Justification of Corporate social responsibility by banks

The banks through Corportate social responsibility are giving back to the community to improve the communities in which they operate. Corporate social responsibility is mandated in many countries for corporates.Banks have discovered that it is equally important for business growth apart from providing excellent customer service and even coming up with very innovative products. It has therefore usual to see in the media banks highlighting their Corporate Social Responsibilities undertaken during specific periods.

Options taken by banks as Corporate Social Responsibility

• Education Foundations for the less privileged yet bright students
• Provision of much needed water, either by funding drilling of boreholes in arid and semi arid areas or where communities have no access to clean water
•  building of classrooms or schools facilities like libraries
•  hold marathons to support eyesight and/or heart operations for the people who are unable to afford the same.

Benefits of Corporate Social Responsibility to the Bank

Even though Corporate Social Responsibility is seen as of great benefit to the communities the banks also benefit from it. Some of the benefits are listed below

• Loyalty by the existing customers due to corporate social responsibility. The existing customers are proud to be associated with the bank that is having a positive impact on the community and are likely to continue banking with them
• Corporate Social Responsibility helps a bank to attract new customers. This is especially true for members of the community targeted by the bank. The new accounts opened lead to business growth and new opportunities.
• Corporate Social Responsibilities boosts the morale of the existing employees as they are proud to be associated with such a bank. This pride in the employer increases employee productivity and reduces staff turnover resulting in reduced costs associated with hiring and training of new staff.
• Corporate Social Responsibilities also singles out the bank as an employer of choice as most potential employees look to them as their ideal employer therefore they are easily able to acquire the best skills in the market.
• Corporate Social Responsibility activities act as advertisement opportunities for the banks’ products. The products sold to the community are seen more than just bank products but as products that result to  Corporate Social Responsibility
• Corporate Social Responsibilities helps in brand reinforcement among the populace. People generally easily associate such a bank and learnt to trust the bank viewing it as the one that cares for the welfare of the community.

Budgets must include the amounts that would be ploughed back to the community banks. Corporate Social Responsibility activities are important and cannot be ignored.

Having identified the importance of Corporate Banking, majority of banks create specific departments to ensure that their needs are met. Given the magnitude of their transactions and their importance these companies need a designated Relationship Manager.

Corporate Banking

The relationship manager provides advisory services on for example, investments and Capital decisions. The relationship manager also tries to identify change in the corporate customers’ need the relationship manager comes up with innovative solutions to meet this corporate banking need.

Managing this Relationship is slightly different from managing an SME as the failure or success of a corporate has a great impact on the Bank. So whether these Corporate Companies have credit facilities or not, the Relationship Manager should always be in touch with the following areas of the company

Corporate banking- Governance of the Company

This includes the members of the Board of Directors, the Board of Management and the management structures in place. The shareholding structure of the company and the bank also investigate the integrity of the team and what impact the corporate would have on the reputation of the company. The quality of governance is very critical as it can help determine the future of the company.

Corporate banking -Recovery Management

This is key to the stability of the business and it is important to establish in general if the corporate has a policy on the recovery from any unforeseen factors that would greatly affect the business. In other words the disaster recovery plan or the business continuity plan is very important and must be disclosed to the bank.

Corporate banking-Technology

This affects database management, establishing whether a company is up to date in technology, which is changing rapidly. Updated technology greatly ensures good database management, resulting and leading to accurate reporting, increasing transparency and accountability. Technology may also be used to reflect the financial health of a corporate.

Corporate Banking-Risk Management

Establish whether the corporate has identified the risks that could greatly affect their business. Confirm the measures that have been put in place to manage the risk. These measures must be well documented. The corporate should have unit monitoring for the ever increasing risks.

Corporate Banking -Management of Manpower

Establish whether the corporate optimizes manpower resources in terms of numbers, knowledge and even skill. This in turn maximizes productivity, improves quality of operations.

Given the current economic crises that has greatly affected many corporate companies, it would be prudent for the banking industry to keep in touch with their corporate customers operation  by providing relevant corporate banking solutions.

