Executive Summary:
The main theme behind this report is to help understand the major functions of the Personal Loans Department of Standard Chartered Bank as I had the opportunity of interning at this prestigious bank. This requires that I introduce both the Bank and the Department and then I will go on to give a brief summary of the major points, related to my internship that have been presented in this report.
Standard Chartered Bank is basically the result of a merger between two banks the Standard Bank and the Chartered Bank. Of these Chartered Bank is the oldest, having been founded in 1853 whereas Standard Bank was founded in 1862. Over the 150 years of banking services that this bank has provided till today. SCB the merged Standard Chartered Bank has developed a very stable position. On one hand it has a very positive reputation in the international market which can be seen through their presence in over 50 countries. On the other hand they have the added advantage of having merged with various banks such as ANZ Grindlays and the Chase Consumer Banking operations in Hong Kong in 2000. So we can see that this bank has still not lost the urge to grow. This along with over 90 billion in assets makes SCB a very prominent player in the international banking industry.
SCB has been one of the oldest amongst the foreign banks of Pakistan. At present it is offering the banking consumers complete consumer banking and a wide range of products such as long and short-term deposit/ current accounts, corporate banking facilities, unsecured loans and credit cards. So this bank has kept a variety of products to be able to furnish their customer to the maximum.
My internship, as mentioned earlier was in the Personal Loans Dept. which comes under the unsecured loans of up to RS. 500000. During my internship I was assigned to the Personal Loans Help Desk and stayed at only this position during the 6 weeks that I worked there. From this position I was able to study the working of this entire department as the nature of my internship sent me to nearly all the people working in Personal Loans. I soon learnt the entire process that an application goes through, the nature and type of tasks that were done by people at various designations in this department. I also learnt the role that PLHD played for this dept and have therefore discussed the entire department and also discussed the PLHD in detail. My desk was on the “Floor” where all the counters were and also where all the customers came. I was therefore, also able to grasp a slight idea about nearly all the departments of the bank and the type of functions they perform. But that knowledge is not comprehensive enough to be presented in this report. A brief idea of each dept. has still been given in the introduction. A marketing mix analysis of the personal loans dept. has also been conducted. This is because it is easier to introduce this dept. in such a manner as it is basically a marketing dept. and the major revenue generating dept. of SCB.
A major portion of the report is devoted towards explaining and describing the tasks that I performed or that I observed other people performing. These tasks have been explained with relevance to the processes that I have discussed.
Various analysis of the dept. such as SWOT analysis, Competitive analysis and an in-depth analysis of the role of IRR and Markup and how they work separately yet collectively to determine the amortization schedule is also given.
The competitive analysis has been conducted with the major players of Pakistan’s Banking Industry so as to give a realistic picture of SCB and its position in Pakistan. Some of the major competitors of SCB and specifically competitors of the Personal Loans dept. of SCB have been considered in the competitive analysis. Such as HBL, Union Bank, Askari Commercial Bank etc.
Lastly I have discussed the problems that I think that this bank is facing at present and also given recommendations as to how these can be resolved. My suggestions are divided in categories where some suggestions are for the improvement of the product while others are for the management of Personal Loans.
A brief history of Standard Chartered
Standard Chartered is one of the worlds leading banks headquartered in London. Its businesses however, have always been overwhelmingly international. The main events in the history of Standard Chartered and some of the organizations with which it merged are provided in this section.
The early years
Standard Chartered is named after two banks, which merged in 1969. They were originally known as the Standard Bank of British South Africa and the Chartered Bank of India, Australia and China. Of the two banks, the Chartered Bank is the older having been founded in 1853 following the grant of a Royal Charter from Queen Victoria. The moving force behind the Chartered Bank was a Scot, James Wilson, who made his fortune in London making hats. James Wilson went on to start The Economist, still one of the world's pre-eminent publications. Nine years later, in 1862, the Standard Bank was founded by a group of businessmen led by another Scot, John Paterson, who had immigrated to the Cape Province in South Africa and had become a successful merchant. Both banks were keen to capitalize on the huge expansion of trade between Europe, Asia and Africa and to reap the handsome profits to be made from financing that trade. The Chartered Bank opened its first branches in 1858 in Chennai and Mumbai. A branch opened in Shanghai that summer beginning Standard Chartered's unbroken presence in China. The following year the Chartered Bank opened a branch in Hong Kong and an agency was opened in Singapore. In 1861 the Singapore agency was upgraded to a branch, which helped provide finance for the rapidly developing rubber and tin industries in Malaysia. In 1862 the Chartered Bank was authorized to issue bank notes in Hong Kong. Subsequently it was also authorized to issue bank notes in Singapore, a privilege it continued to exercise up until the end of the 19th Century. Over the following decades both the Standard Bank and the Chartered Bank printed bank notes in a variety of countries including China, South Africa, Zimbabwe, Malaysia and even during the siege of Makeking in South Africa. Today Standard Chartered is still one of the three banks which prints Hong Kong's bank notes.
Expansion in Africa and Asia
The Standard Bank opened for business in Port Elizabeth, South Africa, in 1863. It pursued a policy of expansion and soon amalgamated with several other banks including the Commercial Bank of Port Elizabeth, the Colesberg Bank, the British Kaffarian Bank and the Fauresmith Bank. The Standard Bank was prominent in the financing and development of the diamond fields of Kimberly in 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885. Over time, half the output of the second largest gold field in the world passed through the Standard Bank on its way to London. In 1892 the Standard Bank opened for business in Zimbabwe, and expanded into Mozambique in 1894, Botswana in 1897, Malawi in 1901, Zambia in 1906, Kenya, Zanzibar and the Democratic Republic of Congo (D.R.C.), in 1911 and Uganda in 1912. Of these new businesses, Botswana, Zanzibar and the D.R.C. proved the most difficult and the branches soon closed. A branch in Botswana opened again in 1934 but lasted for only a year and it was not until 1950 that the Bank re-opened for business in Botswana. In Asia the Chartered Bank expanded opening offices in, Myanmar in 1862, what is now Pakistan and Indonesia in 1863, the Philippines in 1872, Malaysia in 1875, Japan in 1880 and Thailand in 1894. Some 34 years after the Chartered Bank appointed an agent in Sri Lanka it opened a branch in 1892 to take advantage of business from the tea and rubber industries. During 1904 a branch opened in Vietnam. Both the Chartered and the Standard Bank opened offices in New York and Hamburg in the early 1900s. The Chartered Bank gaining the first branch license to be issued to a foreign bank in New York.
The impact of war
Even the First World War offered opportunities for expansion when the Standard Bank set up a branch in Tanzania shortly after British troops occupied the formerly German administered Dar us Salaam in September 1916. Both banks survived the inter-war years but the worlds trade slump led to the closure of operations in the Canary Islands, Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank's office in Yokohama, Japan, when an earthquake destroyed it in 1923, killing a number of staff. The Second World War particularly effected the Chartered Bank when Japan occupied numerous Asian countries.
