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Strategic Plan for Seylan Bank PLC

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A Strategic Plan regarding the bank that was almost bankrupt to now expanding it's horizon and looking forward for growth in the Sri Lanka Economy. …

A Strategic Plan regarding the bank that was almost bankrupt to now expanding it's horizon and looking forward for growth in the Sri Lanka Economy.
Submitted by Lalindra De Silva

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  • 1. 0 Strategic Plan for Seylan Bank PLC. 2013-2018 BSc in Business Management (Special)-UGC Degree 13F2 Strategic Management Group Assignment Productivity & Management Development Division NSBM
  • 2. 1 Group Members D.G.L.R DE SILVA BSC-UGC-MGT-1315-319 J.H.M.G.C JAYAPATHMA BSC-UGC-MGT-1315-221 R.G.A.C ARIYARATHNA BSC-UGC-MGT-1315-182 M.M.S.P BANDARA BSC-UGC-MGT-1315-189 W.D.M FERNANDO BSC-UGC-MGT-1315-077 M.H.MOHAMMED BSC-UGC-MGT-1315-240 M.M.N.L BANDARA BSC-UGC-MGT-1315-188 U.M.D.C FERNANDO BSC-UGC-MGT-1315-206
  • 3. 2 Preface We are extremely happy to produce this report regarding the strategic plan of Seylan Bank. In our endeavor we have mainly taken the PESTEL and SWOT Analysis types of environment analysis, the strategic group mapping, and compared with similar other banks in Sri Lanka and we have developed a Strategic plan for Seylan Bank for the next five years. And through that we have compiled this report. The main idea of doing this project is to orchestrate a Strategic Plan for Seylan Bank from the year 2013 to 2018. The strategic report includes ratio analysis and various other research and market share nucleuses and there growth prospective in the coming years after their almost Bankrupt situation few years ago. We have collected data from their Annual Reports and online and utilized that Data to transform into meaningful information, and then implemented various conceptual and theoretical methodologies. In doing so we able to identify various factors and culminate that into the report. When going through this report you could see the different ways & methodologies, such as PESTEL analysis, SWOT analysis, Strategic Group Mapping, while identifying the geographical localities, quality and to what extent it has been successful in this project. And also the constraints of the project are stated as well.
  • 4. 3 Acknowledgement We would like to gratefully acknowledge the contributions of Mr. Kolitha Ranawaka our Strategic Management Module Lecturer for his guidance & helpfulness in preparation of this report as a fulfillment for our Strategic Management Module Assignment. With the consistent support of our team members Mr. Gihan Jayapathma & Mr. M.H.Mohammed gathering of the Data, providing the Data regarding Seylan Bank, Research and formulating was of utmost importance as it helped to formulate the major parts of the Strategic Plan. Priyanwada, Shani, Nishan, Asith and Chinthaka contributed in numerous ways that they could with their technical expertise and last but not the least the Anchorman Mr. Lalindra De Silva. I would like to gratefully acknowledge the outstanding contributions of Lalindra De Silva & Gihan Jayapathma. Were it not for their outstanding support & creative contributions to this project, it would not be the success that it is. “Thank you.”
  • 5. 4 Executive Summary This report emphasis on how Seylan Bank, who nearly when into solvency and Bankruptuncy and within the span of three years how it stood up consolidated its position in the competitive Sri Lankan Banking arena, and is now in the process of growth through Strategic Plans that helped the Bank when they had their backs to the wall and by collecting data, analyzing and implementing appropriate suggestions’ and recommendations. We foresee tremendous opportunity for growth as our nation overcomes the challenges posed by the 30-year long war and embraces the opportunities that peace and stability has paved the way for. While the external environment would remain challenging due to global economic conditions, every player would have to adapt and evolve to stay competitive and profitable. The banking sector which has remained strong and resilient in adversity will have a key role to play as Sri Lanka completes its remarkable journey of recovery and reconciliation and marches towards the milestone of US$ 4,000 per capita income. The task before us is now to advance from our phase of consolidation to a phase of growth. We shall do so by leveraging our strengths further while enhancing areas such as customer service and staff training and development. Corporate banking, Trade finance an Treasury units will play a more vibrant role and we will develop an even more focused approach towards SME, retail and premier banking functions. The Bank plans to grow the branch network at the same pace as in 2012. Strategic locations have been identified to open up branches on a selective basis. Infrastructure development and upgrading of facilities will continue at a pace with existing branches made bigger, better and more customer friendly. Alternate channels such as Internet and SMS banking will also be further improved. We have been a very popular bank among our expatriate community who regularly remit their hard earned money to their kith and kin through us reaping the rewards of many direct and indirect benefits we offer. We aim to further strengthen our offerings in the remittance market while expanding the number of employees and agents representing us in the relevant markets. We have formulated a comprehensive new product development strategy and a number of products have been identified for upgrading in addition to new products to be launched with numerous value additions to our current and potential customers.
