A financial institution is selected for the purpose of this review. To maintain its confidentiality this organization will be referred to as RCB Bank. This review is based on personal working experience in RCB Bank and reference to other materials such as internet and books on related subject.
RCB Bank was established in July 1959 with its first branch located in Kuala Lumpur. RCB Bank was the first American bank to be incorporated as a subordinate company of the worldwide American bank.
It started with 17 employees and now has 5,500 staff of which more than 95% are local. It was localized in 1994. Now, this institution serves customers across 7 branches in KL, Selangor, Penang and Johor. RCB Bank offers both consumer and corporate banking services. It offers a range of banking and financial management service including credit card, loans, insurance and investment in consumer business. RCB Bank is a leading player in Malaysia credit card space, holding 20% market share in credit card usage.Corporate banking services offers a broad spectrum of financial services that includes treasury management, transaction services, securities custodianship, foreign exchange, fixed income, sales and trading and corporate finance to corporate clients, governments and financial institutions.
RCB Bank is the only foreign bank to be rated AAA by the Rating Agency Malaysia for 8 consecutive years a reflection of its effective operation management. Operation Management is the science and art of ensuring that products and services are created and delivered successfully to internal or external customers.Every organization’s ultimate goal is to maximize profit and improve its return on investment. To achieve this, a proper operation management is necessary. There are five objectives of operation management, namely Quality Speed Flexibility Dependability Cost All this five objectives apply to all type of operations (organization), including RCB Bank. The diagram below shows the bank’s transactional process flow. It will assist to illustrate how the five objectives integrate within the institution’s operation.
Quality The first objective discussed is quality.As many competitive organization, RCB Bank also emphasizes on its quality. It aims to always exceed customers’ expectation. For a financial institution quality means doing things right in the first time on processing coupled with knowledgeable and courteous staff. In its effort to ensure quality RCB Bank manages the following activities: •Staff training •Process documentation •Campaigns on quality. Staff training Staffs are given training that befits their station. A sales staff is trained on product knowledge, customer service as well as compliance to both internal and external regulations.
This is to ensure that they are able to provide quality service to the customer. The bank tellers and processing clerks are given high-level product knowledge training and more on the processes and compliance. This is to ensure a zero defect processing. Then there are the various levels of managers, all of whom are given the trainings that will enable them to support the organization’s drive towards quality. Process documentation This organization invested in getting ISO accreditation for its processes. This is a proof of the organization’s commitment towards quality.In order to obtained the accreditation the organization is required to document its processes and ensure that the quality aspect of these processes are given due emphasis.
Each department in the organization has the relevant processes documented. These processes are designed to ensure error free process, such as inclusion of maker and checker. New processes are added and obsolete ones removed. These documents are updated and reviewed on regular basis to ensure that they are current and remain relevant. Staff are required to read, understand and follow this standard processes.This is to ensure that the quality of the process is maintained throughout the organization. Campaigns on quality On regular basis this organization will launch campaigns to ensure that quality is maintained.
Among the popular ones are the ‘Zero defect’ and the ‘WOW’ campaign. As the name suggest, these campaigns are to encourage an error free processing and a beyond expectation customer servicing respectively. Staffs are encouraged to support the campaign and rewards are given to those who excelled in their achievement.The above are just some example of the tools applied by the organization in ensuring quality, hence gaining edge against its competitors. Speed Speed is another important objective for organization to have an edge against it competitors. Customer expect speedy fulfillment of their needs in various aspects of their lives i. e getting a passport or loans application.
In this millennium world, it is possible to provide instantaneous service like internet banking and phone banking. Customer could make their banking transactions electronically without having to physically go to the bank.This not only saves the customer precious time and money but provide convenience of banking from their own home. The institution has invested time and money in re-engineering processes to eliminate long and unproductive processes. An example of this is where previously customer is required to sign multiple forms in order to conduct transactions on the various banking products. With re-engineering, the institution has cut through the process and now requires just a single form to affect their banking. This contributes to a speedy service delivery, which benefits the customer.
With such implementation, it provides convenience and save cost for the customers. This institution will launch a process improvement program on regular basis. Staff is encouraged to provide feedback and suggestion to improve processes, which they are familiar with. Staff is being trained to re-look into the existing process and to eliminate redundant work without impacting the compliance and regulatory. An example of this is reduction of the numbers of hands off in a process i. e. approving Credit facilities where it used to flow across four departments.
After a brainstorming session, this process was reduced from passing through four departments to only two. This new process satisfies customer need for speedy deliver by reducing service turnaround time. Another move by the institution in ensuring speedy service is by keeping close watch on their staff availability to service customers.
