BNK603 Handouts Lectures 1-45

TABLE OF CONTENTS · Lecture # · Topic · Page #

1.

2. Profit Boosters ...........................................................................................................11

3. Bank Business & Operating Model (BOM): An Extended Context .................................... 21

4. Consumer, Consumer Rights & Protection ......................................................................... 26

5. Key Issues in CB --- Consumer’s Perspective ...................................................................... 32

6. Emerging Issues in Retail Banking ....................................................................................... 38

7. Structure of Bank Credit Risk --- An Overview ................................................................... 44

8. Structure of Bank Credit --- An Overview (Contd…) ......................................................... 49

9. Consumer Financing in Pakistan An Overview ................................................................... 53

10. Costing /Pricing of CB Products ..................................................................................58

11. Costing / Pricing of CB Products (Contd…) ................................................................ 63

12. Bank Schedule of Charges .................................................................................................... 68

13. Consumer Financing in Pakistan Issues, Challenges and way Forward Study / Report ..... 75

14. Code of Consumer Banking Practice: The Association of Banks in Singapore................... 81

15. Growth Strategy in Retail Banking Structured Relationship Approach............................... 85

16. Growth Strategy in Retail Banking Structured Relationship Approach (Contd…) ............. 89

17. Growth Strategy in Retail Banking Structured Relationship Approach (Contd….) ............ 94

18. Growth Agends in Financial Industry .................................................................................. 99

19. Capturing Consumer Finance Opportunties in Emerging Markets ................................... 104

20. India Consumer Banking Landscape.................................................................................. 109

21. The Next 4 Billion Market Size & Business Strategy at the Base of the Pyramid an

IFC/World Resources Institute Report (2007) ............................................................ 116

22. Market-Based Approach for Poverty Reduction................................................................ 121

23. Financial Services Market within BOP .............................................................................. 130

24. Reflection Time! ................................................................................................................. 136

25. Reflection Time (Contd…) ................................................................................................ 142

26. SBP Risk Management Guidelines ..................................................................................... 151

27. ERM: Development & Implementation of “Integrated Approaches to Measure and

Manage Risks across The Enterprise. ................................................................................. 159

28. ERM: Development & Implementation of “Integrated Approaches to Measure and

Manage Risks across The Enterprise (Contd…) ................................................................ 166

29. Risk Appetite: How Hungry are you? ................................................................................ 172

30. A Structured Approach to Establishing a Risk Appetite Statement .................................. 179

31. ERM at Asian Banks from Challenges to Strategies A Study by Asia Risk Management

Institute (ARMI) ................................................................................................................. 186

32. ERM at Asian Banks from Challenges to Strategies A Study by ARMI (Contd…) .......... 190

33. Service Management Breaking the Trade-Off between Efficiency and Service ................ 198

34. Service Management Breaking the Trade-Off between Efficiency and Service (Contd) ... 208

35. Why Bank Customer Experience Matters? ........................................................................ 217

36. Moments of Trith in Retail Banking……Managing Customer Interations to Enhance

Loyalty, Satisfaction & Share of the Wallet........................................................................ 226

37. Food for Thought… ................................................................................................. 235

38. Housing/Mortgage Finance in Pakistan ............................................................................. 240

39. Housing/ Mortgage Finance in Pakistan (Contd…) .......................................................... 248

40. Global Perspective on Managing Mortgage Profitability Retail Banks at a Crossrad in

2009 Principal Findings...................................................................................................... 258

41. Auto Financing/Leasing in Pakistan .................................................................................. 272

42. SBP Operational Guidleins for Credit Cards Business in Pakistan ................................... 278

43. Building Consumer Trust in Retail Payments .................................................................... 284

44. Evolving Models of RB Distribution Capitalizing on Changes in Channel Usage. ........... 294

45. Fit, Focused and Ready to Fight How Banks can get in Shape for the Battle

Ahead…................................................................................................................... 304

LESSON 01

Objectives of Course

•  To help Students gain some fundamental knowledge/information about this important

component of Banking Business. As educated citizen of the country they are expected to develop a

balanced perspective & establish the relevant context towards the contribution this banking

practice could make in the growth/development of Economic and Social Sectors of our country

•  To provide Students with an opportunity to undertake some additional/complimentary learning

which could help them succeed in their work/professional lives, i.e. choosing any

occupation/carrier in general or Banking/Finance in particular

•  To assist Students in making better decisions in their capacity as Consumers themselves. With

their educational background they represent a Key Societal Stakeholders Category and as such

constitute a significant Prospective Customers Segment for the banks

Five Forces of Competitive Position

Let us take Porters Five Forces model as an example:

•  Information can provide us with the details of buyers, suppliers, substitutes, competition, etc.
•  Knowledge can show us how to build Porter's 5 forces mode with this information
•  Understanding can explain to us why we utilized the model (objective is to determine industry

attractiveness and/or use as a threat matrix)

•  Wisdom enables us to discern the objective's value or relevance to us and our desired outcome
•  Wisdom is about effectiveness while the rest are about efficiency

Systems Framework

Consumer Banking is a separate course but we are not going to learn about it “in Isolation”.

Our endeavors will be to understand it by applying the process of learning cycle described earlier and take a

“Systemic View” of the nature & characteristics of this subject, i.e. in the wider & a macro context.

What are Systems?

•  System is a group of interacting, interrelated, and interdependent components that form a complex

and unified whole

•  Systems are everywhere—for example, the R&D department in your organization, the circulatory

system in your body, the predator/prey relationships in nature, the ignition system in your car, and

so on

•  A system has a purpose
•  The parts combine in a particular way for the system to carry out its purpose
•  Systems serve specific purposes within larger systems
•  Systems seek stability
•  Systems have feedback

The methods of systems thinking provide us with tools for better understanding difficult management

problems. The methods have been used for around fifty years (Forrester 1961) and are now well

established. However, these approaches require a shift in the way we think about the performance of an

organization. In particular, they require that we move away from looking at isolated events and their causes

(usually assumed to be some other events), and start to look at the organization as a system made up of

interacting parts. We use the term system to mean an interdependent group of items forming a unified

pattern. Since our interest here is in business processes, we will focus on systems of people and technology

intended to design, market, produce, and distribute products or services. Almost everything that goes on in

business is part of one or more systems. As noted above, when we face a management problem we tend to

assume that some external event caused it. With a systems approach, we take an alternative viewpoint --

namely that the internal structure of the system is often more important than external events in generating

the problem.

Systems Thinking is a process of discovery and diagnosis an inquiry into the governing process underlying

the problems we face. It helps in building more choices not answers, into our thinking process. It creates a

framework for productive dialogue.

Can you think beyond new Products and new Services to entirely new business concepts --- ones

that meet deep customer needs in unconventional ways?

Can you think of unconventional ways of recharging an existing business concept? Can you go

non-linear? To be an industry revolutionary, you must develop an instinctive capacity to think

about Business Models in their entirety