Al-Falah Bank Limited Chapter-8

CHAPTER 8

IMPLEMENTATION

Action/Implementation Plan

Using the organizational analysis of the study, some critical issues are evident in the bank. Currently the bank enjoys a market leader status in its own segment. Growth possibilities are slim because deposit mobilization has reached its peak. New deposits can only be taken away from competitors and this would require a value package to the customers, which includes value added packages and extra ordinary services. However, this will reduce the profitability of the bank.

Moreover, because of a general economic slump, the proposed increase in deposits at term not favorable to bank’s profitability would increase pressure on advances at a period when demand for advances has slowed. BAF Islamabad main branch employees currently have poor inter-relationship amongst themselves because promotion prospects are dim. The reason for dim promotion prospects is the inability of the branch to give extra services to their clients. The reason for this is the lack of industrial and commercial activities. Consequently the employees in the bank are concentrating only in the business of account maintenance and deposit mobilization, which is unfavorable to the branch.

To overcome these problems a plan is presented here on the bases of recommendations i.e., Electronic Banking, which include electronic fund transfer, PC banking, Internet banking, Tele-banking etc. If these plans were implemented then it will help the bank to compete with leading foreign and local banks like Emirates, Standard Chartered Grind lays, Muslim Commercial, Metropolitan, Askari etc in their geographic territory. As well as these plans enables the organization to be effective (in terms of less paper work and time saving), competitive and hopefully profitable and to boost the business by catching new customers and keeping the potential customers to do business for long period of time.

The highlights of the implementation plan are as follows:

Electronic Funds Transfer (EFT): The first thing in the E-BANKING is the Electronic funds transfer which also includes the ATM, the most visible form of EFT. Others are standing instructions performed for utility bill payments and so on. Another well-known form is SWIFT, the international payment system. The important point to highlight is that funds transfer takes place electronically without any paper-base transactions involved. In Pakistan, the number of installed ATMs is still comparatively few due to high installation and operating costs, while use of SWIFT is not as prevalent as it should, though most of the major banks are members.

EFTPOS (EFT Pont of Sale): is an electronic payment method, which involves goods or services being paid for, at the point of sale. The transaction may be initiated either by the EFTPOS card being swiped through a card reading device, prior to the authorization of transaction by means of a Personal Identification Number (PIN) being inputted into a hand-held pad by the customer, or else through the card swiped being followed by the customer signing a paper voucher.

PC or Home Banking: is a service in which customers can use their personal computers at home, or at their office, to access their accounts for transactions, by subscribing to and dialing into the bank’s own intranet proprietary software system, by use of password. This virtually establishes a bank branch in the customer’s home and offers 24 hour service seven days a week for the test marketing purposes this service is initially given to the corporate customers.

Internet Banking: Simply one form of PC banking, not only offers customers 24-hour access, but also the ability to bank from multiple venues, since

a.                   Proprietary software t need not reside on each machine (a browser is used),

b.                  The customer accesses the bank from its web site.

A number of banks in Pakistan, particularly the foreign ones, are planning initiatives in this area since their parent organizations already offer these services abroad. Tele-banking can be considered as a form of remote or virtual banking, which is essentially for the delivery of branch financial services via telecommunication devices where the bank customers can perform retail banking transactions by dialing a touch-tone telephone or mobile communication unit, which is connected to an automated system of the bank by utilizing Automated Voice Response (AVR) technology.

Tele –Banking: Tele-banking service provides yet another alternative to almost all of the functions available on the Automated Teller Machines except withdrawal and deposit of cash. The facilities available include checking account balance, funds transfer between current, savings and credit car accounts and bill payments. As far as the customers are concerned, it provides increased convenience, expanded access and significant time saving. On the other hand, from the bank’s prospective, the costs of delivering telephone-based services are substantially lower than those of branch-based services.

There is no doubt that technology does not come economically. If one looks at the foreign banks almost all use foreign application packages. These are generally integrated systems implemented over a Wide Area Network and provide online real time connectivity of their branch network to a central system. This also provides to bank the capability to provide better customer service via inter-branch transactions, ATM service at any location, customer-profiling etc. A centralized database provides better portfolio management, transaction reconciliation, integrity of data, management reporting and decision support.

Banks need to look outwards, rather than inwards to overcome their insecurity and gear themselves to compete on a global scale. Organizations can no longer stick their heads in the sand, ostrich-like, and pretend that the world in not shrinking and competition from other markets is not at their door. More important, many of the local organizations have to bridge the cultural gap towards the implementation of technology.