  • 6. 5 We have also set our sights on reducing the NPL ratio to a single digit by end 2013 through rehabilitating troubled loans and through effective recovery strategies. Capital is increasingly becoming a scarce commodity and even a limiting factor for the growth of banks. We will use our product portfolio and staff skills to grow our non- interest revenue streams. Our IT platform will be strengthened to support the overall growth and development strategies of the Bank. Cost containment and cost management will continue to be a priority area. The debenture issue which was planned for last year was concluded in early 2013, which has boosted our capital base further. Going forward, a culture of passing capital to more productive business units will be implemented to ensure its optimal use.
  • 7. 6 Content Group of Members……………………………………………………………………..1 Preface..........................................................................................................................2 Acknowledgement……………………………………………………..........................3 Executive Summary………………………………………………………..…….........4 Seylan Bank Introduction……………………………………………………………7 Background………………………………………………………………………………..8 Methodology………………………………………………………………………………10 Company Profile………………………………………………………………….………11 Swot Analysis Of Seylan Bank………………………………………………..……12 Porter’s Five Forces Model…………………………………………………….…….19 Strategic Group Mapping……………………………………………………......…….22 PESTEL Analysis……………………………………………………………………..…..32 Conclusion……………………………………………………………………………..……43 Recommendations…………………………………………………………….…..…….45
  • 8. 7 Seylan Bank Introduction This report details the performance review, the divisional performance and the strategic adopted by the bank to achieve the pre-set goals according to the strategic plan and the budgets. It also enables to gain a better understanding of the bank while maintaining the transparency of the information to all their stakeholders. This report is written, based on the various strategies adopted between 2009-2012 and the success of these plans. Their theme of last year’s annual report IT WORKS is based on the strategies adopted from 2009-2012 for readers to understand the significant progress made by the bank over the said period. We have identified strategic priorities as per the following scope and detailed in the relevant sections where necessary.  Success strategies and business growth  Expansion of our delivery channels for faster reach  Improved credit quality Success Strategies and Business Growth After the change of management in 2009 the bank implemented its 2009-2011 strategic plan to build customer confidence and address various issues that were prevailing at that time. Strategic plan 2013-2018 was built on growth, improving of the business performance, service quality and obtain process efficiency. Such initiatives and strategies have already shown growth in business and banks profitability as evident in our 2012 performance. Main strategies adopted, its implementation and the result are discussed in detail under this report. Vision- To be Sri Lanka’s leading financial services provider as recognized by all our stakeholders. Mission- We provide our customers with financial services that meet their needs in terms of value, pricing, delivery and services. We will do so through a team of Seylan bankers who are recognized and rewarded for results orientation. We will ensure that our efforts translate to meeting the expectations of our shareholders, whilst always acting as responsible corporate citizens.
  • 9. 8 Background HISTORY Seylan Bank PLC was founded in 1987 and opened its doors for business on 24th March 1988,in Colombo Fort,the traditional banking district of Sri Lanka's largest city. Originally named Seylan Trust Bank Limited,it was designated a Licensed Commercial Bank and incorporated as a public company with a broad base of shareholders. From its founding, the new institution was part of the Ceylinco Group of Companies,a major Sri Lankan conglomerate operating in a wide range of industries. The goal of the Bank's Founder Chairman, Dr. Lalith Kotelawala, was to offer retail customers a more welcoming, service-oriented alternative in a banking culture that was generally perceived to be formal and regimented, even a bit austere.From the outset, Seylan Bank presented itself as a flexible, customer- friendly choice, summing-up its promise in a service motto that soon caught the attention of prospective customers: 'The Bank with a Heart'. In December 2008, Seylan Bank was confronted by a sudden, unexpected crisis of public confidence resulted by the crisis evolved around the "Golden Key Credit Card Company" which is a subsidiary of the Ceylinco Group of companies. With the timely intervention of the Central Bank of Sri Lanka under the provisions of Section 31 of the Monetary Law Act, a new board of directors was appointed to manage the bank. The new board under the Chairmanship of MR. Eastman Narangoda, a veteran of the banking industry who had previously held the position of General Manager/CEO of National Savings Bank - a state-owned institution, took the challenge of re stabilizing the bank and regaining the customer confidence. The effort of the management and the staff paid dividends in a matter of months and Seylan Bank PLC rose like a Phoenix from the ashes and reached a mile stone in 2010 by recording a Profit after tax of LKR 1.2 Billion surpassing the 1 Billion thresholds for the first time in it's history. And now this report unfolds the strategic plans that were adopted and to be taken
  • 10. 9 Seylan services  International Trade :Seylan Bank Trade Services  Corporate Banking :In our short period of existence  Offshore Banking :Eligibility criteria for opening accounts  Development Banking :A novel idea of introducing a credit card  Pawning services :Seylan Bank now offers you the highest value within the next five years.
