Banking Industry Has Become Highly Case Study

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[. . .] Moreover, WOW! Was incorporated in the training process at Commerce University, which is a training facility dedicated to training employees. Here employees are taught customer service skills and more so how to WOW the customers.

Staffing has continued to be a challenge to the bank. Success of the bank is based on selection and hiring the right people and integrating them into the existing culture. Despite this fact, the bank has very low employee turnover. Employee motivation is a key factor in helping organizations to survive. This way they are more productive within the context of roles they perform (Lindner, 1998). The Commerce culture apparently is conducive for both the customer as well as the employees. The bank has continued to pay particular interest to experience; this way the bank gets information on competitors, the labor market and the banking industry as a whole. It is important to note that the success of Commerce bank has been driven by focus on customer not price.

As a result, the bank has registered substantial gains in revenue. In 1998, the bank's net revenue was 61.7 billion dollars. In 1999, net revenue grew to 71.4 billion dollars a 15% growth from the previous year. In 2000, the bank registered 70.9 billion dollars a 0.7% drop from 1999. In 2001, the bank recovered from the drop to register a 4.2% growth from the previous year with net revenue of 73.9 billion dollars (Figure 1).

Growth

Commerce had reduced deposit rates to half percent lower than competitors had. It had also generated more than half of these deposits from consumer business as compared to most banks that lacked substantial consumer business base. Unlike Commerce, they encountered challenges gathering consumer deposits; they funded themselves in wholesale market and cut costs in the retail banking. In addition, most banks are driven by loans while Commerce's policy was based on a no deposit no loan attitude. At Commerce, the branch manager doubles up as a loan officer to ensure that the bank gives sound loans that are repaid as well as promoting generation of deposits. This significantly reduced Commerce's loan-to-deposit ratio below the industry average.

Nonetheless, the bank saw an opportunity in taking coins, a practice most banks had stopped. It dedicated 10 million dollars in the exercise dubbed The Penny Arcade. In 2001, the bank handled 730,000 transactions worth 5711 million dollars from Penny Arcade. The bank also awarded account credit for those branches that recorded deposits.

As a result of the bank's effort to encourage deposits, it registered over 1 billion dollars every quarter. The bank expects to attain the 100 billion dollar mark in deposits from the 1000 branches stretching from Washington, D.C. To Boston. In general, the bank's total deposits in 1998 were 4.5 billion dollars, in 1999; the deposits grew 26% to 5.6 billion. In 2000, total deposits were 7.4 billion dollars 34% growth from 1999; it then went up 38.7% to 10.2 billion dollars in 2001(Figure 1). Commerce's success was not limited to deposit growth.

Conclusion

According to Stirtz (2011), a unifying characteristic of the most successful companies is their use of resource in finding solutions. These companies value both the employees and the customers alike and have clear understanding of what the customer wants and how best they can help them. Just as in the case of Commerce bank, where it focused on the customer instead of the price as many other banks did. At Commerce bank, when customers' came in to open checking accounts, they received a friendly service that included incentives.

It is important that organizations establish staff training and development as a strategic weapon in improving productivity and in building as well as sustaining competitive advantage (Selvarajah, Sung-Wai Lau, & Taormina, 2012). The steps taken by Commerce bank in introducing an in house training program is commendable. The program is fundamental in orienting new and future employees on the culture at the bank. The program also offers courses to existing employees including senior executives.

References

Lindner, J.R. (1998). Understanding Employee Motivation. Journal of Extension, 3.

Selvarajah, C.T., Sung-Wai Lau, T., & Taormina, R. (2012). Management training and development: A New Zealand study. Journal of Management… [END OF PREVIEW]

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Banking Industry Has Become Highly.  (2012, July 30).  Retrieved February 20, 2019, from https://www.essaytown.com/subjects/paper/banking-industry-become-highly/5570586

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"Banking Industry Has Become Highly."  Essaytown.com.  July 30, 2012.  Accessed February 20, 2019.
https://www.essaytown.com/subjects/paper/banking-industry-become-highly/5570586.