Strategies for Business Development of the Branch

project REPORT onSTRATEGIES FOR

BUSINESS DEVELOPMENT

OF THE BRANCHContents:

Chapter no.TitlePage no.

Executive Summary6

1.1.1 Introduction7-11

1.2 Objectives12

1.3 Research Methodology13

2.Analysis14-18

2.1 Branch analysis15

2.2 Market analysis16

2.3 SWOT analysis17-18

3.Findings / Business development strategy19-24

3.1 Setting strategic objectives20

3.2 Formulation of strategy/ Recommendations21-24

4.Conclusion 25-26

Bibliography 27

Executive Summary:

Banks offer various products to its customers such as personal loans, home loans, savings account, credit cards and so on. It is very essential for a Bank to know, which user to target for what product and when. The goal of data analytics and data mining department is to arrive at accurate answers to these 3 questions, (Which User, What Product, When), and it is a rewarding exercise for the bank, branch and definitely to the employee as well to the existing and prospective customer of the bank.The problem is very simple. A customer may have purchased a single product or multiple products from a bank. The Bank would ideally like if all its customers bought all of its products. This possibility however does not exist, therefore without any targeting model; the Bank would be wasting money, time and resources by randomly targeting customers for its products.

Using a little sophistication of data mining techniques, we would be able to build a targeting model or a response model on customer base. A response model is a predictive model which estimates the future behavior of a given customer even before it occurs. Even with a fair amount of accuracy it can be very useful for Banks in saving majority of costs in various departments/channels. There are various types of data available for analysis like demographic, behavioral & attitudinal. The above data can be very useful in data mining methods, however the cost, usefulness and expertise to store / retrieve data have to be assessed and judged.

This project is an honest attempt to find out the techniques and methods which are useful in identifying customer needs and then formulating strategies for business development by providing complete banking solutions & satisfaction to customers.Chapter 1IntroductionChapter 1:

1.1 Introduction:Bank of Baroda

It has been a long and eventful journey of almost a century across 25 countries. Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech Baroda Corporate Centre in Mumbai is a saga of vision, enterprise, financial prudence and corporate governance.It is a story scripted in corporate wisdom and social pride. It is a story crafted in private capital, princely patronage and state ownership. It is a story of ordinary bankers and their extraordinary contribution in the ascent of Bank of Baroda to the formidable heights of corporate glory. It is a story that needs to be shared with all those millions of people - customers, stakeholders, employees & the public at large - who in ample measure, have contributed to the making of an institution.Bank of Baroda is a pioneer in various customer centric initiatives in the Indian banking sector. Bank is amongst first in the industry to complete an all-inclusive rebranding exercise wherein various novel customer centric initiatives were undertaken along with the change of logo. The initiatives include setting up of specialized NRI Branches, Gen-Next Branches and Retail Loan Factories/ SME Loan Factories with an assembly line approach of processing loans for speedy disbursal of loans.

Mission statement:

To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence.Our Motto : RACE AHEAD OF COMPETITIONBusiness growth through higher productivity, Efficiency and profitability. Sustainable Business Model:

Bank of Baroda has been talking about Sustainable Business Model, which rests upon Four pillars viz.

A strong and growing CASA base

Well diversified and quality credit expansion

Continuous improvement in asset quality through arresting slippages and recovery/ Up gradation of bad loans Growing pool of fee based business & income

Global Presence of Bank of Baroda

Corporate Offices

Head OfficeSuraj Plaza 1, Sayaji Ganj,Baroda 390005

Ph:(0265) 2361852(10lines)

Fax:(0265) 2362395, 2361824, 2361806Corporate CentreBank Of BarodaBaroda Corporate Centre,Plot No. C-26, Block G,Bandra Kurla Complex,Bandra (East),Mumbai 400051

Indian Branches

AreaNo. of Branches

Metro991

Urban902

Semi Urban1388

Rural1916

Total5197

Overseas Branches / Subsidiaries

Branches of Bank of BarodaBranches of Bank of Baroda's Subsidiaries

CountryNo. of BranchesCountryNo. of Branches

United Arab Emirates17Uganda15

United Kingdom10Kenya11

Mauritius9Trinidad & Tobago3

Fiji Islands8Tanzania4

Sultanate of Oman4Botswana3

Hongkong2Guyana2

South Africa2Ghana2

USA1New Zealand3

Bahamas (OBU)1

Singapore (OBU)1

Belgium1

Bahrain1

Seychelles1

China1

Australia1

Total60Total43

Representative Offices

Thailand1

Total Number of Branches / Offices / Representative Office102

Total No. of countries covered24

Summary

No. of Branches% of Business Covered

Indian Branches5197100%

Overseas - Bank's Branches60100%

Overseas - Branches of Bank's Subsidiaries43100%

Representative Office1100%

Total5301

BARODA MANIPAL SCHOOL OF BANKING: An HR Initiative Baroda - Manipal School of Banking has been set up jointly by Bank of Baroda and Manipal group. The school has been set up to first train prospective candidates in Banking and Finance before their embarking on a Banking career with Bank of Baroda.