The post war years
After the Second World War many countries in Asia and Africa gained their independence. This led to local incorporation in some countries, particularly in Africa. Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalized, while in Indonesia the Jakarta office was destroyed in an attempted coup d'etat. In 1948 the Chartered Bank opened in Bangladesh and during 1957 it acquired the Eastern Bank. The Eastern Bank gave the Chartered Bank a network of branches including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab Emirates. The Chartered Bank also entered into a joint venture to form the Irano-British Bank that opened for business in 1959. The bank grew rapidly and had 24 branches when it was nationalized in 1981. By mid 1950s the Standard Bank had around 600 offices in Southern, Central and Eastern Africa. Its network grew substantially in 1965 when it merged with the former Bank of British West Africa, which had some 60 branches in Nigeria, 40 branches in Ghana and eleven branches in Sierra Leone in addition to operations in Cameroon and Gambia. Despite these acquisitions and expansion into new countries such as Mexico, South Korea and Oman (1968), both the Standard and Chartered Bank networks were comparatively small. Both viewed the future with some trepidation as the need to protect themselves from acquisition became ever more apparent. Standard Chartered PLC In 1969 the decision was made by the Standard Bank and the Chartered Bank to undergo a friendly merger thus forming Standard Chartered PLC. It was one year later that the descendants of the "Chartered Bank of India, Australia and China" were finally permitted to open a representative office in Sydney, Australia. Standard Chartered subsequently acquired the UK based Hodge Group, in which it already had a minority shareholding, and the Wallace Brothers Group. The Hodge Group brought to Standard Chartered an extensive network of UK offices specializing in installment credit and industrial leasing, and after a period of rationalization its name was changed to Chartered Trust Limited. Standard Chartered's operations in Jersey emerged from the integration of other Hodge Group businesses with those of Wallace Brothers Bank (Jersey), Limited.
Standard Chartered decided, after the merger, to expand the Group outside its traditional markets. In Europe a number of offices were opened including Austria, Belgium, Denmark, Ireland, Spain and Sweden as well as several major cities in the UK. Standard Chartered also opened offices in Argentina, Canada, Colombia, the Falkland Islands, Panama and Nepal. In the USA a number of offices were opened and three banks were acquired. These included the Union Bank of California that gave Standard Chartered a presence in Brazil and Venezuela. The opening of a branch in Istanbul in 1986 was overshadowed by a far more dramatic event when Lloyds Bank of the UK made a hostile take-over bid for Standard Chartered. Standard Chartered won its right to remain independent but entered into a period of considerable change.
By the late 1980s Standard Chartered already had considerable exposure to third world debt. To this were added provisions against loans to corporations and entrepreneurs who could not meet their commitments. Standard Chartered reviewed its operations and decided to focus on its core strengths of Consumer Banking, Corporate & Institutional Banking and Treasury in its well-established operations in Asia, Africa and the Middle East. This led to a series of divestments notably in Europe, the United States and Africa. During this time staff numbers were reduced; businesses not considered core were sold or closed; associate holdings disposed of; unprofitable branches closed and back office functions consolidated. In addition expensive buildings were sold with the proceeds reinvested in the business, and the senior management team was radically changed and strengthened.
Standard Chartered in the 1990s
Even within this period of apparent retrenchment Standard Chartered expanded its network, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993 and Myanmar in 1995. With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative office in Laos (1996), Standard Chartered now has an office in every country in the Asia Pacific Region with the exception of North Korea. In 1998 Standard Chartered concluded the purchase of a controlling interest in Banco Exterior de Los Andes (Extebandes), an Andean Region bank involved primarily in trade finance. With this purchase Standard Chartered now offers full banking services in Colombia, Peru and Venezuela. In 1999, Standard Chartered acquired the global trade finance business of Union Bank of Switzerland. This acquisition makes Standard Chartered one of the leading clearers of dollar payments in the USA. Standard Chartered also opened a new subsidiary, Standard Chartered Nigeria Limited in Lagos, acquired 75 per cent of the equity of Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the share capital of Metropolitan Bank of the Lebanon.
Standard Chartered today
Today Standard Chartered is the world's leading market bank employing 30,000 people in over 500 offices in more than 50 countries. Primarily in countries in the Asia Pacific Region, South Asia, the Middle East, Africa and the Americas.
The new millennium has brought with it two of the largest acquisitions in the history of the bank with the purchase of Grindlays Bank from the ANZ Group and the acquisition of the Chase Consumer Banking operations in Hong Kong in 2000.
These acquisitions demonstrate Standard Chartered’s firm commitment to the emerging markets, where they have a strong and established presence and where we see their future growth.
Mission Statement & Brand Values
Mission Statement:“To offer outstanding value to our customers by providing knowledgeable, efficient and reliable services in a personal, helpful and responsive manner.”
Over the 150 years of quality services that SCB has provided to its customers, the Bank has had various mission Statements. However this is the one that is currently being followed by the organization.
Brand Values:From the above mentioned mission statement the bank has developed some very deep-rooted brand values. These values are mainly designed with the intention of communicating with the customers. However they also serve the purpose of showing each employee exactly what a customer expects when he walks into Standard Chartered. The employees are constantly reminded of the customer expectations and have to continuously evaluate how their behavior is conformant with what the customers have in mind. This is why it is common practice to display these values in almost each department and on all the notice boards.
These values are there for all employees and apply especially to the personal loans department. As it is the people of this department who are mainly going out to meet the customers and getting the opportunity to communicate these values to them.
The values that have been developed over the 150-year life of this organization are as follows:
Courageous
A commitment to being there for you, in good times and bad. We help you achieve your aspirations by guiding you towards the right choice, not just the easy one.
A commitment to being there for you, in good times and bad. We help you achieve your aspirations by guiding you towards the right choice, not just the easy one.
Responsive
We are good on our word. We are accessible whenever and wherever you need us. Not only do we strive to deliver solutions, we also aim to exceed your expectations.
We are good on our word. We are accessible whenever and wherever you need us. Not only do we strive to deliver solutions, we also aim to exceed your expectations.
International
We understand the balance between global and local. You trust us to be established and internationally networked, while at the same time sensitive to your individual needs. Our strong network across culture helps us build stronger relationships based on ideas, not formulae.
We understand the balance between global and local. You trust us to be established and internationally networked, while at the same time sensitive to your individual needs. Our strong network across culture helps us build stronger relationships based on ideas, not formulae.
Creative
Creative thinkers are not limited by convention. They allow their minds to soar beyond predictable solutions. That's how we approach each challenge posed to us, which is why we base our products and services on ideas that are innovative, perceptive and instinctive.
Creative thinkers are not limited by convention. They allow their minds to soar beyond predictable solutions. That's how we approach each challenge posed to us, which is why we base our products and services on ideas that are innovative, perceptive and instinctive.
Trustworthy
We respect you, and the life you live. By understanding your needs and tailoring the right financial solutions for you, we earn your trust.
We respect you, and the life you live. By understanding your needs and tailoring the right financial solutions for you, we earn your trust.