  • 11. 10 Methodology The operational outlook which brought back the Seylan Bank to its current status. Seylan Bank foresee tremendous opportunity for growth as our nation overcomes the challenges posed by the 30-year long war and embrace the opportunities that peace and stability has paved the way for. While the external environment would remain challenging due to global economic conditions, every player would have to adapt. The strategic plan which got off the ground in January and Seylan Bank’s adherence to the key actions identified proved an invaluable asset not only for the success that Seylan Bank achieved during the year but also in terms of preparing Seylan Bank for further growth and improvement in the years to come. While the main focus was to improve the core – business, the objectives multi-fold , including improving overall customer satisfaction, adding more value to our stakeholders through reinventing the product portfolio, enhancing internal processes to improve efficiency, strengthening risk Management processes and further developing the human resources across the board. The bottom-up process that was followed in the formulation of the strategic plan where Seylan Bank got the input and support of the staff across the network meant greater understanding and a singular focus on key initiatives. Seylan Bank have and shall continue to update the plan through the rest of the period bringing in the learning’s of what works and what does not and ensure that this will remain a live and meaningful document that will continue to charter the Bank’s way forward.
  • 12. 11 Company Profile The Seylan bank was formed in the year 1987 to cater to the Banking Industry. The company's main focus is to be Sri Lanka's leading financial services provider - as recognized by all their stake holders. The top management consists of eight members who have a vast knowledge & experience in the Banking Industry. The Board of Directors are as follows. CEO – Mr. D.G.L.R DE SILVA BSc Business Management (Harvard), MSc Marketing Management (Cambridge) PHD Economics (Oxford), CFA Managing Director – Mr. J.H.M.G.C JAYAPATHMA BSc Business Management (NIBM), MBA Project Management (Moratuwa) MSc Actuarial Science (Cambridge), ACCA, CIMA, AAT Finance Director - Mr. M.H.MOHAMMED BSc Finance Management (PLYMOUTH), MBA Finance & Accounting (Colombo), ACCA,CIMA Executive Director – Mr. M.M.N.L.BANDARA BSc. Accounting (Sp) (First Class Honors) (Colombo), MSc. Business Finance (Harvard) CIMA, AAT, Executive Director - Ms. R.G.A.C. ARIYARATHNA BSc in Business Management (Special) Kelaniya, CIMA, CIM Non- Executive Director – Ms. W.D.M. FERNANDO AAT,CMA,CIMA,ACCA,CFA Non- Executive Director- Mr. U.M.D.C FERNANDO BSc. in Banking & Finance AAT,CMA,CIMA,ACCA,CFA, FMCC, CGMA Director – Ms. M.M.S.P BANDARA BSc. Banking & Finance (Special) 1st Class Hon. MSc. Banking & International Finance.