 Clients Customer experience at a bank

After several months of literally  being tracked down by a sales representative or sales executive as they prefer to be called my group decided to open an account at one of the banks, being satisfied that that the features looked good and would serve the interest of the group.

Six months down the line the group held elections as some of the office bearers were moving out of town and it would be prudent to replace them to allow smooth running of the group. There was therefore need to change the account signatories and one of the office bearers was mandated to get all the requirements needed from the bank. This was in readiness for when the other office bearers would be available for this process.

After ensuring all the requirements previously obtained from the bank were in place the office bearers walked confidently to the banks sure that the process would take the shortest time possible. When they got to the customer service desk after patiently waiting on the queue  a blank looking officer informed them that those are not the requirements and went ahead to produce a totally different list of requirements.

Protesting, they explained that they got the previous requirements from that desk and even their request to see the manager was declined. As at this moment the group has not been able to change the signatories and this has greatly hampered the operations of the group.

Reasons for poor customer experience

• Once one opens an account then they become a statistics to the bank, the customer no longer has a face or a name. The bank can proudly say they have reached the one million mark in number of accounts maintained. Customer experience is no longer necessary when the numbers are being achieved.
• Lack of staff training on all areas of banking. Training of staff members on the procedures of the bank is no longer a priority to the banks. It seems like provided you can communicate, press keys on the computer key board and sit on a desk that’s it. One will catch up on procedures as they sit there. This reduces the customers experience since the customer is not assisted.
• Quality of service is not in the interest of banks. It is the number of transactions that matter, profits have become more important.
• Banks are aware that the justice system is slow and a customer needs to have huge resources to file for damages. The banks will not bother to keep their promises. An ordinary account holder is unable to sue the bank due the costs.

Ways for the banks to improve customer experience

• Training is a must. The staffs must be trained in all aspects of serving the customers not just in selling.
• The bank must have standard operational procedures which are known and available to all staff. This will lead to consistency on all operations and forms that customers have to complete. This enhances customer experience.

Customers are the reason why banks operate. The banks must therefore make it a point to improve on their customer experience offering.

What are hard economic times

hard economic times

Great economies are facing hard economic times and are struggling, hence living in a country where majority live below the poverty line, things seem to be moving from bad to worse. The Banking industry is also affected by hard economic times.

If one reads the Bible, one will notice that these are not unique situation. There are stories of mothers eating their babies and people feasting on the refuse of the donkeys. People in ancient days also lived through hard economic times too.

One of the most mind boggling things about the human species is the ability to adopt and be very innovative during these times. Tough people have an inner strength and that is why they have the ability to last during tough times. It is not about physical strength but inward strength that they draw from.

 Some of the secrets for living in hard economic times

• They acknowledge the change due to living in hard economic times and that is not business as usual.
• Apart from acknowledging the times they are living in they set strategies on how to thrive while living in hard economic times. This is to ensure that at the end of these hard economic times, they will not be beaten to pulp. Put in simple words they do not just whine but take action.
•  one must avoid taking loans and learn debt management strategies

Highlights of financial strategies one would adopt while living in hard economic times

1. Stick to your budget especially on non essential expenses. Take for example your monthly budget for fuel for your car; when you realize you are spending beyond this budget then reduce the number of times you use the car and stick to the budget. For ladies maybe one should reduce the visits to the salon, one can opt to do basic hair maintenance like washing or even treating the hair at home.
2. Please do not dispose off your near cash investment to meet your daily living expenses. These are assets such as shares. After all, with the poor performance of the economy one is likely to sell them at a loss.
3. There is no use on spending on holidays one cannot afford. You can opt to take the family for a simple drive to the park and spend quality time together instead of taking an expensive trip to the coast yet they cannot afford the same so they have to borrow. Let prudence take the place of pride, put image issues aside everyone is feeling the pinch.
4. Make sure when going to the supermarket a shopping list should be in hand to avoid buying what one does not need.

In the middle and lower class bracket where the salary is not increasing as fast as the inflation rate, disciple is one of the key qualities adopted.  Let us keep hope alive as we see these hard economic times through.