Other Departments of Standard Chartered Bank
There are various departments in this bank due to the wide range of services that it offers to its clients. Each dept. serves a very important role in making the difference between a satisfied and a dissatisfied customer. The major departments that I was able to learn about are:
IT Department:
Even though this department works at the back end and customers are never aware of whether IT people exist in SCB or not. IT has a very important role to play. As it is this dept. that comes up with all the latest upgrades to the system to make it more efficient and effective. It is they who clear out the “bugs” in the BPS system that generates Account Statements. IT also ensures that the inter branch connection of this bank is maintained continuously through properly functioning PABX, Fax machines, systems etc.
Personal Financial Services Department:
This department basically consists of 4 Personal Financial Consultants (PFC’s) who have the task giving all sorts of financial services to the client. They can be asked for information about any product of the bank or any advice to help in reaching the best decision by the customer. It is basically there job to assist the customer in any way possible. Their task also includes opening all types of accounts and letting customers know of the best-suited option for them.
Corporate Department:This department mainly dealt with all matters related to corporate accounts. By corporate accounts I refer to all the companies that have opened accounts of their entire staff with SCB. Management of these accounts is done in this separate dept. of SCB. Other than management this department also has to achieve a certain target of getting a certain number of corporate arrangements to make this banks corporate customer base stronger. SCB has corporate accounts of US Embassy, Australian High Commission etc.
Cash Management and Remittances:This department is mainly concerned with the most critical and nerve wracking work in the entire bank. This department includes the management of all cash related activities and therefore also includes the tellers and all activities related to withdrawals or deposits by customers. The management of funds and the transfer of money within the bank is also managed by this dept. and the additional services that this dept. performs are money transfers, issuing new check books, making drafts etc.
Credit Card Department:This dept. is basically concerned with all functions related to the credit cards of SCB. There is a Visa card and a Gold card that is being offered by SCB. Getting customers to buy these cards and also satisfying customers who have previously got this card is the major function of this dept. however the dept also manages its own collections of bad debts or people who pay late. So it is a relatively self-sufficient dept that covers an entire product of SCB.
Priority Banking:This dept basically exists for those customers who can open a minimum current account for RS. 1 million or who open accounts of at least 2 million rupees in case of savings account. Priority banking solely deals with customers who fit the above-mentioned criteria and not with the regular customers. A separate teller that is only for Priority Customers deals with matters of such clients. Apart from this, finding such clients and making them open accounts with SCB is also the task of this department’s staff.
Telemarketing:
This department as the name implies deals mainly with all telemarketing activity of SCB within Islamabad. They provide information regarding the banks products. They also serve clients by telling them their account balances or credit card limits that are outstanding. This department provides further facilitation by helping get clients for Credit cards, Personal loans and Auto Loans. Customer complaints are also made to this department if they are via telephone.
Auto Loans:This dept. basically deals with all SCB Car financing loans. This dept. also has a fully equipped sales team like the Personal loan dept. and it is their job to get customers to finance their cars through SCB.
Personal loans Marketing Mix Analysis
Personal Loan is the major revenue-generating department for Standard Chartered. It serves the purpose of providing the bank with an avenue through which it can earn some essential markup on the collected deposits. Thus providing the bank with a means to conduct its basic functions to go towards profitability and survival.
The nature of this department is purely sales and marketing. Therefore I have analyzed the product offering and other features from a marketing perspective. In doing so we can have an answer to the questions of what, where, at what price and how the department is performing its functions.
However before moving on to answer these questions we must first have an idea of what type of target market this product is designed for to be able to understand how it works in a more comprehensive manner.
Target Market:
This product targets the permanent salaried individuals of Karachi, Lahore and Islamabad. Who are serving for any company that has already been approved and added to the list of approved companies that is sent to Islamabad from the Head Office in Karachi. The list mainly consists of:
Local Corporate Organizations
Multinational Companies
Embassies
High Commissions
The United Nations
Only Karachi has the additional target segment of self employed professionals. Personal loans are prohibited for the self-employed professional’s category in Islamabad and Lahore. This segment will be opened shortly for these two cities.
The income requirement for employees who are working in A graded companies of the Approved Companies list is Rs.15000 gross and Rs.10000 net. This requirement is also the same for employees of the B graded companies on the list. As the bank still adopts a relatively conservative approach towards giving loans to government employees the income requirement for the approved ministries is RS. 12000 Net.
The target market is then narrowed to employees who have been working in the particular organization for at least 1 year.
There is also an age restriction that states that customers can only be between 23 – 62 years of age.
The target market can consist of only those people that have all the above mentioned characteristics and also have Telephones at both their office and at their residence.
The above mentioned requirements have to be supported by a number of documents before the customer can be made eligible to apply for a personal loan. The documents that are required are as follows:
A Graded Companies:
Copy of NIC
One salary Slip (preferably of current month) or three months Bank Statement.
ECC, issued by “Authorized Signatory,” with:
Date of joining
Employment status (permanent or contractual)
Gross salary (if salary slip is not provided)
B Graded Companies:
Copy of NIC
Three months Salary Slip (preferably current) or three months Bank Statement.
ECC
We can see that even though there are not many required documents, in the words of the BDE’s “you have no idea how many people fulfill the criteria but make us wait for weeks to acquire their documents. In certain cases applicants are unable to provide the complete set of documents at all.“ So it is safe to say that the requirement of these documents further narrows the target market.
Marketing Mix variables.
Product:
The product offering consists of loans of amount 50,000 to 500,000 Pak Rupees. The maturity period of this loan varies between 1 to 3 years. The customer has the flexibility of being able to pay of his debt earlier than the specified maturity period. However there is an additional service charge in cases where the customer wishes to do so.
A complementary addition to this product comes in the form of a loan account of the customer with SCB that can be maintained at Zero balance.
Price:
The markup that is charged on a personal loan varies from case to case. Even though the general markup for every loan is 10.05% the customers are also charged an IRR rate that determines the amount of each installment. The workings of the IRR rate are going to be presented at a later stage in this report. What we need to consider here is that the IRR varies between 15-24% depending on the credibility of the Organization.
Apart from this some additional charges known as processing fee are also attached with the Loan. This fee is either 1% of the approved loan amount or a minimum of Rs.1500 in cases where 1% of the approved loan amount is less than Rs.1500.
There is very minimal promotion of this particular product as the major focus of this department is on getting sales through personal selling. A customer can however get brochures related to personal loans or see certain displayed information regarding the product at nearly every Standard Chartered branch.
Building personal relation and the vision that customer is not just client but is starting a long-term relationship of mutual benefit is the theme that promotes the Personal Loan department.
Methods of Data Collection
During the course of my internship my main method of data collection was interview. As the best way to collect the most accurate information was to talk to the staff members and discuss the various aspects of their work. This way I was able to understand exactly what type of work is being done by employees of various designations in the Personal Loans department. The staff members sat with me during lunch and other free time and would describe in layman terms what work they do. It was easier to understand their jobs without the involvement of too many banking phrases.
