move different branches of
United Commercial Bank Ltd. (UCBL) throughout the country. For my convenience I‟ve
surveyed the customers who came to the Kawran Bazar branch of UCBL.
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Chapter # 2: Overview of the Organization
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2.1 About United Commercial Bank Ltd.
Sponsored by some dynamic and reputed entrepreneurs and eminent industrialists of the country
and also participated by the Government, United Commercial Bank Ltd. (UCBL) started its
operation on June 26, 1983 and has since been able to establish one of the largest networks of
124 branches as on 31.12.2011 among the first generation banks in the private sector. With its
firm commitment to the economic development of the country, the Bank has already made a
distinct mark in the realm of Private Sector Banking through personalized service, innovative
practices, dynamic approach and efficient Management. The Bank, aiming to play a leading role
in the economic activities of the country, is firmly engaged in the development of trade,
commerce and industry thorough a creative credit policy.
2.1.1 Management
The Bank has in its Management a combination of highly skilled and eminent bankers of the
country of varied experience and expertise successfully led by Mr. Muhammad Ali, a dynamic
banker, as its Managing Director and well educated young, energetic and dedicated officers
working with missionary zeal for the growth and progress of the institution.
2.1.2 Working Departments of United Commercial Bank Ltd.
United Commercial Bank Ltd. (UCBL) maintains the jobs in a proper and organized considering
their interrelationship that are allocated in a particular department to control the system
effectively. Different departments of UCBL are as follows:
Human Resources Division
United Commercial Bank Ltd. (UCBL) recognizes that a productive and motivated work force is
a prerequisite to leadership with its customers, its shareholders and in the market it serves.
UCBL treats every employee with dignity and respect in a supportive environment of trust and
openness where people of different backgrounds can reach their full potential.
The bank‟s human resources policy emphasize on providing job satisfaction, growth
opportunities, and due recognition of superior performance. A good working environment
reflects and promotes a high level of loyalty and commitment from the employees. Realizing this
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UCBL has placed the utmost importance on continuous development of its human resources,
identify the strength and weakness of the employee to assess the individual training needs, they
are sent for training for self-development. To orient, enhance the banking knowledge of the
employees UCB Training Institute organizes both in-house and external training.
The major responsibilities of HR are as follows:
• Employee recruitment
• Posting
• Transfer
• Increment
• Established yearly performance bonus
• Provident fund
• Confirmation
• Training
Travel policy
• Telephone policy
Personal banking Division
The personal banking department deals with the consumer credit schemes such as the personal
loan, car loan, education loan, tax loan, personal secured loan that are tailored to meet the
demand of individual customers. The manager of United Commercial Bank Ltd. (UCBL) credit
who approves and administers all the activities heads this department. The approval officer
mainly rejects or approves the credit requests. After being checked by the approval officer, the
credit requests go to the processing officer for further processing of the application.
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Treasury Division
Their main job is to take decisions regarding purchase and sell of foreign Currency. The purpose
of Treasury's operations is to utilize the funds effectively and arrange funds at a lowest possible
rate of interest, through maintaining effective relationship with other banks and following the
Government rules and foreign exchange regulations.
Computer and Information Technology Division
This department gives the software and hardware supports to different departments of the bank.
As United Commercial Bank Ltd. (UCBL) is engaged in online banking, the role of IT is very
crucial for the bank. This department is the most active department of UCBL where employees
always stand by to solve any problems in the system. The managers and executives of IT
division work continuously to develop the total IT system of UCBL so that it can be operated
with ease, accuracy, and speed. From the very beginning of its journey as commercial bank in
serving customers UCBL has been laying great emphasis on the use of improved technology.
Credit Division
The borrowing capacity provided to an individual by the banking system, in the form of credit or
a loan. The total bank credit the individual has is the sum of the borrowing capacity each lender
bank provides to the individual. Credit Policy Committee is composed of the managing director,
the general manager, the Chief Risk Officer and the assistant general manager responsible for
credits. Committee meets every other week, evaluates the banks overall lending portfolio and
determines principles and policies regarding portfolio management.
