COMMERCE BANK COMMERCE BANK

Akosh Deep 127

Gowthom Sr|n|vos 142
Kon|ko Jo|n 147
Kon|ko S|nghon|o 148
kudro kodhokr|shnon 173
Soh|n| 8ero 185
Iojeshwor S|ngh 188
%0 Banking Industry: An ov0rvi0 %0 Banking Industry: An ov0rvi0
!roducts S0rvic0
O 2 major categories:
Deposit products: commodity products,
involved storing of money, transaction
oriented
Loan products: Loans given out to
customers
O Checking accounts distinguished
by fees, channel access,
overdraft protection
O Used demographics such as
age, income, geographic
location
Recently included individual
customer profitability
O About one third of customers
lost due to attrition
Largest in first year
O Banks created large branch
networks because proximity of
branch was major influence for
selection of branch
O Large ATM networks;
increasingly viewed as profit
centers
O Call centre to address customer
grievances
istribution
Employ00s
O mployee selection on basis of
ability to perform repeated
tasks, interact with customers
O Training consisted of:
O Policies and procedures
O Features of deposit and loan products
%0 Banking Industry: K0y tr0nds %0 Banking Industry: K0y tr0nds
O Two key trends:
Push towards cross selling of products; on average 1.5-
2.5 per customer
Growing revenues from transactions and functionality.
N 1998-2001: fee revenue increased at 27% compared to
interest income growing at 11%
O 34% of customers lost due to dissatisfaction due to
steep fees, fee surprises, poor service
O Many banks merged with each other to access
other banks branch networks
O Because of lower marginal transaction costs,
electronic banking was encouraged by banks
Comm0rc0 Bank: %0 story across Comm0rc0 Bank: %0 story across
t0 y0ars t0 y0ars
1973
- Commerce Bank was founded by Vernon W. Hill II
- With a $1.5 million capital and a determination to be different
1981
- Grew to $1 billion in deposits
1994
- Developed the WOW! program
- A framework to teach employees service
1997
- Introduced WOW! Awards
- To honor outstanding service performers for the year
2002
- Introduced Retailtainment
- To encourage branch managers to suggest ideas, even wacky ones.
A comparison it ot0r banks A comparison it ot0r banks
COMMERCE BANK
O 4 types of checking accounts
O Deposit growth of nearly 40%
in 2001
O Customers are not pushed
towards internet banking
O Customers - revenue
generator
O Do not believe in M & A
O Lowest rate payer in every
market
O Longer working hours
O Lower loan to deposit ratio
than industry average
O More than half its deposits
from consumer business
%!ICAL BANKS
O A dozen or more types of accounts
O Cumulative deposit growth of 5% in
2001
O Customers encouraged to move
transactions to self-service channels
O Customers - cost generator
O Wide occurrence of M & A
O Pay at least 0.5% more than
Commerce Bank
O Lesser hours ->lesser cost
O More focus on credit than deposits
O Around half of overall business only
from consumer business
A diff0r0nt approac toards A diff0r0nt approac toards
d0posits and cr0dits d0posits and cr0dits
0posits Loans
O Deposits called as the value
of the bank
O Deposit rates half a percent
lower than competitors
O More than half deposits from
customer business
O "Were winning the ground
war- company executive
O High expense ratio focussed
on service to customers;
giving back to customers
O Loans assigned to respective
branches that services the
customers unlike competitors
Branches received the credit
O Loan to deposit ration
significantly lower than
industry average
O Cautious approach towards
giving out loans to avoid
credit risk
O Loan takers encouraged to
open deposit accounts
CUS%OMER FOCUSSE S%RA%EG CUS%OMER FOCUSSE S%RA%EG
O Building on the customer `trust
O Commerce branches are built to be inviting and are replicated
everywhere.
O The location of the branch was chosen carefully
O 10-minute rule : open 10 minutes early and stay open 10
minutes late
O Free gift in opening account
O Customer - centric programs : pens, dog biscuits, lollipops,
phones in ATM machines, Penny Arcades
O O
O Process improvement - Offices have quality-assurance results to live by
O WOW! Awards for outstanding service performers
O It is an integral part of training process at Commerce University - an award
of stock options at course completion
O mployees should be passionate, future leaders
O Red Fridays - time for WOW! Patrol
O Mystery shopping- to rate banks
O Leagues -inter branch competition for most impeccable service report
O Kill the stupid rule - $50 for the alternative
O Blue and red Commerce vans - mobile service
RE%AIL%AINMEN% RE%AIL%AINMEN%
O Other banks had started emphasizing on retail experience
O Retailtainment - entertain branch customers on Friday afternoons
%0 call0ng0s of b0ing diff0r0nt %0 call0ng0s of b0ing diff0r0nt
O "The hardest thing about becoming a big bank is not becoming a
big bank-CFO; Can CB continue to be small while continually
getting bigger?
O Do the customers really wanted all this? And at what cost?
O Higher marginal costs associated with full service channels
Justified to fight a ground war?
O Are lower deposit rates justified to provide high customer
services?
O Staffing: Getting the right people and integrating them into the
unique CB culture
O A few customer concerns with service focussed approach:
mployees focussing on greeting than getting work done
Odd mishaps due to crossing the line on retailtainment; hotdog carts
and juggler in the branch
O Company focus was on centrally controlling the branch
environment but sometimes decentralized approach required
A f0 r0comm0ndations A f0 r0comm0ndations
O Putting across the value proposition clearly to the
customer
nhanced customer service is CBs forte and reason for the
past success
O Maintaining balance between decentralization and
customized branch experience
O nsure company doesnt lag behind competitors while
focussing on traditional channels and ignoring
alternative channels
O Not crossing the line with retailment; being true to a
banks definition
%ANK OU %ANK OU