I also learnt a lot through simply observing the employees at work. I would see them make phone calls and deal with customers. I observed how certain dissatisfied customers were dealt with and how the satisfied customers were asked to give more leads. So observation also helped me a great deal in acquiring the data that I have presented in this report.
Now that we have learnt how the data was collected during my internship we can move on to the actual data. In this section we will discuss:
The hierarchy of this department.
The daily activities of the employees in various designations of this Department
The process and mechanism through which an application goes.
Personal Loans Hierarchy
In order to understand the above mentioned areas of study it is essential that we first know the hierarchical setup of this department. This will enable us to see all the designations and also help simplify the processes.Chart 1: Hierarchy setupNational Sales Manager
Mr. Omer FarooqPersonal Loans Help Desk
Customer Relationship OfficerMs. Beenish Bukhari
Trainee
Sajjad Ali
Coordinator
Hasnat Ahmad
Regional Manager Sales- North
Faisal IqbalTeam Manager
Shahzad Zafar
Team Leader
Mr. Sipere Irfan and Mr. Naveed Akhtar
Senior BDE
Mr. Ajmair Riaz
BDE’s
Personal Loan Department Islamabad “ Daily Glance”
The day starts of with a Daily meeting in which expected customers are debated and targets are given to BDE’s by Team Manager and Team Leader with time line to meet those targets.
The working of the previous day is shown to the team leaders. Then the documents that have been collected with the new applications of the previous day are dispatched to the to Credit Department and fresh applications are submitted to the Verification Department for VA. (The role of VA will be discussed at a later stage in this report.)
The team leaders, BDE’s and the Processors along with the CRO’s then busy themselves in maintaining and sending daily sales reports.
The BDE’s then contest certain declined and pending cases with VA Department. The reason behind declining an application is discussed with the VA and employees brainstorm for ways to be able to “get that application through.”
Then there is the task of resolving the Discrepancies in cases where the solution is solvable. For e.g. some fields in the application form may not have been filled appropriately or some additional documents may be required.
It is also necessary for all the BDE’s to concentrate on the maintenance of Call reports and a Pipeline showing their future clients. The Team Manager can at any time ask one of the BDE’s to show his/her pipeline and the BDE’s live in constant fear of that. So as soon as all the BDE’s get time they work on this. I saw most of the people organizing their future visits in the early morning hours, which after all the tasks above have been done means around 9:45-10:00 a.m.
Discussions with in Teams about planning and motivating also take place.
As a Department totally based on Marketing in the form of personal selling, it mostly counts on lots of calls and constant meetings with customers. So phone calls are the major part of Personal Loan Department. As soon as the routine morning work is gotten out of the way the BDE’s “hit the phones.” Their calls mainly deal with checking the leads, setting up meetings with clients, informing clients about their daily status and generating more leads.
Then the rest of the day is spent in going to appointments or in the words of the sales staff “going on call.”
On their return to the bank in the evening, the BDE’s submit their new applications to a Processor. The processor has the task of checking each application for complete documents and information and prepares the applications for the purpose of submission to the VA department. However this task is mostly delayed to the next morning. This is not because of the Processors inefficiency but because of the late times at which the applications are given to Processor.
After the days work a BDE must always be careful to inform customers of their daily Status of application. This is done by most of the BDE’s as they wish to maintain long term relations with the client for “one never knows who may comeback for a Top up(enhancement of the loan) or provide some leads.”
Photo copying of documents for record is also a task that has to be done, as it is an essential part of daily routine.
In short the whole day in the department is a complete scene of a “Hurdle race” as every individual is constantly facing many hurdles and can still not lift his/her foot from the accelerator and lose speed.
As the Team Manger quotes “By hook, or by Crook”, I guess that explains the whole daily glance.
Personal Loans Help Desk “ Daily Glance”
Not having an earlier opportunity to explain what is the function of the Help Desk in the Personal loans department I will discuss it now. This desk is occupied by a CRO who in my case is Ms. Beenish Bukhari who was also my direct Boss during my internship. It is mainly concerned with customer dealings in two major areas. Answering queries of customers interested in this product and assisting those customers who have either submitted their applications or have been approved the loan amount and are wishing to withdraw their money. This desk also assists Personal loan customers in getting their checkbooks and ATM cards for their loan accounts. There is further responsibility of opening loan accounts for the approved applications. Apart from this the help desk is also concerned with getting the complete applications that have been verified by the VA department and getting them signed from the required people before sending these applications to the Lockers. In the Lockers these applications are scanned and sent to Karachi for approval.
The complete set of functions of this Help Desk will be easier to understand by seeing all the activities that take place in a typical workday. These activities will be given with a little background and explanation to enable the reader to understand exactly what is done how at the Help Desk.
As the Branch opens at 9:00 a.m. sharp for the customers, the day for the Personal Loans Help Desk starts at the same time. In case a customer visits this desk early.
Getting the Account Opening Register (AOR). This register is used to keep a record of all the accounts that have been opened due to the reason of approval of a particular personal loan application. As it is the Banks practice to open a new account in which the approved loan amount is transferred. This practice exists for all customers regardless of those who already have a personal/ current account that is being maintained at the Standard Chartered Diplomatic Enclave Branch. This allows the customers to have the flexibility of withdrawing the cash at their own convenience and according to their needs.
Preparing the applications that have been approved by the VA along with all the documents (documents consist of over seen photocopied sets) for their final approval from Karachi. This involves attaching a KYC form to the application. An AOC is also attached to the complete set of documents.
Sending the complete applications to the Branch Manager and Manager Operations to be signed. Each personal loan application has to be signed by both these authorities before it is sent to Karachi. The Manager Operation checks whether the applications are in complete conformance with the requirement of the bank. If not then he returns the application to the Help Desk to be corrected.
Once the applications are signed, they have to be photocopied in two sets. One photocopy is then filed in the BDE’s folder whose applicant it is and the other is filed with the PLHD. The original set of documents is sent to the Lockers to be scanned to Karachi.
These are the activities that are involved in preparing and sending the applications to Karachi. However the Personal Loan Help Desk is also involved in doing many other important tasks for this department. These tasks may be carried out at any time during the day so they do not fit in the Daily Glance. There may be certain days on which some of these tasks are not done at all. They are:
Calling customers and making appointments to receive documents.
Receiving PDC’s from the customer once the loan has been approved, as this is the only method of repayment that is applicable in Islamabad. These Post Dated Cheques are not complete and it is often the CRO at the PLHD who has to complete the amount on these cheques. Even though this seems like a very small task it makes a difference when you receive sets of 35 cheques from 7-10 customers in a day.
These cheques also have to be dated according to the installment dates that are applicable to a particular case. These dates are mostly the 3rd of each month, starting from one month after the loan has been disbursed. This is because the bank gives customers a grace period of one month before the 1st installment is collected.
Photocopying the cheques and keeping the originals in a specified storage space. The photocopy of the cheques is sent with the application to Karachi.