Operation Division
This is an integral and vital part of United Commercial Bank Ltd. (UCBL). The services
department ensures smooth operation and functioning within and between all the departments of
UCBL. It also provides continuous support to the core banking activities of UCBL. The Manager
of Services heads the department who formulates and manages various critical issues of the
services function of UCBL. He is followed by a group of executives who are the heads of various
subsidiary divisions that operate within the services department. The Services Department is
considered as the backbone of all other departments.
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Card Division
United Commercial Bank Ltd. (UCBL) is one of the domestic commercial bank in Bangladesh to
introduce Visa Debit Card and Visa Credit Card at the same time as an addition to their services
for the customers. The total card related activities have been supervised by the card division in
all the branches of UCBL.
Finance & Accounts Division
This is considered as the most powerful department of United Commercial Bank Ltd. (UCBL). It
keeps tracks of each and every transaction made within UCBL Bangladesh. It is headed by
Manager of FCD who ensures that all the transactions are made according to rules and regulation
of UCBL group. Violation of such rules can bring serious consequences for the lawbreaker. The
functions of FCD are briefly discussed below along with an organ gram of the department.
Audit & Risk Management Division
The Risk Management Division of United Commercial Bank Ltd. (UCBL) is responsible for
measuring risks that the bank might face in the course of its operations, developing corporate risk
management policies and ensuring that risks remain within the limits in which the Bank prefers
to bear such risks in line with its own strategic targets and risk appetite. The primary goal of risk
management is to provide capital to businesses in line with their risks (economic capital),
maximize risk-adjusted return and increase the added value.
The risk management function consists of Market Risk, Credit Risk and Operational Risk
Management Units. Bank Risk Committee, Asset-Liability Committee, Credit Policy Committee,
and Operational Risk Management Committee are the other risk management bodies.
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2.1.3 Services of United Commercial Bank Ltd.
Savings Accounts
Current Accounts
Salary Accounts
Home Loan
Car Loan
UCB Multi Millionaire
UCB Money Maximizer
UCB Earning Plus
UCB DPS Plus
Western Union Money Transfer
SMS Banking Service
On line Service
Credit Card
Time Deposit Scheme
Monthly Savings Scheme
Deposit Insurance Scheme
Inward & Outward Remittances
Travelers Cheques
Import Finance
Export Finance
Working Capital Finance
Loan Syndication
Trade Finance
Industrial Finance
Foreign Currency Deposit A/C
NFCD ( Non Resident Foreign Currency Deposit Account )
RFCD ( Resident Foreign Currency Deposit Account )
Consumer Credit Scheme
Locker Service
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2.1.4 Branches of United Commercial Bank Ltd.
Dhaka: Bangshal, Bhulta, Bizoy Nagar, Banani, Bashundhara, Chashara, Corporate branch, Dhanmondi,
Donia, Dilkusha, Elephant Road, Faridpur, Foreign Exchange Br., Gazipur Chowrasta, Gulshan,
Gopalganj, Hasanabad, Islampur, Kawran Bazar, Kanchan, Keraniganj, Konabari, Kanaipur,
Madhabdee, Mirpur, Mirpur Rd, Mohakhali, Mohammedpur, Moulovibazar, Mymensingh, Mawna,
Munshiganj, Narayanganj, Narshingdi, Nawabpur, Nayabazar, New Eskaton, North Brook Hall Road,
Nabinagar, Paglabazar, Principle Br., Pragati Sarani, Rajbari, Savar, Shantinagar, Shatoirbazar, Shatarkul,
Shibchar, Sonargaon Janapath, Tangail, Tongi, Tongi Station, Tejgaon, Uttara, Uttarkhan, Zinzira.
Chittagong: Agrabad, Anderkilla, Anwara, Bahaddarhat, Brahmanbaria, Bhatiari, Battali, Chandpur,
Chawkbazar, Chokoria, Chowmuhoni, Comilla, Cox‟s Bazar, Dohazari, Dampara, Eidgaon, Fotikchori,
Feni, Gohira, Hathazari, Halisahar, Jubille Rd., Kadamtali, Kamal Bazar, Khatunganj, Laxmipur,
Lohagara, Modunaghat, Muradpur, Maijdee Court, Nazirhat, Noapara, Laxmipur, Lohagara, O.R. Nizam
Rd., Pahartali, Port, Rangunia, Raozan, Station Rd.
Other Districts:
Rajshahi - Bogra, Chapai Nabaganj, Naogaon, Natore, Pabna, Rajshahi, Sirajganj.