  • 13. 12 SWOT Analysis of Seylan Bank The SWOT analysis is a tool which can be used to highlight the strengths, weaknesses and opportunities, threats of Seylan Bank. Analyzing the strengths of our product will help us to find out any business opportunities that will enable our company to have a stronger market position. Also being aware of any weaknesses that exist in our product will help us to minimize any threats that may reduce the demand for the product. Therefore SWOT analysis proves to be a useful tool that helps to carve business strategies in order to keep a sustainable share in the market. While the strengths and weaknesses are affected by factors internal to the company, the opportunities and threats are related to the external environment. Successful marketing strategies emerge from a comprehensive situation audit. The marketing strategies are evaluated from both external factors opportunities & threats and internal factors strength & weakness. On the other hand, the information on competitive activities and customers collected through market intelligence which helps to maximize the fit between the organization’s capabilities & future opportunities. Firms which successfully evaluate market intelligence will enjoy financial performance. SWOT has been used to evaluate the firm’s strategic situation in the competitive marketplace. The SWOT analysis on firm’s marketing situation is determined through internal & external strategic analysis which covers the firm’s traits (strengths & weakness) and competitive factors (opportunities & threats). Therefore a SWOT analysis is essential for effective strategic marketing. The environmental factor opportunities & threats are uncontrollable whereas the internal factors strength & weakness are seen as controllable for the organization. The comprehensive SWOT profile of Seylan Bank provides an in-depth strategic analysis of the bank’s business and operations. The analysis will give the clear idea about company’s key strength & weakness and the potential opportunities & threats. This helps to formulate the strategies and to better understand the competitors, partners & customers.
  • 14. 13 The above diagram shows the SWOT analysis of Seylan Bank. It shows the strengths, weaknesses, opportunities and threats. POSITIVE NEGATITIVE INTERNAL EXTERNAL STRENGTHS Seylan Bank’s core strength is its people who united and managed to overcome from crises. _ WEAKNESSES - Overtrading -Bank’s undue expansion in limited capital OPPORTUNITIES -Independent identity with a completely new board helps to boost the confidence of management as well as employees THREATS -Threat of recession contains global banking failures -Liquidity risk
  • 15. 14 Seylan Bank SWOT ANALYSIS: Strengths - Weaknesses & Opportunities – Threats STRENGTHS (Internal) WEAKNESSES (Internal) 1) Seylan Bank’s core strength is its people who are united to manage any overcome from crisis. 01) Seylan Bank’s large innovative services provided to the customers 02) Offered high interest rates & additional bonus on minimum deposit amount. 03) Expand its reach to rural areas 04) Highly diversified customers’ portfolio 05) Diversification in their operation in banking including insurance investment banking assets management and increase the facility for mobile & internet banking. 06) Present unstable market condition increases their profit margin than previous year. 07) Have succession plan through talent management team. 08) Increases the earning per share than previous year. 09) Increases shareholders fund and earning. 10) Bank have a wider product line. 11) Network of branches spread all over the country and provide easy access to entire spectrum of customer. 12) Improve the access to financial service for customer. 13) Enhance higher ATM coverage in the country and newly open the ATM in rural area. 14) Done the CSR activities than other competitors. 01) Overtrading 02) Bank’s undue expansion in limited capital 03) Bank is not aligned with the current customer needs & demands. 04) Sizeable amount of Non Performing Loans. 05) Poor asset management& capital inadequacy 06) High operation cost 07) Inadequate deposit mobilization effort 08) High level of nonperforming asset. 09) Financial exclusion 10) Weaker brand image in the market (problem of 2009) 11) Complex and nonproductive sector organizational structure 12) Credit to non-productive activity 13) Inadequate access to global financial system 14) Structural weakness such as a fragment industry structure, restriction on capital availability and development lack of industrial support institutional
  • 16. 15 OPPORTUNITIES (External) THREATS (External) 01) Independent identity with a completely new board helps to boost the confidence of management as well as employees 02) Deliver higher financial value to its customers & investors 03) Highly market focused 04) Strategic initiatives such as domestic & international business opportunities 05) Empower disadvantaged group 06) Increase the profitability by accessing international financial market ( bank have only one blancher in Bangladesh for internationally ) 07) Expand the their business in product wise using related or unrelated diversification achieve the competitive advantage.(minimize the risk) 08) Stronger productivity growth 09) Opportunities to access foreign market 01) Threat of recession contains global banking failures 02) The intervention of monetary board is the broader threat to economic equilibrium. 03) Liquidity risk 04) Competitors bank in the market 05) Higher rules and regulation are introduce by the government ( establish new act & low) 06) External party have negative attitude about the bank( bank corruption in seylan ) 07) Weak brand name Strengths:  Inventor in SMS banking service in Sri Lanka. Seylan Bank PLC was the first bank in Sri Lanka who introduced SMS banking to its customers in year 2004. This system is connected to almost all Telecommunication’s operating in the country. Being the first member of experiencing the SMS banking service island wide; strengthening the capabilities to face future challenges & enhance the existing services. It facilitates the customization to manage customer’s accounts by the SMS push and pull technology. With this feature customers have the capability of transferring money between their own accounts, requesting the Bank for many ad hoc functions such as cheque books, pay utility bills, check credit card details and many more day-to-day banking functions. SMS alert facility was introduced in year 2011 as a new marketing drive, promoting the SMS facility as a fake detection method for cardholders’ transactions. Further; the Bank is currently improving this technology with