Dealing with all account opening activities of the customer once the loan account has been opened after approval and the amount transferred to this account. This includes satisfying requests for ATM cards and Chequebooks. For this the CRO first has to get the Cheque book requisition form or/ and the ATM card application filled by the customer. These are then processed with other checkbook requests. Then it is also up to the CRO to call the customer to collect these when they are issued. Most customers are informed to collect their respective item from the Saudi Pak Tower Branch. “But they still have to be reminded” is the policy Ms. Beenish follows.
Even though it is the task of the BDE’s to deposit the processing fee and attach a customer copy of this deposit to complete the set of documents before they are sent to the Head office. It is often a task that has to be done by the CRO at the PLHD. Then the customer copy of this deposit is photocopied and the originals maintained in a separate file while the copy is attached to the application.
The PLHD also has to satisfy the demand of the BDE’s for new account opening forms, letters of understanding, income tax certificates, authority letters for bank statements and new personal loan applications.
Once the loan has been approved, the approved loan amount is not directly transferred to the loan account. The head office first sends back a contract that has to have 7 signatures of the customer. This contract is then sent back to Karachi, after which the loan amount can be transferred to the new account. Getting these 7 signatures is also in the array of duties that the CRO at the PLHD has to perform
The PLHD also has to disburse the loan to the customer once the loan amount has been transferred. The customer can either do this if he has been issued a Chequebook. However most often a customer does not have the time to wait till his Chequebook has been issued. In such cases the CRO issues a “loose check” otherwise known as a counter check. This may seem to be a small task. However it requires that the CRO first find out the account number that has been given for this particular loan. Then we must find out the total amount that has been transferred to the customer’s account to avoid filling out an amount that is not there in the account. Once this check is filled out it is submitted to the teller for signature verification of the customer. After this the withdrawn amount is disbursed.
In some cases the customer may not wish to withdraw the amount and neither maintain two accounts at the same branch. Instead he/she may wish to get an internal transfer from the loan account to his own personal or corporate account. To do so the bank requires that the customer fill out an Account Service Form (ASF). Once this form is processed there is an internal transfer from the loan account to the required account. All this is also included in the tasks and duties of the person occupying the PLHD.
A major portion of some days is also spent in furnishing customers with answers to their queries regarding the balance of their loan account or how many installments they have given. Other queries may be from customers who wish to pay off their loan at an earlier date instead of giving installments for the specified time period.
These are the major tasks that are carried out by the PLHD. On some days there is an onslaught of customers and the CRO has to do all these tasks. On other days she may have to do only some of these tasks. This mainly depends on the traffic at the PLHD. However the tasks that have been mentioned in the first portion are those which have to be carried out every day regardless of whether PLHD has customers or not. In the words of Ms. Beenish “it’s a rough job but some ones got to do it.”
PROCESS FLOW FOR PERSONAL LOANS APPLICATION
DAY 1:
BDE picks up the application / discrepancy from the customer & submits it to PL Dept (Coordinator), along with one copy of the application for VA, for screening.
Coordinator screens it and prepares it for submission to the Credit Dept.
DAY 2:
Coordinator submits the applications / discrepancies to the Credit Dept. & gets their VA copies received on a summary sheet from the VA resource.
Credit receives the applications / discrepancies, screens them according to the credit policies & emails the status, at the end of the day, after updating every received document.
If any discrepancy is found, Personal Loans is informed.
DAY 3:
Credit submits the approved loan’s applications to Asset Operations for loan document printing.
Customer details are entered into the Asset Plus System. Asset plus generates the loan documents.
COU sends back the loans documents to credit
Credit makes a record of the customer documents and sends them to Personal Loan department.
DAY 4:
Personal loan department receives the documents.
Coordinators give documents to CRO at PLHD.
CRO attaches a Personal Account Opening Form (AOF) with customer’s documents.
Stage II officer takes the complete documents to the customer for signatures.
Customer gives instructions for mode of payment
1% processing fee is given by customer to be deposited into the PL commission account.
Stage II officer deposits the processing fee, logs it into the processing fee register & attaches it to signed loan documents.
Makes a pouch of all signed documents & gets the signatures verified.
Completes the AOF’s & submits them to the CRO at PLHD
Personal loan department submits the loan documents to Personal loans Credit.
PLHD officer gets the loan account opened by the day end.
Keeps a copy of AOF with personal loans dept.
Credit Dept screens them according to the policy guidelines.
Declares all received document discrepant or OK in the day end emailed status.
Personal loans department informs customer about the discrepancy or disbursement.
If any discrepancy is found, Personal Loans is informed.
DAY 6:
Credit department sends the OK documents to Asset Operations (AO) for disbursements.
AO checks whether the loan account is opened. If yes, loan is disbursed in it, returned to credit otherwise with stating discrepancy.
Customer walks into the branch & personal loans department’s Customer Relationship officer at the Personal Loans Help Desk assist him in accessing his disbursed loan.
The process that a personal loan application goes through has been described as accurately as possible. The role of the personal loan help desk has not been shown as comprehensively as it should due to the difficulty in merging certain simultaneous activities. But we can gather what role the CRO at the PLHD has from the daily activities that have been given from them in the previous heading.
The role of other departments such as the Credit department and the Asset operations department is also mentioned to give a more rounded picture of what goes on.
ANALYSIS
The analysis of my study is based both on the product that this department offers and the major aspects of this department itself. This has been done by using the following techniques of analysis:
A competitive analysis along with an analysis of what additional features the Personal Loan of Standard Chartered Bank has as compared to other banks.
Apart from this a SWOT analysis of the entire Personal Loan Department is also given.
An IRR analysis through which we can see the role of the stated IRR and the precise impact that it has on the loan installment amount.
Competitive Analysis:
SCB | Union Bank | ABN AMBRO | MCB | Askari | HBL | |
Stage-1 | ||||||
| Loan Range | Rs. 50,000/-to 500,000/- | RS. 50,000/- to 1,000,000 | Rs. 50,000/- to 500,000/- | Rs. 30,000/- to 500,000 | Rs. 50,000/- to 500,000/- | 6 times the Basic |
| Tenure | 1-3 years | Un limited | 1-5 years | 1-3 years | 1-3 years | 1-3 years |
| Target Market | Salaried Individual | Salaried Individual & SEP | Salaried individual & SEP | Salaried Individual | Salaried & Business P | Salaried persons |
| Age Limit | 21-63 years | 23-55 years | 21-60 Years | 25-55 years | 25-63 Years | 25-63 Years |
| Monthly Income | Rs.10, 000/- (Net Income) | Rs.25, 000/- (Gross) | Rs 25,000/- (Net 20,000/-) | Rs 10,000/- (Net) | Rs. 12,000/- (Net) | Rs. 15,000/- (Net) |
| Cities | Khi, Lhr, Rwp & Isd | Khi, Lhr, Rwp & Isd | Khi, Lhr, Rwp & Isd | Karachi | Khi, Lhr, Rwp & Isd | Khi, Lhr, Rwp & Isd |
| Rate Charged | 18% | 19% | 20%-24% | 18%-24% | 20%-24% | 17.5% with SI |
| Processing Time | 3-5 Days for Approval (10 Days Max) | 10-12 days Min 15 days | 7-10 days 4 days | 7-10 days | 10-20 days | 10-20 days |
| Processing Fee | 1% of Loan or Min 1,500 | 1,000/-Documentation Fee 1,500/- per Anum | 1% of loan | 1% of Loan or Min. 2,000 | 1% of Loan or Min 1,500 | 1% of Loan |
Stage-2 | ||||||
| Legal Documents | Signed by the customer after loan approval | Already signed at the time of application | Already signed at the time of application | Already signed at the time of application | Signed by the customer after loan approval | Already signed at the time of application |
Additional Features of SCB Personal Loans:
Cost features:
Standard Chartered along with other banks take processing charges 1% with minimum Rs.1500, as according to rules and regulations of State Bank of Pakistan with no annual charges, where as in Union Bank annual charges exist.