Khulna - Chuadanga, Jessore, Jhenaidah, Khan Jahan Ali Rd., Khulna, Kustia, Noapara Bazar.
Barisal – Barisal.
Sylhet - Amberkhana, Borolekha, Beanibazar, Biswanath, Goalabazar, Lamabazar, Moulovibazar,
Nabiganj, Sherpur, Shibganj, Sylhet, Shahjalal Uposahar, Subid, Zindabazar.
Rangpur – Dinajpur, Rangpur.
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2.1.5 Organogram of United Commercial Bank Ltd.
`
Managing Director (MD)
Deputy Managing Director (DMP)
Senior Executive Vice President (SEVP)
Executive Vice President (EVP)
Senior Vice President (SVP)
Vice President (VP)
Senior Assistant Vice President (SAVP)
Assistant Vice President (AVP)
First Assistant Vice President (FAVP)
Senior Executive Officer (SEO)
Executive Officer (EO)
Principal Officer (PO)
Senior Officer (SO)
Management Trainee Officer (MTO)
Junior Officer (JO)
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2.1.6 Mission, Vision & Objectives
Vision
“The mission of the organization to make United Commercial Bank Ltd. (UCBL) the mist
respected band leading private commercial bank in Bangladesh.”
Mission
Create and urban area base bank for
i) Mass people living in urban areas.
ii) Financial service institutions.
Aiming to satisfy our customers with high quality services.
Strategy
United Commercial Bank Ltd. (UCBL) is implementing the strategy through following
business:
i) Private Banking,
ii) Treasury,
iii) Commercial, industrial to gain control, profitability and growth.
Objectives
The objectives of United Commercial Bank Ltd. (UCBL) are to provide innovative products
supported by quality delivery of systems and excellence customer services, to train and
motivate staffs and to exercise social responsibility. By combining regional strengths with
group network UCBL‟s aim is to be the one of the leading banks in its principle markets.
UCBL‟s goal is to achieve sustained earnings growth and to continue to enhance shareholders
value.
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Business Principles and Values
The corporate character of United Commercial Bank Ltd. defines the values and principles
inherent in all their everyday dealings.
United Commercial Bank Ltd. (UCBL) is committed to:
Outstanding customer service;
Effective and efficient operations;
Strong capital and liquidity;
Conservative lending policy;
Strict expense discipline;
United Commercial Bank Ltd. (UCBL) Operates According to Certain Key Business Values:
The highest personal standards of integrity at all levels;
Commitment to truth and fair dealing;
Hand-on management at all levels;
Openly esteemed commitment to quality and competence;
A minimum of bureaucracy;
Fast decisions and implementation;
Putting the Group‟s interests ahead of the individual‟s;
The appropriate delegation of authority with accountability;
Fair and objective employer;
A merit approach to recruitment, selection, promotion;
Promotion of good environmental practice and sustainable development and commitment
to the welfare and development of each local community.
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2.2 History of the Parent United Commercial Bank Ltd.
Background of the Bank
In the 1972 the entire banking sector of Bangladesh was taken under nationalization in
accordance with the avowed policy of the Government. The objectives of the nationalization of
the banking sector was to create mass banking service is to the general people both in the rural
and urban areas are in the inadequacy of the physical and social infrastructure, a low industrial
and technological base, lack of private entrepreneurship and an under developed market provided
the ground for active participation of the public sector in the developed process. But over the
years, it has been experienced that public sector has become inefficient and continuous loosing
concern. As a result, there has been a visible change in the policy of the Government, which was
more favor of privatization, and a number of banks were launched as private commercial bank.
United Commercial Bank Ltd. (UCBL) was one of the oldest and leading private commercial
bank which started its operation on mid 1983.
Introduction of United Commercial Bank Ltd.
United Commercial Bank Ltd. (UCBL) was incorporated in Bangladesh as Banking Company
under the Companies Act 1913 and commenced operation on June 26, 1983 when the
Government allowed some commercial banks to operate in the private sector. As a scheduled
bank of the country the bank‟s activities are subject to the effective control, supervision and
guidance of the Bangladesh Bank. The Bank is primarily oriented towards extending financial
assistance in the trade and the commercial sector besides lending in the industrial sector.
Present United Commercial Bank Ltd.