  • 17. 16 a view to facilitate more enhanced security features to provide a more advanced banking functions based on market dynamics and collated consumer inputs.  Inventor in Phone banking service in Sri Lanka Seylan Bank PLC is the inventor of multilingual phone banking product in Sri Lanka was launched by the Bank in 1998 to its customers under the flagship “Seylaphone”. It has become a famous way for customers to carry out basic banking using any fixed-line or a mobile telephone. The bank is delivering the services to customers free of charge for life time. Account holders of the Bank could register and use this facility in their preferred language Sinhala, Tamil or English. This facility has also been extended to all expatriates living abroad to maintain and monitor their accounts from anywhere in the world. Weaknesses:  Lower Staff strength Seylan bank PLC consists with total staff of 3,061 Island-wide which is the lowest among rivals in the industry. Lack of human resource may lead to poor performance of the bank & customer turnover will be increase.  Poor Branch network Seylan bank PLC has 147 branches Island wide which is also lower than the key rivals. Other than that; some of key rivals consist with overseas banking services while establishing branches in abroad.  Poor ATM network Automatic Teller Machine (ATM) is a computerized telecommunications device that enables the clients of a financial institution to perform financial transactions without the need for a cashier, human clerk or bank teller. It improves customer convenience in banking services. In this case Seylan bank PLC having the lack of essential resource to gain more customers than rivals.
  • 18. 17  Poor Return On Assets (ROA %) Return on assets gives an indication of the capital strength of the company. When consider the ROA of Seylan bank PLC (1.17%) ; which is comparatively low than key rivals. This will impact on profitability as the earning on assets is low.  Poor Return On Equity (ROE %) Return on equity (ROE) measures a company’s efficiency at generating profits from every unit of shareholders' equity. ROEs between 15% and 20% are generally considered good. In this case Seylan Bank PLC having 11.24% ROE which is lower than the key rivals as well as the standard.  Poor product portfolio Even Seylan bank PLC providing corporate, personal, treasury & international banking services; their product portfolio is poor among those services than rivals. Some of the key rivals focusing on providing banking facilities to small & medium enterprises (SME) targeting different market niches while Seylan bank having narrow common markets. Opportunities:  Seylan Bank PLC is having a small number of staff compared to other financial rival institutes. It’s an ease for the management to control and monitor the staff. And also it’s easy to provide training, research and development to get the best potential outcome of them through increasing the efficiency and productivity.  Seylan Bank PLC has an up to date technological knowhow which efficient the operations within the bank. Since they are having a reduced supervision costs compared to other financial rival institutes, they can focus on new banking opportunities by allocating those saved funds.  Knowledgeable and trainable staff compared to Government Banks. Threats :  Commercial bank has placed business promotions officers overseas in Jordan Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates with the objective of promoting the banks e-exchange facility among the Sri Lankan
  • 19. 18 expatriates and to canvass new accounts while promoting various other types of products.  Banks open from 9 am to 1.30pm on bank holidays.  Commercial Bank providing services in banking centers at Arpico Super Centers: Providing holiday banking centers, Minicom – Banking centers at Cargills Food City super Markets and several service points.  Rival Banks have gained a larger provision of market capitalization.  Key rivals capturing the global attention.  Unavailability of skilled and know ledged expertise.
  • 20. 19 Porter’s Five Forces Model Michael E. Porter who introduced Porter’s Five Force Model in 1979 Harvard Business School. The Porter’s Five Forces Model show how the competitive landscape in an industry is impacted by five forces. Industry analysis and business strategy development is the main framework of it. These forces are firms in other industries offering substitute, Competitive Rivalry within an organization, bargaining power of suppliers, bargaining power of Buyers, and thereat of new entrants. Industry is favorable entry when five forces are higher. Banking industries are the most competitive. The Seylan Bank to get an understanding about the profitability and industry’s competition. Not only that but also Porter’s five factor model helps to enhance some activities done by Seylan bank. They are managing the capital, assets and liabilities, Interest rate risk, liquidity, asset quality, profitability. With the help of this model Seylan bank can make strategies such as focus on individual customers and smaller businesses, providing banking services such as personal loans and deposits, checking accounts, clearing, debit and credit cards, leases, mortgages and ATM networks to win the market and its survival.