PROJECT SPARSH:

In order to take the bank to the next level of performance in terms of higher productivity, Efficiency and profitability, the most critical enabler is bank`s human resources. The bank has taken note of the need to harness its human resources in a scientific manner encompassing all facets of HRD. A new project Project Sparsh is therefore launched with the assistance of BCG, 1.2 Objectives of project:

1. To find the business/ demand trends in branch area Understanding the demographical background of the area and monitoring current trends and competition. 2. To explore the factors used in business development strategy planning process. Various factors including strength, weakness, opportunity & threat (SWOT).3. To explore business development strategy of the branch. Formulating strategic objectives by analysis of : What do we do? For whom do we do it?

How do we excel?

1.3 Research Methodology: Data and information collected from various departments, staff, customers, Annual report of bank, and website of bank are explored and analyzed.

Information so collected put into pattern and observation so gathered analyzed by using SWOT analysis.

Other Banks branches situated in the same area have been taken as samples and methodology adopted by them analyzed.

Finally a report prepared.

Chapter 2

AnalysisChapter 2

Analysis2.1 Branch analysis

Branch profile

Name of BranchTHILLAINAGAR BRANCH

Alpha code

Sol ID2748

RegionMADURAI

ZoneTAMILNADU&KERALA

Date of opening of the branch

Area classification Urban

Category of branchScale IV

Risk rating advice by security departmentMEDIUM

Composite Branch Rating (CBR)A (well run branch)

CBS since11/11/2006

Services / Facilities availableDeposit products

Credit products

Remittance

Safe Deposit Locker

ATM

Authorized to handleGovt. business

Third party products

Services unavailableForex business

2.2 Market analysisDemographical profile:

As per latest 2011 India census,

Trichy has a population of 27,22,290 making it one of the largest cities in Tamil Nadu. Males constitute 51.28% of the population and female 48.72%. Trichy has an average literacy rate of 83.23% (census 2011), Male literacy is 89.72% and female literacy is 76.87%.

Owing to the rising employment opportunities and opening of numerous regional and state level offices, banks, and FMCG companies, and Real Estate Business the city witnessed a rapid influx of employment seeking migrants.

2.3 SWOT Analysis of the Branch:It is an analysis which depicts the trueposition of the firm in terms ofCompetitionand prepares the firm for future endeavors. It starts by Stating the Strengths(S)on which the Company can bank upon and moves forward followed by Weakness(W), which they need to cover under the belt ofStrengths, then Opportunities(O)which the companies can grab from the mouth of thecompetitor and Threats(T)which act as a Warning Signals from their rivals.

Findings under each of the head of the Analysis are:-

Strengths

Advantages Bank/Branch have: Urban area branch

Located at Thillai Nagar, Trichy. Surrounded with MSMEs and many Hospitals.

Importance of the Customer for Bank/Branch: High

Customer is everything for a Bank Weakness

Factors responsible for the loss of sales/revenue: Higher priced products

Non-Performing Assets (NPA) Thetechnicalsnags for Bank/Branch which creates dissatisfaction in customers: Link failure Unavailability of Non-personalised ATM cards

Passbook printers not in working condition Opportunities

Good opportunities in Bank/Branch way: Huge existing customer base

Business area is well developed and still growing

Improved demographical condition of area provides a great chance to enrich its various product basket.

Threats

Presence of the Competitors: Big players like State Bank of India, ICICI Bank, HDFC bank, and Indian Bank are situated near branch area. With the emergence of larger number of players in the Banking Industry, the switching cost of the buyer has gone done significantly. The onus is now on the effectiveness and speed with which the services are provided to the customers.Chapter 3

Findings / Business development strategy

Chapter 3Findings / Business development strategy

3.1 Setting strategic objectivesOn the basis of SWOT analysis done of the branch we first have to set the strategic objectives in the below form:

Factors to be considerObjective of strategy

Product Features of service offering like various types of deposit and loans as per customers requirements.

PriceInterest Charges, Discount, Fees and Commission must be competitive.

PlaceBranches, ATMs, Mobile And Internet Banking for affordability, quality & convenience, smooth & error free CBS (Core Banking Solutions).

Promotion To create awareness and improve attractiveness of product & services offered by Bank in customers mind.

PeopleEstablish a nice & customer friendly approach by Bank branch employees. As their behavior is a significant factor in the service quality of Banks which is considered a prime factor in the Bank selection criteria by customer also.

Process The process of a transaction contains Time, accuracy and convenience. Customer must feel delighted after getting a transaction processed.

Physical environment This is a highly rational part of Banking services. These are to attract potential customers towards Bank and to retain existing.