United Commercial Bank Ltd. (UCBL) has 124 branches all over Bangladesh and carries out all
banking activities through its branches in our country and through international correspondent
outside the country. It is now hoping to open fifteen more branches to serve its customers more
frequently all over the country.
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2.3 Organizational Status of United Commercial Bank Ltd.
At the end of the year 1996, United Commercial Bank Ltd. (UCBL) was in a steady and
reasonably satisfactory progress except a very few short coming due to some adverse economic
situation then the total assets of the bank was stating at BDT 9538.23 million which is an
increase of 11.10%.
Branch Expansion
According to the annual report 2008 the bank contributed their efforts to improve the client
service. All of its active branches along with Head Office and Principal Branch have been fully
computerized to provide prompt and efficient service. A few new branches are introduced this
year and the number of branches has increased to 84. To keep pace with the time and
requirements the bank is continuing to expand its network even to abroad. With the start of the
bank, it introduces three branches at the very beginning of the bank in mid 1983. And then the
number of its branches increased gradually. In 1987 it came to 40 and in 1988 it increased to 50.
According to the annual report of 1996, its branches were totaled 78 at that time.
Limitations of Branch Expansion and Computerization
Though the important branches are being computerized but the computer skill of the employees
is not that much satisfactory. Employees were in trouble in using the newly invented software.
Also, those computers, which were used, were not very modern PCs. Moreover, those are used
for a few purposes. As the employees have inadequate knowledge in using modern software so
they didn‟t like to use computer at that time. Also only branch expansion is not the requirements
rather than the quality of the service of the branch.
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2.4 Industrial Analysis
It is extremely crucial to analyze competitive forces in the industry environment to identify
opportunities and threats. Michael E. Porter‟s well-known framework, known as the five forces
model helps with this sort of analysis. The model focuses on five forces that shape competition
within an industry. The stronger the five forces, the more limited is the ability of established
companies to raise prices and earn greater profits. Therefore, we can conclude that a strong
competitive force can be considered as a threat because it depresses profit, whereas, a weak
competitive force can be viewed as an opportunity as it facilitates the companies to earn higher
profits. The situation of the industry changes overtime. The influence of the five forces in the
banking industry has been discussed below:
2.4.1 Analysis of United Commercial Bank Ltd. According to Porter’s Five
Force:
Threat of potential entrants
Potential competitors are companies that are not currently competing in an industry but have the
capability to get into the industry. The banking sector of Bangladesh seriously faces the threat of
new entrants. However the threat comes from two directions. The first threat comes with the
arrival of the multinational banks and their branch expansion particularly due to the booming
energy sector. Secondly, the continuous entries of local banks with lower cost structure also
possess a severe threat to this industry.
In the context of United Commercial Bank Ltd. (UCBL) the various new & upcoming Banks
pose a significant threat, being late entrants in the banking sector of Bangladesh. But UCBL is
aware of these potential competitors. So it is trying to expand countrywide to make the sector
unattractive & to create entry barrier.
Government policies for banking industry are not so strong in this country. We don't have strong
rules and regulation from Bangladesh Bank for regulating the private banking sectors. If
government doesn't regulate the banking sector strongly than lots of new banks will come and
will make the competition more intense.
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Rivalry among established companies
In the banking sector, the market size is measured in terms of total deposits and total advances.
Banking industry in Bangladesh is highly fragmented with categories like: Nationalized
Commercial Banks (NCBs), Development Financial Institutions (DFI) or Specialized Banks
(SBs), Private Commercial Banks (PCBs) and Foreign Commercial Banks (FCBs). The banking
sector is at the growth phase as different types of businesses are mushrooming all over the places
in Bangladesh, the need for banks has emerged, resulting in lots of banks operating in the market
making the present situation quite intense. There are more than 50 commercial banks in the
market, which are constantly fighting for the share in the market. Among the international banks,
Standard Chartered Bank has the largest network in the metropolitans of Bangladesh, operating
quite aggressively which can be a severe threat for the other banks in the banking sector of
Bangladesh.