  • 21. 20 Competitive Rivalry within an Industry In the traditional economic model rival firms get zero profit. However firms are not reasonable price. Banks strive for a competitive advantage over their rivals. Most industries, the intensity of competitive rivalry are the major competitiveness of the industry. There are 6 factors favor price competitive ;Market structure, No product differentiation , The nature of the sales process, large, secretive & lumpy, capacity utilization, consumers. According to the banking industry analysis, there are 5 competitors in the market for Seylan Bank. These are HNB,BOC Peoples’Bank, Sampath Bank, Commercial Bank. The banking industries are highly competitive because everyone who need banking services for their financial activities. Every banking sector is in a race to see who can offer both the best & fastest services. According to our analysis among the rivals, commercial Bank takes higher place in the industry. Because of the taking highly risk projects. Threat of Substitutes Products There are plenty of substitutes in the banking industry. Seylan bank offer higher rates, taking deposits and lending money & non-banking financial services. Other companies offer similar services insurance, mutual funds, or fix income securities. According to deposit money of the Seylan bank have more competition with commercial bank and BOC. Threat of New Entrance Many Companies enter the market as new comers. It is very higher to new entrance. The banking industry has undergone a consolidation in which major banks seek to serve all of a customer’s financial needs under their roof. This consolidation furthers the role of trust as a barrier to entry for new banks looking to compete with major banks, as consumer are more likely to allow one bank to hold all their accounts and service their financial needs. Ultimately the barriers to entry are relatively low for the banking industry. While it is nearly impossible for new banks to enter the industry offering the trust and full range of services as a major bank, it is fairly easy to open up a smaller bank operating on the regional level.
  • 22. 21 Banking Industries focus on Services Oriented. One person who cannot come along and to start a new bank. Seylan bank use online services, use pay bill from internet. Economies of scale and scope, limited access to essential resources or Channels of distribution, patents, need to establish brand identity, high capital costs, licencing costs. Bargaining Power of Suppliers According to the banking sectors Seylan Bank have no big threat from suppliers. During right liquidity periods suppliers of capital will act continually. Capital is the primary resource on any bank and there are four major suppliers (various other suppliers [like fees] contribute to a lesser degree) of capital in the industry. 1. Customer deposits, 2. Loans, 3. baked securities. 4. Loans from other financial institutions. By utilizing these four major suppliers, the bank can be sure that they have the necessary resources required to service their customers' borrowing needs while maintaining enough capital to meet withdrawal expectations. The power of the suppliers is largely based on the market, their power is often considered to fluctuate between medium to high. Bargaining Power of Customers. One major factor affecting the power of buyers is relatively high switching costs. If a person takes loan, credit card, deposit A/C and mutual funds in a bank it can be extremely tough that person to switch to another bank. To try and convince customers to switch to their bank they will often times lower the price of switching, though most people still prefer to stick with their current bank. The internet has greatly increased the power of the consumer in the banking industry. The internet has greatly increased the ease and reduced the cost for consumers to compare the prices of opening/holding accounts as well as the rates offered at various banks.