Capacity planning is done up to ensure adequate staff is available to meet customer demand in providing service within the turnaround time. Staff is trained to multi-skill so that they can support each other in time of staff shortage.This will ensure that the speed of service delivery is not affected. (Appendix I).
Flexibility Flexibility simply means the ability to adapt quickly and effective to changing requirements. This changing requirement can either be a change in the customers’ need for a product or service or a change in volume of demand. Although RCB Bank has limited branches in Malaysia compare to other banks, it still attracts wide range of customers from parts of the country where it has no branch represented. This is made possible through partnering with other non-financial institutions and designing innovative products.An example of this flexibility is the partnering with a well-known mobile company to provide fund transfer services to their customers. Funding of the funds transfer is made through mobile company who will then relay the instruction to RCB Bank to affect the fund transfer. This provides the convenience and flexibility to customer who may not even be a client of RCB Bank.
In terms of services, multiple choices are available to serve customer conveniently. Customer may do phone banking or internet banking.In addition, for the corporate client the bank also provides collection services, where the bank partnered with courier companies to service the customer needs such as collecting checks and other financial transaction request from their doorstep. With all these services being offered, customers can avoid the hassle of jam or looking for parking as they do not need to go to the bank and do their banking transactions. In addition, there is also the standing instruction service, which the customer can subscribe to, and the bank will handle the rest of the work on a timely hassle free manner.Flexibility to volume or demand Another example is in their ability to rise to the increase in demand during the festive season. During this time e.
g. Chinese New Year the bank may expect a higher volume of customer in the bank, mostly with the needs for new notes. The bank has made it convenient for the customers by dispensing new notes via the Automated Teller Machine (ATM). This will speed up the service as well as reduce the bank operating cost as the process of exchanging of new notes is now transferred from human to machine. DependabilityDependability is another objective of operation management. In a financial institution, it is important that both its system and human resource to be highly dependable. RCB Bank has a responsibility of meeting its customers’ expectation and deliver as promised.
System Dependability System dependability is fulfilled through various means. As a bank, it is expected that the Automated Teller Machine (ATM) and internet banking is available as promised i. e. 24 hours a day. In ensuring this, the bank has placed its IT support personnel to be on stand-by round the clock.In the event of breakdown of any of this channel, the supports will instant work on recovering the system. All system downtime are closely monitored and contingency plan evoke in the event recovery is not possible within the expected time frame.
Understanding the importance of system dependability, RCB Bank undertakes a system recovery exercise semi annually. Through this exercise the bank is able to gauge its system recovery time. This exercise includes all system, even the mainframe. Human Resource DependabilityIt is the bank’s responsibility to ensure that it can function even when it has human resource crisis such as during pandemic of any kind, strike or any form of emergency like ‘September 11’. In ensuring that service is not disrupted under such circumstances the bank has come out with Continuity of Business Plan. This plan is being tested semi annually, simulating a condition of such crisis. Staff is trained to be multi-skilled in order to ensure dependability.
Security of deposits Security of deposits is another form of dependability expected of a financial institution.The bank is responsible to ensure that customer funds are safe at all time. Security measures are being taken to ensure that physical cash are safe by employment of security guards, close circuit camera and vault. The bank also invested in system security to prevent hackings into customer data and funds. The Bank is also mandated to take up insurance for customers’ deposit via Malaysian Deposit Insurance Corporation (PIDM) as protection in the event the bank goes bankrupt. COST Last but not least amongst the objective of operation management is cost.Cost refers to cost of operation which includes both capital costs and annual operating costs (fixed cost and variable cost).
In order to remain competitive and profitable, an organization needs to keep their cost as low as is compatible with the levels of quality, speed, dependability and flexibility as demanded by their customers. There are many ways cost can be contained. An error free operation not only projects quality but also help maintain cost low as no costly rework needs to be done. No personnel required to pacify irate customers. RCB Bank aims for zero-defect processing in its operation.It also embarks on process re-engineering to reduce the processing time, eliminates redundancy and reduces usage of stationeries, RCB Bank also invested in automation. Though this adds to fixed cost it helps reduces annual operating cost.
An example of this is internet banking. With internet banking, RCB Bank managed to reduce cost through reduction of manpower. With reduction of manpower, rentals are reduced, as less workspace is required. As internet banking also means error free processing it also contribute to cost reduction and quality. ConclusionIn summary, it can be seen that RCB Bank has successfully applied the five objectives of operation management in meeting its business goal, namely in maintain good return on investment (ROI). RCB Bank needs to continue its effort in producing more innovative product and services. This is because the competition is great and before long its winning ways will be copied.
In order to continue being a market leader and having an edge over its competitors, it will need to continue delivering new products and services that exceeds customers’ expectation and keep them satisfied.