3.2 Formulation of strategy for Business Development:3.2.1 Product-Objective of strategy: Features of service offering like various types of deposit and loans as per customers requirements.Strategy to achieve objective:-

Use of data mining techniques:

A customer may have purchased a single product or multiple products from a bank. Using a little sophistication of data mining techniques, we would be able to build a targeting model or a response model on customer base. A response model is a predictive model which estimates the future behavior of a given customer even before it occurs. Even with a fair amount of accuracy it can be very useful for Branch in saving majority of costs in various departments/channels.Giving an example: A customer has savings account in a bank, based on the information given to the bank along with account status and history, we could target him/her as a prospect for a loan product based on a logic / algorithm.

The logic / algorithm could be as simple as if a customer from urban area with account balance of Rs 1,00,000 or more for over 6 months should be a prospect for home loans Rs 20,00,00. 3.2.2 PriceObjective of strategy:

Interest Charges, Discount, Fees and Commission must be competitive.Strategy to achieve objective:-

These factors are decided on macro level, which are not in the hand of branches to change. Hence no strategy can be formulated to be price competitive.3.2.3 PlaceObjective of strategy:

Branches, ATMs, Mobile and Internet Banking for affordability, quality & convenience, smooth & error free CBS (Core Banking Solutions).Strategy to achieve objective:-

Implementation of project Navnirman (Baroda Next branches):Major changes & benefits under this project are:

Sales and service focus: Baroda Next branch More efficient service More convenient options for transactions ATM, Internet kiosk in branch premise etc. Better facilities at branches Queue management and Cheque Deposit Machines. Improvement in branch productivity on sales Best-in-class service levels for customer delight Redesign & simplification of front and back office processes and roles to reduce turnaround time and avoid duplication Reduction in operating costs.All these steps will provide opportunity for better utilisation of resources in sales and service, for higher revenue generation and greater customer delight.3.2.4 PromotionObjective of strategy:

To create awareness and improve attractiveness of product & services offered by Bank in customers mind.

Strategy to achieve objective:-

Mass media is considered best for Banking- Hoardings of latest schemes of deposit & credit products should be placed on public places like railway station, shopping area.

Advertisement in local daily newspaper on regular basis. Organizing public event like customer meet in branch.

Personal selling-

By branch staff as an advice to customers.

Direct marketing- By targeting employees of organizations like: Government organizations3.2.5 PeopleObjective of strategy:

Establish a nice & customer friendly approach by Bank branch employees. As their behavior is a significant factor in the service quality of Banks which is considered a prime factor in the Bank selection criteria by customer also.

Strategy to achieve objective:-

Awareness of products & services offered by branch through branch meetings, new product training programs. Knowledge of correct rules & practices followed in customer dealing to offer error free services.

3.2.6 ProcessObjective of strategy:

The process of a transaction contains Time, accuracy and convenience. Customer must feel delighted after getting a transaction processed.

Strategy to achieve objective:-

Reduce turnaround time for every process by allocating work to staff as per the skills and situation.3.2.7 Physical environmentObjective of strategy:

This is a highly rational part of banking services. These are to attract potential customers towards Bank and to retain existing.

Strategy to achieve objective:-

Using Baroda next model for branch transformation into a well maintained workplace to facilitate: Smooth work flow

Greater customer satisfaction

Efficient way of customer handling

Create a new nice image of bank in customers mind.

Chapter 4ConclusionChapter 4

Conclusion

Banking in current scenario is very competitive due to presence of several others banks in the same area. This situation forces each bank branch to think, analyze and formulate its own strategy to increase its business as well as retain its existing customers. It is found that there is huge opportunity of business growth, which is supported by branch location, good market presence, growing population and increasing income level of people residing in area. But with opportunities also there are challenges in form of presence of many big banks including public & private banks. To beat these challenges and tap the opportunities branch has to seriously follow the strategies for business development. The strategies suggested in this project report are based on the SWOT analysis of the branch. The strategies show the importance of seven factors including: Product, Price, Place, Promotion, People, Process and Physical environment of branch. These factors are highly rational part of banking services. These are to attract potential customers towards Bank and to retain existing. Also they help in efficient utilization of the same resources for selling more products by using techniques like cross selling, personal selling etc.These all has been possible due to dedicated workforce of Bank of Baroda who have mainly concentrate toward SUSTAINABLE BUSINESS MODEL of Bank.

So the Branch strategy should mainly concentrated over the SUSTAINABLE BUSINESS MODEL of Bank and business should be on retail segment. Retail growth gives a sustainable growth in contrast to bulk business which is quite susceptible to high risk. Hence the branch should mainly concentrate on retail growth as Assets & Liability products.

The bank is situated in residential cum business area. It provides a very good scope for retail business. The focus should be to more strategy which is adoptable to the competitive changing environment of high level of competition

Use of these strategies will ensure better customer satisfaction and higher revenue for the branch. This will lead the way for bank To be a top ranking National Bank of International Standards committed to augmenting stake holders' value through concern, care and competence.Bibliography:

Reports and other materials available in branch for branch profile analysis.

Websites: www.bankofbaroda.co.in www.wikipedia.com11