  • 23. 22 Comparative Market Positions of Selected Banking Industries: 2009 Medium High Low Low Medium High Performance Geographical Area Commercial Bank Sampath Bank Peoples’ Bank Seylan BOC HNB
  • 24. 23 2010 Medium High Low Low Medium High Performance Geographical Area Commercial Bank Peoples’ Bank BOC HNB Seylan Sampath Bank
  • 25. 24 2011 Medium High Low Low Medium High Performance Geographical Location Commercial Bank HNB Seylan BOC Sampath Bank Peoples’ Bank
  • 26. 25 2012 MMedium Highgh Low Low Medium High Performance Geographical Area Commercial Bank HNB Seylan BOC Peoples’ Bank Sampath Bank
  • 27. 26 Comparative Market Positions of Selected Banking Industries: 2013 Medium High Low Low Medium High Performance Geographical Area Commercial Bank Sampath Bank Peoples’ Bank BOC HNB Seylan Bank
  • 28. 27 2014 Medium High Low Low Medium High Performance Geographical Area Commercial Bank Peoples’ Bank BOC HNB Seylan Sampath Bank
  • 29. 28 2015 Medium High Low Low Medium High Performance Geographical Area HNB Seylan BOC Sampath Bank Peoples’ Bank Commercial Bank
  • 30. 29 2016 Medium High Low Low Medium High PrPerformance Geographical Area HNB Seylan BOC Peoples’ Bank Sampath Bank Commercial Bank
  • 31. 30 2017 HNB Seylan BOC Peoples’ Bank Sampath Bank Performance Low Medium High Geographical Area High Medium Low Commercial Bank
  • 32. 31 2018 HNB Seylan BOC Peoples’ Bank Sampath Bank Commercial Bank High Medium Low Performance Low Medium High Geographical Area
  • 33. 32 PESTEL Analysis The Macro Environment A PESTEL Analysis is undertaken to understand the dynamics of the external environment, which the film industry operates in. While these factors are out of the industry’s control, the industry needs to be aware of them to adapt itself to avoid the threats and exploit the opportunities in the environment. The External Environment Impact on The Film Industry Political Factors 1. The political environment is considerably stabilized and Sri Lanka is united under one Government after a span of 25 years. 2. Government has lessened the degree of Intervention in the economy. 3. It’s the Government’s responsibility to maintain a good global reputation for foreign Investments and developments in the financial services. 1. A stabilized political system is good news for the Financial & Banking Industry. Explore opportunities presented by the upsurge in the demand for trade finance for investment in post-conflict development in the North and the East. 2. In the Banking Industry they are more confident of planning long term strategies. The opening up of North and East has given the Seylan Bank the attractive opportunity of conquering that virgin market and of stabilizing their industry position throughout the island. 3.The loosened restrictions on the economy allow the Seylan Bank to take more decisions that are independent. - Foreign exchange coming in to the country.
  • 34. 33 Political Factors 4.Government imposes tough rules and regulations and charge. -4.To create innovative features as well as facilitating of physical resources. -as a result, cost cutting measures have to be adopted. - Continue with Bank’s commitment to innovation and product development which will improve service level and enhance market share. Economic Factors 1. A lot of development projects are going on across the country. 2. Lower interest rates have lured international players to the market. 3. Recovery from the economic downturn. 4.Crisis period has not yet settled down. -1.The development projects taking place throughout most rural areas have been creating a steady flow of money in the usually laid back markets. There is plenty of opportunity for the bank industry to strengthen their profits by concentrating on marketing campaigns in these areas. 2. Maximize foreign exchange gains from increased trade volumes. 3. Capitalize on market arbitrageurs in forex and equity trading. 4.Through reinventing the product portfolio, enhancing internal processes to improve efficiency, strengthening risk management processes and further developing the HR.
  • 35. 34 Economic Factors 5.Government impose tough rules and regulations regarding finances. 6. One of the best stock markets in the world. 5. Increase capital gains from government securities trading with the downtrend in rupee interest rates. - Continue with Bank’s commitment to innovation and product development which will improve service level and enhance market share. 6.The lucrative economy (bull market) prevailing in Sri Lanka has been luring investors. This poses threats as well as opportunities to the bank industry as more financially stronger companies enter and compete for a share of the bank industry.
  • 36. 35 Socio-cultural Factors Socio-cultural Factors 1. Increasing ageing population 2. Lifestyles are modern and fast paced. 3. Increase number of higher education institutes. 4. Increased Tamil population. 5. Many Sri Lankans are migrating back to Sri Lanka. 6. Tourism has taken a sharp rise in the country. 7.Women are employed more than ever. 8.The young generation gives priority to work, and marriage is postponed. 1. Bank Industry has the opportunity to venture into new Segments and fill up a gap in the market for the elderly population. -Introduction of retired pension schemes. 2. Marketing via social media, launching Seylan Bank ‘s Facebook fan page and enhanced fan base to 20,000 in two months from date of launch. 3. granting student loans for higher education. - focused on existing product development based on existing segments in order to add more value and enhance the relationship through co-creation initiatives. 4.A population with a new taste palette too is on the rise, giving the bank industry a reason to widen their production portfolio. 5. The return of Sri Lankan migrants back to the country gives the Bank Industry a chance to expand their customer base. 6. The tourist boom can be made handy to market the Seylan Bank value added services. 7.Research shows women work more than men do, thus the trend of working women is positive for the industry. 8.Developed bundling of products and services and simplified processes to benefit
  • 37. 36 the internal and external customers(young generation). Technological Factors Technological Fact 1.Bankers have been introducing latest technology into the Sri Lankan Banking Industry during the last few months. 2. Technology is being obsolete at a mind- blowing rate. 3.Automation and improvements 4.Enhance IT-based solutions to deliver superior benefits to internal and external customers. 5.Automation and improvements 1.The continuous introduction of modern technology in the industry facilitates the Bank’s to keep a breast with the international Banks. - Trends and operations. 2. The Bank Industry owes it for technology for their undisputed standards of quality, operations and services. 3.All identified possible operation processes were transferred to centralized services for specialized support to ensure efficiency and cost savings. 4.the funds transfer process was automated, enabling business units to make better informed decisions. -Manny HR processes that were hitherto manual were automated, among them staff appraisal, training etc…. 5-a.Data from the bank’s separate systems, consolidated in a single “client view”.