Threat of substitutes
There are substitute financial institutions that do many of the activities and transactions of a bank
in the leasing field but these financial and leasing institutions are too small in size. These
institutions can shrink the profit margin of commercial banks. Industrial Leasing and
Development Company Ltd. (IDLC), Industrial Promotion and Development Corporation
(IPDC), United Leasing Company are the key players. They provide industrial leasing to many
companies in the country. But some of the operations of the banks like exporting/importing have
no substitutes. In banking industry substitute products are very easy to find. We need to consider
all types of substitute products for the banks. Different private and nationalized banks are
offering similar products, which are close substitutes. On the other hand some non-bank banks
like insurance companies and leasing companies are also competing indirectly with the
commercial banks product.
All the products of the commercial banks perform the similar functions. Taking the money from
the depositor and sanctioning loan to investors are the main functions. They all do it in a same
manner. United Commercial Bank Ltd. (UCBL) is not different from them. Since functional
similarity is high in banking industry so competition is also high because customer can switch at
any time they want.
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Product offered in banking industry is very identical. All the banks offer virtually the same
products with same characteristics. Only few large multinational banks of our country are
offering some differentiated products but the ratio is very low. UCBL offers products that are
highly identical with other banks products. So, we can say that product identity is high in
banking industry which means competition is also high. For example, the launch of premier
banking by SCB poses a strong threat on UCBL‟s premium customer group and UCBL is at a
condition where it should launch an even better product. Moreover the various consumer credit
schemes offered by various local banks with lower interest rates and cost also poses a strong
threat on the UCBL personal banking products. Again the lower service charges at national
banks also discourage a wide group of customers to hold account in UCBL. So these are some of
the threats posed by substitute products in the market place.
Bargaining power of buyers
Bargaining power of the buyer can be viewed as a competitive threat when they are in a position
to demand lower prices from the company or when they are in a position to demand better
service that can increase operating costs. On the other hand, when buyers are weak, a company
can raise its prices and earn greater profits. For the banking industry buyer means customers who
take loan from the banks. Switching cost is very low in banking industry. Every bank is giving
the similar types of loan at similar interest rate. So, an individual who wants to take loan from
banks can switch easily to other banks if he or she doesn't like the terms and conditions.
Customers of United Commercial Bank Ltd. (UCBL) are switching to other banks because of
low interest rate and lots of other reasons. Lower switching cost makes the industry more
competitive. In banking industry, there is always a chance for threat of backward integrations.
Big multinational companies or corporations can give threats to the commercial banks that they
will arrange their funds by forming another bank where the cost of fund is low compare to other
banks. For this reason, giant customers of this industry always possess more power than their
banks. Creditors are considered to be the buyers of the banks. There are thousands of creditors
from all walks of life. Mainly businessmen are the major buyer of bank‟s credit. Big amount
creditors have strong powers in determining interest rate of their credit amounts. Banks
distinguish their prime customers from others by setting a prime interest rate for them.
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Bargaining power of suppliers
Bargaining power of suppliers can be viewed as a threat when they are able to force up the price
that a company must pay for its inputs or reduce the quality of the inputs they supply, thereby
depressing the company's profitability. On the other hand, if suppliers are weak, this gives the
company the opportunity to force down prices and demand higher input quality. For the bank the
main supplier of fund is depositor. Bank also gets its funds from the directors. United
Commercial Bank Ltd. (UCBL) has one of the largest capitals among all other private banks. The
bank doesn't want more money right this moment because there is a very few good opportunities
for investment. So, it is offering lower interest rates on depositors for their funds. Bargaining
power of the fund suppliers is low in banking industry because there are lots of individual
savings in the economy but banks don't have opportunities for investment. Sometimes suppliers
of funds can give threat to the bank as well. Corporations or big multinational companies can
give threat to the private bank that they will form another bank for depositing their money. They
will not supply any fund to other banks. We all know that bank makes money by investing other
money. So, this can be lead to a higher competition in procurement of fund. Depositors are
considered to be the suppliers of the banks. There are thousands of depositors from all walks of
life. There are businessmen, service holders, farmers, students and people from virtually any
other profession who are depositors of the banks. Big amount depositors have strong powers in
determining interest rate of their deposits.
2.4.2 SWOT Analysis of United commercial Bank Ltd.
Strength
Client‟s deposit in the bank is much secured. The vault is insured.
United Commercial Bank Ltd. (UCBL) is one of the largest & profitable private
commercial bank in Bangladesh.
For any difficulty faced by clients the relevant officer is responsible.