 Definition of Cross selling by Banks

cross selling by Banks

Cross selling by banks is defined as offering the existing customers additional banking products. For example, a deposit customer who is already operating a savings account can be offered a term deposit account or a fixed deposit account or call deposit account. Another customer can be offered  mortgage finance, credit card and personal loan.

cross selling by banks can also be said to be the art of customer retention by ensuring customers are provided with as many products to meet their needs.

Process for effective cross selling by banks exercise,

• Analysis using existing customers database should be done for each customer, identify their specific need and match with a product that can be offered to the customer as a cross selling product.
• After identifying the product,  the banks should come up with a strategy on how to disseminate information about the product to the customer. The strategy may suggest each customer be assigned a particular staff for smooth management of the relationship.
• The staff members charged with this responsibility should be knowledgeable and well trained in cross selling to be able to market all or majority of the banks products to the customer.
• There should be continuous periodic review of the customer needs and the database to identify the needs of new customers.

This exercise has proved to be very beneficial with more banks adopting the approach, major banks have expanded their banking business.

 Benefits of Cross selling by Banks:

1. There is increased profit as the bank is able to greatly expand their banking business by offering more products to existing customers. There is tremendous growth in business.
2. There is reduced cost as it has been proven that the cost of acquiring a new customer is four times higher than serving the existing customer, with reduced cost the profits will also increase.
3. There is ensured loyalty of the customer to the banks and therefore there is little or no likelihood that the customer would shift their business dealings to another bank. This is also known as ‘ring fencing’.
4. The bank would have a competitive edge over the other banks, because in the process of analyzing the needs of the existing customer they would come up with innovative products which are not being offered in he market.
5. Cross selling by banks can also greatly build team spirit among the staff members of the bank, creating loyalty and reducing staff turnover as they are well trained and feel part of the team that brings in the business and not just ‘robots’.

Cross selling by banks is an art if well mastered by the bank will have a great long term effect on the business growth and put the banks on the cutting edge of innovation. Training in cross selling by banks is a must to grow and compete in the industry.

M-Banking: Awareness Creation Required

Recent developments have seen banks like the Kenya Commercial ,Equity and Cooperative introduce mobile banking services.These range from services that allow deposit and withdrawal of cash amounts of a certain speficied value.

Whilst this may seem a good move by both the banks and the service providers, there is need for the public to be sensitized on this. This will help avoid scenarios that have resulted in the rise in cases of mobile fraud as been noted in the recent past.

there are of cases where M-Banking agents have been killed or robbed at gun point by persons posing as customers.There have also been instances where clients have been conned into transferring monies to people under false pretenses.

This scenario calls for  information creation strategies that would  help reduce these  situations.

M-Banking: Who should be empowered?

Both the Mobile banking agent and their customers should be enlightened on the following:

The agent:

• She or he should be trained on how to swiftly deliver banking services through mobile networks as per the procedures laid out.
  

  M-banking

• Should be sensitized on how to react when confronted with robbers who pause as clients. This will go a long way in reducing the number of deaths due to resistance from the mobile money transfer agents
• How to detect and  raise an alarm in case of any suspicious customers

The customers:

• Should be sensitized on how to choose wisely between banking services to be executed within a banking hall and those that can be transacted via mobile money agent.
• How to enhance their own safety by choosing appropriate time of the day and locations to carry out their mobile transactions

With the above sensitization’s executed, I do believe that there will be a reduction in the number of mobile frauds as is the case.

The Future of M-Banking

M-Banking is here to stay given the amount of online transactions people are engaging in due to:

• Convenience
• Reduction in access costs

It is therefore paramount for banks in Kenya to continuously device strategies that would enable majority of those already engaged in use of internet for their financial transactions to benefit immensely.

Some of these strategies can still ride on the existing mobile platforms that are commonly used by the public to help reduce on the costs.

As we move closer to Vision 2015,we as a country need to embrace mobile and M-banking as a means of promoting economic empowerment.