The Processing charges are for Legal documentation, Account opening and other charges for providing the facility of free ATM and Checkbook.
Time features:
Standard Chartered takes 5-8 working days to process the Loan application and when Loan has been approved only then applicant is made to sign Legal Documentation where as in other Banks, Legal procedure is carried out at the time of application. So Standard Chartered Bank offers additional thinking and reviewing time and yet takes less time to disburse the amount.
Value added features:
Standard Chartered Bank provides customers with the facility that they can have their personal account in the bank in case that there loan is approved. This account can be maintained at zero balance. Customer’s having personal accounts otherwise at this bank have to maintain a minimum of 25000 rupees.
SCB offers its product to customers having Net salary figure of 10,000 whereas in other banks this figure is 25,000.
SWOT Analysis:
A thorough study of the Personal Loans department has resulted in the compilation of the SWOT analysis. This analysis is also important because the Department under consideration is a marketing/ sales department and a SWOT analysis is always useful in assessing departments of this nature.
Strength:There are various strengths of this department. These are:
The department firstly has the name of a very prestigious bank attached with it. The bank that this department represents has a good image of providing quality services to customers who are looking for the best. The BDE’s themselves say that once they show their card and people recognize that they are from SCB, customers immediately give them more attention and respect.
The major strength of the Department is the team members of the 2 teams that currently exist. These members are mostly made up of the best sales people working for this particular product. Most of the members have enjoyed positions of sales man of the month in Credit cards or Personal loans at various other banks such as Citibank, Union Bank etc. This has resulted in each of the sales people having an already well established network through which they can achieve relatively higher targets and still have a considerable number of leads in the pipeline for each month.
The product that this department offers has a clear edge over its competitors in certain areas. This allows the team to market something that is better than what the market offers. The competitive advantage that this product holds has been discussed previously in the competitive analysis.
The repute of the bank in areas apart from Personal loans is also very positive. Therefore customers of other products of SCB are also sometimes willing to enjoy another product of this bank. This results in the department getting customers without the hassle of making sales calls and proper presentation. These bonus customers also make a contribution to the total applications and in some months, they contribute to more than a few loans.
The major weakness is that Standard Chartered is at present facing more than a few dissatisfied customers of credit cards as more banks are offering lower rates and fees. These customers are having a slight impact on the banks image as word of mouth circulates their dissatisfaction. this then has a direct impact on personal loan sales and other products of the Bank.
The department at present is facing the problem of continuos hiring and firing. This is resulting in greater difficulty of coordination and the synergy that may exist in a stable environment. During the course of my internship of 6 weeks I saw at least 3 people who left their job, 2 who were fired and approximately 7 employees who were hired.
Apart form this there is also the problem that time has to be taken out to train and induct the new employees. There is however no designated trainer and therefore the BDE’s have to carry out the training. This results in improper training and extra burden on the BDE’s who already have a very stressful job.
The management environment of this department promotes fear and the adopted leadership approach is to treat employees as Theory X workers. This is resulting in a certain extent of dissatisfaction and also promoting a greater sense of insecurity amongst the BDE’s. The result is loss of productivity that exists due to the difference between complete commitment of the employees and the approach of “just surviving” that they have adopted at present.
The limited number of companies that are on the approved list of companies and the restriction of self employed professionals not being eligible for personal loan are also limiting the department from making major inroads into the Islamabad market.
The major opportunity lies in the surfacing of new organizations that are getting approved and added to the Personal Loans Approved list of companies. “Box farm signatories” as they are called, are polling in and opening new avenues for the sales team, creating new customers and providing the BDE’s with new leads.
Another opportunity is the rate of conversion of already approved loans into enhancements and top up cases. As more people are utilizing this service it is really an area that all BDE’s are looking forward to cash in.
Threats:The major threat that this department has is the stress levels that are running high due to certain employees not being able to meet their targets. This is having a negative impact on the figures for the entire department and causing increasing tensions. This may result in declining applications if this situation is not resolved in an appropriate manner.
Another threat is the entry of new banks into this area of personal cash financing. As more banks are starting to offer this facility this industry is becoming increasingly competitive and the already saturated target market is not showing great potential for growth. We can see this from the loan that Citibank is currently offering with 0% interest these days.
The State Bank has limited the credit limit on credit cards to RS. 4999999. This is 1 rupee less than the maximum loan amount of SCB. So people who wish to have this sort of money are shifting from financing their needs through personal loans to instead utilizing the limit on their credit cards.
From the above analysis we can see that the Personal loan Dept. at present is evenly balanced. But the future holds many threats both foreseen and unforeseen and how the management and the sales team take these threats is what is going to set whether this department excels or starts facing declining applications as time goes by. The BDE’s are eagerly looking forward to harnessing the potential of the
opportunities that have been presented here. And their energy and enthusiasm along with the hard work hours that they put into the job will most probably tip the scales in favor of SCB.
IRR Analysis and Installment Calculation:
For this we can first see the different rates that are offered according to the organization that the client is employed in. the different rates are:Table 1: Markup and respective IRR
| Mark up | 10.05% | 11.25% | 12.5% | 13.47% | 9.4% | 8.2% |
| IRR | 18% | 20% | 22% | 24% | 17% | 15% |
From the table we can see the different markup rates that are offered to the clients according to the credibility of each case. The last 2 columns show the rates that are offered to the UN. These are annual rates. We can see that with each markup rate there is a different attached IRR rate. This is because the bank uses the markup rate for the calculation of each installment amount or in other words the amortization amount for the loan. However the calculation of what portion of principal will be recovered and what part of the installment will go towards interest charges is calculated by using the IRR rate. To understand this in a better way we can take an example to see how the IRR and markup work together to form the amortization schedules.
Suppose that there is a loan for RS. 100000. The markup rate in this case assumed to be 10.05% whereas the IRR is 18%.
Now firstly the bank will calculate the installment amount. This is done in the following way: 100000 * 10.05 = 10050
Now supposing that the loan is for 3 years we can get the total interest amount by:
10050 * 3 = 30150
So the total amount that the customer will pay for a 100000 rupee loan is going to be the principal plus the interest charge which comes out to be 100000 + 30150. This means that the total repayment will be 130150 rupees.