The department incharge is always very much considerate and maintain a very good
relation with his subordinates.
The branches are very much solvent regarding the fund.
It has good worldwide corresponding maintaining NOSTRO A/C.
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Maintaining privacy and confidentiality the bank is not comparable.
All the branches are well equipped and have enough technical support.
United Commercial Bank Ltd. (UCBL) also has Management by Objectives (MBO)
everywhere. Each person has multiple objectives. All the employees must have to get the
approval of their bosses on what they are going to do. Later they review as how well they
have performed their job with their management as well as the peer group.
The MBO makes the review a communication device among various groups. The key to
the system is a “one-to-one” meeting between a supervisor & a subordinate. In the
meeting, the problems in dealing with customers are put forward first & every one dug it
to solve them.
At United Commercial Bank Ltd. (UCBL) the main objective is to setting up workshops
are to remove authority from an artificial spot at the top & place it where the most
knowledgeable people are, the people closest to the operations. The free exchange of
ideas is reinforced by a policy of “constructive confrontation”. Each employee is
expected to challenge ideas openly & aggressively, but never attack an individual‟s
motives for presenting an idea.
At United Commercial Bank Ltd. (UCBL) workshops are conducted periodically. On the
workshops, all people participate as equals, with new members free to openly challenge
top managers.
HRD has tried hard to avoid communication barriers & structural bureaucracies. The
little existence of authoritative barriers among the different level of management
stimulates a feeling of importance as their work get priority over the position.
The human resource of United Commercial Bank Ltd. (UCBL) is extremely well thought
& perfectly managed. As from the very first, the top management believed in empowered
employees, where they refused to put their finger in every part of the pie. This
empowered environment makes UCBL a better place for the employees. The employees
are not suffocated with authority but are able to grow as the organization matures.
The selection & recruitment of United Commercial Bank Ltd. (UCBL) emphasizes on
having the skilled graduates & postgraduates who have little or no previous work
experience. The logic behind is that UCBL wants to avoid the problem of „garbage in &
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garbage out‟. & this type young & fresh workforce stimulates the whole working
environment of UCBL.
United Commercial Bank Ltd. (UCBL) employees are one of the major assets of the
company. The employees of UCBL have a strong sense of commitment towards
organization and also feel proud and a sense of belonging towards UCBL. The strong
culture of UCBL is the main reason behind this strength.
Weakness
As United Commercial Bank Ltd. (UCBL) is a very large and busy organization the
clients might face some problems. They might be bothered because of some unexpected
inconvenience like waiting time, maintaining queue etc.
The recruitment is not well enough. Those who are being appointed here are not enough
technologically literate sometimes. Then few training sessions are much needed.
The local office branch must be well decorated but this is not so.
The bank management always instructs the official to know all the clients which is not
under practice.
The computer installing in UCBL branches is not modernized.
The workload is very high so that the personnel cannot always maintain well
communication with the clients.
The bank is maintaining a conservative banking method.
There is no open door culture.
UCBL are not introducing new and dynamic innovation like ATM services which is
already been introduced by other private banks in the country.
Most of the employers from messengers to the top level are from a particular region of
the country.
UCBL currently do not have any strong marketing activities through mass media e.g.
Television. TV ads play a vital role in awareness building. UCBL has no such TV ad
campaign.
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Opportunity
United Commercial Bank Ltd. (UCBL) is noted for its distinct operating procedures.
Repayment capacity as assessed by UCBL of individual client helps to decide how much
one can borrow. As the whole lending process is based on a client‟s repayment capacity,
the recovery rate of UCBL is close to 100%. This provides UCBL financial stability &
gears up UCBL to be remaining in the business for the long run.
The ultimate goal of United Commercial Bank Ltd. (UCBL) is to expand its operations to
whole Bangladesh as its mission is to create both urban and rural base bank for mass
people. Nurturing this type of vision & mission & to act as required, will not only
increase UCBL‟s profitability but also will secure its existence in the long run.
The top management team of United Commercial Bank Ltd. (UCBL) is expert in banking
activities. The operating policies established by them are unique & unified. All the
members of the team carry out their management roles exhaustively. They equally
contributed to UCBL‟s superior leadership, by carrying out their unique roles. They
worked well together, respecting each other‟s abilities, & arguing openly & without any
rancor when they disagree.
An ATM service is one of the most popular and emerging products in Bangladesh, which
offers customers total financial mobility. Various other banks and institutions are
currently offering this product. United Commercial Bank Ltd. (UCBL) has started this
facility in collaboration with the Prime Bank. But, to be the market leader it has to
introduce its own ATM card.
United Commercial Bank Ltd. (UCBL) is one of the experts in acquiring various firms
and organizations. In Bangladesh it can also diversify quickly by acquiring various local
established banks and increase its total operation within Bangladesh rapidly.
Threats
The upcoming private local & multinational banks posses a serious threat to the existing
banking networks of United Commercial Bank Ltd. (UCBL). It is expected that in the
next few years more commercial banks will emerge. If that happens the intensity of
competition will rise further and banks will have to develop strategies to compete against
and win the battle of banks.
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United Commercial Bank Ltd. (UCBL) should continuously improve its customer service
strategies and the overall service quality needs to win the customer satisfaction
undoubtedly.
Default culture is a major problem in Bangladesh. As United Commercial Bank Ltd.
(UCBL) is an old organization the problem of non-performing loans or default loans is
very minimum or insignificant. However, as the bank becomes older this problem will
arise enormously and the bank may find itself in a more threatening environment. Thus
UCBL has to remain vigilant about this problem so that proactive strategies are taken to
minimize this problem.
2.4.3 Issues of UCBL
Strategic Issues
One of the main strategic issues of United Commercial Bank Ltd. (UCBL) is to capture majority
of market share. Currently there are more than 50 banks in the country and majority of the
market share is captured by the local banks. Hence, UCBL need to strengthen its footprint by
increasing the market share. UCBL is also facing intense competition in the market as there are
so many foreign and local banks. Standard Chartered Bank is still its main threat and posses
more market share than UCBL. Increasing the sales is also a major issue of UCBL. Without
increasing the sales the bank cannot generate money and cannot survive in the market. As a
Muslim country it is important for a bank to do banking in Bangladesh that is compliant to
Shariah or Islamic law. As a foreign bank it is a major issue for UCBL to provide customers
Islamic banking service. Product feasibility is also a major issue of UCBL. UCBL also need to
provide products that are highly potential and feasible.
Operational Issues
Direct sale is very critical for a bank. The customers need to be pursued to purchase United
Commercial Bank Ltd. (UCBL) products. The sales officers need to make the customers loyal to
UCBL. High level of customer service is a critical issue for customers. As a foreign bank UCBL
has to set a very high standard of customer service level. Providing different promotional offers
that provide benefit to both organization and customers are very critical for UCBL. Local banks
are taking various promotional activities that may take away some customers from UCBL. As an
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local bank it is important for UCBL to build strong relationship with media, government and
general people through public relations. UCBL has to undertake marketing research to explore its
market and to improve its products and performance.
Legal issues
United Commercial Bank Ltd. (UCBL) is bind by law to pay tax to the government of
Bangladesh regularly. Otherwise they cannot operate their business. UCBL must ensure that no
money laundering is occurred via their bank and they must ensure that each and every of their
transactions are complied with the government policy. Bribing is a culture of Bangladesh, but
UCBL has to fight against this illegal practice and make sure that their staffs don‟t take or give
any bribe to customers.
2.4.4 Strategies of UCBL
Direct sales strategy
An executive is assigned to this part of the marketing department. The Direct Sales division
coordinate & manages the sales activities of all the Mobile sales officers (MSO) of UCBL
Bangladesh. The MSO‟s basically makes sales of the company various Personal Banking
products such as, savings accounts, consumer loan, etc outside the banking premises. There are a
total of more than 150 mobile sales officers (MSO) employed in the cities of Dhaka and
Chittagong. MSO‟s are assigned to specific branches for making sales activities more smoothly.
The DS executive sets sales strategies & targets for the Sales officers and manages the whole
team of MSO‟s in Bangladesh. The direct sales department also decides upon the commission
and remuneration of the mobile sales officers as their salary structure is based on sales
performances. Thus this part of the marketing division is playing important role for the overall
growth of the Personal Banking Division.
Introduce new and competitive products
United Commercial Bank Ltd. (UCBL) constantly try to come up with new products and try to
refine its existing products. They design the products that are fully compatible to the individual
customer needs.