To calculate the monthly installment amount for the 3 years in which this loan of 100000 rupees has to be repaid we use the formula:
Total repayment amount / Total number of installments
So the installment amount for our example is:130150 / 36 = 3615.3 or approximately 3615.
Up till now we can only see the role of the markup rate coming into play. But once the installment amount has been calculated the IRR begins to operate. In this example the IRR rate is 18%. So the interest recovery from the 1st installment will be calculated using the formula:
Principal amount / IRR
100000 / .18 = 18000
as this 18000 is the interest that should be charged for the whole year ( the IRR is annual) we can see what amount will be charged for the first month by dividing this 18000 per month i.e. 18000 / 12 = 1500
Now this RS. 1500 is going to be charged as interest repayment from the first installment. So the first installment of RS. 3615 will pay 1500 rupees towards interest and the remaining i.e. 2115 rupees towards the repayment of interest. This means that the portion of interest for the second installment (being on the reducing balance basis) will be calculated by deducting this 2115 from the total principal and then charging an interest on the remaining principal amount which, in this case is 100000 – 2115 = 97885. So the interest repayment in the second installment is .18 * 97885 = 17619. Dividing this over the months to get per month interest we get 17619 / 12 = 1468.3 ~ 1468. Therefore the second installment of 3615 will pay 1468 rupees towards interest repayment and the remaining 2147 rupees will be paid towards the principal. To understand this in a better way I have made an amortization table of this example:
Table 2: Amortization Schedule
Sr. No. | Beginning Balance | Markup | Principal | Monthly Installments | Ending Balance |
1 | 100000 | 1499.6 | 2115.24 | 3615 | 97884.76 |
2 | 97884.76 | 1468.03 | 2146.97 | 3615 | 95737.79 |
3 | 95737.79 | 1435.83 | 2179.17 | 3615 | 93558.62 |
4 | 93558.62 | 1403.14 | 2211.86 | 3615 | 91346.76 |
5 | 91346.76 | 1369.96 | 2245.04 | 3615 | 89101.72 |
6 | 89101.72 | 1336.29 | 2278.71 | 3615 | 86823.01 |
7 | 86823.01 | 1302.11 | 2312.89 | 3615 | 84510.11 |
8 | 84510.11 | 1267.41 | 2347.59 | 3615 | 82162.53 |
9 | 82162.53 | 1232.20 | 2382.80 | 3615 | 79779.72 |
10 | 79779.72 | 1196.46 | 2418.54 | 3615 | 77361.18 |
11 | 77361.18 | 1160.18 | 2454.82 | 3615 | 74906.36 |
12 | 74906.36 | 1123.36 | 2491.64 | 3615 | 72414.71 |
13 | 72414.71 | 1085.98 | 2529.02 | 3615 | 69885.69 |
14 | 69885.69 | 1048.05 | 2566.95 | 3615 | 67318.74 |
15 | 67318.74 | 1009.54 | 2605.46 | 3615 | 64713.28 |
16 | 64713.28 | 970.46 | 2644.54 | 3615 | 62068.74 |
17 | 62068.74 | 930.79 | 2684.21 | 3615 | 59384.53 |
18 | 59384.53 | 890.53 | 2724.47 | 3615 | 56660.06 |
19 | 56660.06 | 849.66 | 2765.34 | 3615 | 53894.72 |
20 | 53894.72 | 808.18 | 2806.82 | 3615 | 51087.90 |
21 | 51087.90 | 766.08 | 2848.92 | 3615 | 48238.98 |
22 | 48238.98 | 723.35 | 2891.65 | 3615 | 45347.33 |
23 | 45347.33 | 679.97 | 2935.03 | 3615 | 42412.30 |
24 | 42412.30 | 635.94 | 2979.06 | 3615 | 39433.24 |
25 | 39433.24 | 591.26 | 3023.74 | 3615 | 36409.50 |
26 | 36409.50 | 545.90 | 3069.10 | 3615 | 33340.41 |
27 | 33340.41 | 499.87 | 3115.13 | 3615 | 30225.27 |
28 | 30225.27 | 453.14 | 3161.86 | 3615 | 27063.41 |
29 | 27063.41 | 405.71 | 3209.29 | 3615 | 23854.12 |
30 | 23854.12 | 357.57 | 3257.43 | 3615 | 20596.70 |
31 | 20596.70 | 308.71 | 3306.29 | 3615 | 17290.41 |
32 | 17290.41 | 259.12 | 3355.88 | 3615 | 13934.52 |
33 | 13934.52 | 208.78 | 3406.22 | 3615 | 10528.30 |
34 | 10528.30 | 157.68 | 3457.32 | 3615 | 7070.99 |
35 | 7070.99 | 105.83 | 3509.17 | 3615 | 3561.81 |
36 | 3561.81 | 61.17 | 3561.83 | 3623 | 0.00 |
The table shows each installment is clearly charged 18% interest instead of the 10.05% that the bank will have told the customer and advertised. So there is a difference amongst the rate that the customer is offered in comparison to the rate that he will actually get. Had the rate used been 10.05% for the calculation of the amount of interest and principal to be repaid in each installment the scenario would have been completely different and most probably resulted in lesser cost for the loan instead of the 130050 rupees that the customer will now pay. This is because the interest that is charged on the reducing balance is still 18%. That is the actual amount that is not being deducted from the principal but instead going towards interest. Whereas this amount could been 10.05% of the installment and resulted in greater repayment of principal and on the reducing balance basis lower interest charges by the bank.
From this table we can clearly see the effect of the IRR on the repayment of the loan. With the IRR we can see that the initial payments tend to lean more towards interest repayment. A secondary purpose of this is to make the bank recover its revenue as soon as possible so that in case of default the customer is bound to pay back the principal payment.
As the BDE’s say we just focus on the 10.05 and try to ignore the 18% when making the sales pitch. I guess they believe in “what people don’t know can’t hurt them.”RECOMMENDATIONS
Problems in Loan Applications & Disbursement
The turnaround time for MNC Loan Applications Approval & Disbursement, Karachi, Lahore and Islamabad is 3 to 4 working days.
The turnaround time for Local Companies Loan Application & Disbursement is 4 – 5 working days for Karachi + 3 extra working days for Lahore and Islamabad due to courier/mail.
ISB is facing a few problems due to which a delay is occurring in disbursement of the Loans. Following are the problems:
PROBLEMS | SOLUTIONS |
Delay in Verification | The TAT for VA is 48 hrs. This should be followed religiously. Credits to ensure that no VA takes more than 48 hrs. |
Finding out the Loan Amount | BDE will use the LOAN CALCULATOR formula provided by Credit to determine the right amount. |
Employment Confirmation Certificate | BDE shall submit the apps. Once all docs are in order. VA can be done prior to submission of docs to Credit. |
Authorized Signatory Letter | Concerned person to contact the Company & resolve this issue. |
Loans from Unapproved Companies | Please make sure that all apps. Are from approved companies. |
All BDE’s should ensure that Applications are at least 75% correct / complete prior to submission of the application to the Credits Department.