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Refine the interest rate
United Commercial Bank Ltd. (UCBL) constantly refine the interest rate of their saving schemes
and loans and make sure that it is within the range and preference of its customers.
Provide high standard customer service
United Commercial Bank Ltd. (UCBL) constantly promotes customer service by providing its
staffs with extra incentives. There are guidelines regarding the behavior to the customer and
level of the customer service. UCBL sends “Mystery Shoppers” in every branch, who provide
information about the service quality of each branch and staffs are reward or penalty according
to their performance.
Training of the staffs
The staffs of United Commercial Bank Ltd. (UCBL) get special training to improve their
customer service. In every there are small training and meeting sessions where the staffs get
feedback about their customer service.
Cultural strategy
United Commercial Bank Ltd. (UCBL) follows the local traditions. The high standard service
level and behavior of the staffs, environment of the bank reflects the local culture along with the
products and promotional activities of the bank. UCBL take different cultural initiatives. They
arranges different cultural program, like drama shows, language competition, celebrating „Pohela
Baishakh‟ and the like.
Compliance with foreign exchange policy of Bangladesh bank
United Commercial Bank Ltd. (UCBL) makes sure that all the foreign trade services and the
movements of inward and outward remittance are done under the guideline of foreign exchange
policy provided by Bangladesh Bank.
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CSR Strategy
United Commercial Bank Ltd. (UCBL) Bangladesh corporate social responsibility (CR) focuses
on the following four areas:
o Promotion of Bengali culture;
o Sponsored Bangladesh Cricekt Team;
o Education for underprivileged children;
o Assistance for the disabled/needy;
o Support for the environment; and
o Stand beside the acid victims.
Shariah Banking
Non interest Banking of United Commercial Bank Ltd. (UCBL) is an ethical and indigenous
form of community banking that is compliant with the Shariah (Islamic law). It involves
financing based on the sale or lease of assets; i.e. the bank is selling goods for use (trade) rather
than selling money itself. UCBL also offers Non-interest Current Account, which is a
relationship checking account, designed to comply with Shariah (Islamic Law) guidelines while
also providing the regular convenience and security of a current account.
Promotion
This part of the marketing department deals with all the promotional activities of United
Commercial Bank Ltd. (UCBL) Bangladesh. Prime responsibilities of this department are:
Maintaining strong public relations with various media intermediaries, advertising the
company‟s products and services, building a strong corporate image of UCBL in Bangladesh.
Public Relations
The promotion department organizes various environmental and social activities in order to
build a strong corporate image of United Commercial Bank Ltd. (UCBL) in the minds of
customers as well as in the media. Maintaining strong relationship with news media is another
major duty of this department.
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Advertising
The promotion also coordinates all the advertising of United Commercial Bank Ltd. (UCBL)
products within Bangladesh. Some of the advertising tools that are frequently used by the
company are as follows:
Newspapers Advertising: Regular advertisements of various products and services of UCBL
are given in some of the country‟s most renowned daily newspapers.
Billboards: Huge colourful billboards with UCBL logo are found in various major areas of
Dhaka and Chittagong. These billboards emphasize on the needs of customers and shows
UCBL logo as solution to their needs.
Mailers: various product updates and new product information are regularly sent to existing
customers of UCBL.
Brochures: Various colourful brochures featuring specific products of UCBL are being
displayed and distributed to existing and potential customers via branch offices and sales
officers.
Traffic Boxes: UCBL established some traffic boxes in different points of Dhaka and
Chittagong for the traffic force of our country.
Service marketing strategy
A close analysis of the marketing activities United Commercial Bank Ltd. (UCBL) reveals that it
has been following the Offensive strategies of Service Marketing. Some key aspects of this
strategy are presented below:
Marketing research strategy
This department formulates & executes various marketing strategies of United Commercial
Bank Ltd. (UCBL) Bangladesh. This department also administers various marketing research
activities on the existing and potential customers of UCBL. Some such research activities are:
mystery shopping, critical incident surveys, customer suggestion surveys, etc. The results of
these surveys are integrated while formulating various marketing strategies. This department
also deals with the billing and invoicing of various marketing & advertising costs of UCBL
Bangladesh.
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Chapter # 3: Findings & Analysis