All Discrepancies should be resolved within 2 working days.
BDE should ensure that all Loans / Offer Letter are signed within 03 days of issuance of OL or the loan will be cancelled.
Problems & Suggestions for the Management
While interning at Standard Chartered even tough I noticed that the employees have a strong commitment to work and are provided with a relatively cooperative work environment. There are still a few problems that were being faced by the employees who were working in the personal loans department. Some discussions were also done with the BDE’s and the following are the issues that they felt were contributing to a less productive and comfortable atmosphere:
Problems:
The Personal Loan staff are at present being treated as the typical Theory X workers. The only motivation that they are provided with apart from money is that they will face a very angry “Boss” if they are unable to achieve their targets.
Employees have been complaining about lost visiting card diaries, mobile phones and other articles. These articles are “lost” from their desks or their personal storage space. This has added considerably to the already tense environment.
On my first day I chanced to witness a person who was being told to present his resignation to the “Man in Charge”, as he had not been able to achieve his targets. However this exchange was done right in the middle of the department with a clear intention of disgracing the employee. The major reason as perceived by the other employees, for this interchange being done so publicly was to make them see an example of what might happen to them if they failed to achieve their respective targets.
Solutions:
From the above mentioned problems we can see that the problems that are being faced are very basic in nature and can be avoided with a few “nice words of comfort.” Some suggestions that I came up with are as follows:
The Regional Manager has clearly maintained an open door policy. However the employees of the personal loans department are not entirely comfortable with the idea. This inhibition is further reinforced by the strict behavior that has been adopted by the Team Manager and the Team Leaders. To remove this problem the regional manager should hold a meeting to inform the employees of their importance and brief them as to how this open door policy will work.
If the open door policy is not working then the Team Manager must take it upon him to keep a few hours each day to listen to the problems of the employees and also help them with any special cases that they might have brought.
The management must decide to move along the continuum between strictness and leniency and try to set a more relaxed way to deal with the employees of the Personal Loan Department in particular and the entire organization in general.
In the end I would just like to reinforce that a few nice words and smiles can make a world of a difference in the relationship between a superior and a subordinate. This along with the other suggestions can definitely improve staff morale and motivate them to achieve a more positive direction.
Suggestions for improving the Product:
How Time can be minimized?
§ The competitors of SCB get the Legal documents signed during the time of approval of the application. Where as in case of Standard Chartered the legal documentation is carried out only after the approval of the application and amount of loan for a particular case.
If the process of other banks is followed and Legal documentation is carried out at the time of application then some extra time can be saved.
§ Mode of repayment in all cases is by Post-Dated-Checks, the applicant provides checks of his/her salary account and he mentions the installment and the date at which it will be presented according to the Legal Amortization schedule for the installment, which requires 12, 24 or 36 PDCs. The problem in this system is that local banks like; HBL, MCB, ABL take a week to give checkbooks to the customer. The Banks could have an agreement amongst themselves to furnish requests for other banks on priority basis. This may be a very large-scale solution to some. Therefore a simpler solution is to ask the customer to request for his/her checkbook as soon as the decision to take the loan is reached. This can be the 1st thing that BDE’s tell the clients. This will ensure some saving of time.
§ The process involves Credit department and Asset operation department. The Credit department approves the deal and then Asset Operation prints the Legal documents for the approved deal and then the process is carried out further. The extra time added due to the documents going from one department to another and then back to the original department can be reduced in a way that Legal documents are added in a formal application and the Credit Dept. is given the authority to provide Legal documents.
How Quality can be improved?
§ The quality of any services department relies as much on product itself as it relies on the staff that it acquires. The staff is selected on merit and proper training of the staff is a must for ensuring quality. Proper incentives are also required to keep them motivated and agile.
Department recently reduced the salary package and strengthened the commission structure. This must be reviewed to ensure quality improvement.
§ The product is only targeted to salaried class and the segments of Businessmen and Self-employed persons are not considered. The product must have flexibility to accommodate those segments. As the quality of this product can be improved mainly through showing greater volumes of disbursed loans so that the bank realizes its increased importance and gives the strategies of this department greater thought.
Value added features
The product should include value added features like:
1. Pre-approval of Credit card as the procedure for approval of a Credit card is the same as that of a Loan. So when Loan is approved the customer should have facility to get a Credit card without any further process.
2. Pre-approval of Car financing can also be provided to the customer who have been approved a loan. As they are now customers of SCB they should be given reduced rates and a less lengthy process of getting car financing.
3. The Enhancement of loan amount is currently being done after 9 months. This can easily be reduced to 6-7 months. As most of the customers are reliable and a large number have shown interest in enhancing their loan earlier than the allowed period of 9 months.
Market penetration and Sales growth strategy
§ Market penetration
The target for this product is only the salaried class and Businessmen and Self-employed class are completely neglected. The Government organizations are also not considered in the target market that has been specified and only a select few Ministries are included in the approved list of companies.
The product must penetrate in sectors such as the Government, Armed forces and also Semi-Government Institutes for the purpose of attaining more customers.
Features like mortgaged and guaranteed loans must be introduced to capture vast market of Businessmen. As SCB is at present only dealing in unsecured loans and not competing in the market for Secured loans.
§ Portfolio cut strategy
Minimum requirement of salary is Rs.10,000 and in current economical situation maximum ratio of salaried class fall between 8,000 to 10,000. Therefore this minimum criteria should be relaxed to around Rs.8000 to capture the maximum market and also provide financing to the class which needs it most. Cases of deviation should also be applied to the salary limits. For e.g. a 5% deviation from the required 10000 should be made acceptable if it is not possible to relax the actual limit.
Reduction of Non-conformance cost
The cost related to dissatisfied customer can result to reduction of market share and also damage the good will that this bank maintains with its customers. One angry customer tells ten and then those ten spread it further and so on. So SCB has to try and completely eliminate the prospect of having a dissatisfied customer. This can be done in the following ways:
§ Proper training of customer handling should be given to employees. Training workshops and coaching clinics should be considered as an option that would provide adequate results.
§ Quick response to customer queries is necessary to maintain a healthy relationship with the customer.
§ Quick action should be taken against any miscommitment on part of the members of the Sales team.
§ Adding of value added features that offer competitive advantage is also a means of avoiding customer dissatisfaction.
§ Efforts should be made towards reducing the time consumed for disbursement
§ Surveys must be conducted regarding customer satisfaction level and all employees of this dept. should look forward to getting feedback whenever possible.
Even though some of these recommendations may not be entirely workable a certain portion of each of these recommendations can definitely be implemented for future improvement and a greater number of more satisfied customers and employees.
Bibliography:
Http://www.indiainfoline.com/pefi/apply/plon/stch/
Personal loans criteria booklet
http://www.standardchartered.com/pk/
Kotler Philip, Introduction to Marketing Management, 6th Edition.