  • 38. 37 Technological Fact Technological Factors ors 5.Automation and improvements - 5-b.Internal development team rolled out comprehensive remittances module, cheque return management module and some other modules to enhance efficiency of the branches. -5-c.Testing of the core-banking system, subsystems and all the external interfaces was completed during the latter part of year 2012. 5-d. IT Steering Committee was further improved to accommodate Sub- committees of the various business units of the Bank. -5-e.Bank’s card management system platform upgraded to provide the infrastructural facilities for the Europay, MasterCard and visa(EMV) upgrade. 5-f. The IT Department in conjunction with Misys developed and parameterized the module which automated the downgrading of non-performing current accounts in 2012. 5-g. Several Management Systems improved to facilitate user- friendly banking, such as cheque imaging truncation system, SMS banking, internet Banking and pawning systems.
  • 39. 38 5-h. improvement of branch IT infrastructure including expansion of its services to newly open branches and ATMs. 5-i. Structured Systems Training Programme for staff to develop their skills and knowledge. Ecological Factors Ecological Factors 1.Concern for the protection of environment has been on the rise. (Environmental Management Systems (EMS)) 2.Banking operations impacts on the environment. 3.Adopting green initiatives. 1. The demand for saving can both increase and decrease during times of crises. Relief support groups tends to finance for a cause to fund the flood victims. And when victims are unable to go to banks to withdraw money clearly, the demand in the area significantly goes down. 2.In the office complex, work consumes large amounts of energy and natural resources. They generate waste and sound pollution. 3. In a “green” initiative , the printing of salary slip was discontinued and customers also enjoy the option of getting their monthly statements online.
  • 40. 39 Legal Factors Legal Factors -. Compliance and legal regulations for Bankers. - Disability Discrimination Legislation. -Social discretion and cultural values, morals, ethics, strict laws and safety regulations. -. Bank Act of Sri Lanka. -.Regulations to help banks carry out their services and operations. -.Approve and oversee the Bank’s strategic objectives and corporate values and ensure that these are communicated throughout the bank. -. Identify the principal risks and ensure implementation of appropriate systems to manage the risks prudently. - Legal factors have an effect on both service and Employment operations. Systems have to regulatory demands and the bank industry would have to bear a considerable cost if changing the usual way of Processes. -. The demand for quality standards gives only a few banks a competitive advantage as they already adhere to highest standards. -International recognition can be gained by through high quality banking procedures done in the highest possible way. -. It helps towards the up liftmen of the industry. -. Protects the bankers. Legal Entity Act. -.The Board approved the 4 – year strategic plan 2012/2015 on 12th December 2011 and communicated the new strategic objectives and corporate values to the staff. The timely implementation of strategies was monitored through frequent reviews at Board Meetings. -.The Board has delegated these responsibilities to its Integrated Risk Management Sub-committee. The Committee ensures that the Bank’s Chief Risk Officer/Risk Unit identifies principal
  • 41. 40 -. Approve implementation of a policy of communication with all stakeholders, including depositors, creditors, shareholders and borrowers. -Review the adequacy and the integrity of the Bank’s internal control systems and management information systems. -. Identify and designate Key Management Personnel, as defined in the International Accounting Standards, who are in a position to: i. significantly influence policy; ii. direct activities; and iii. exercise control over business activities, operations and risk management. -Define the areas of authority and key responsibilities for the Board of Directors themselves and for the Key Management Personnel. risks and puts in place polices and guidelines to be reviewed and approved by the Committee. Systems put in place were being tested by the Risk Unit. -. A Stakeholder Engagement Policy has been approved, implemented and monitored at Board level. - Adequacy and integrity of the Bank’s internal control systems and management information systems were reviewed by the Board Audit Committee. The decisions and/or actions taken are submitted for Board’s information and/or action (if deemed necessary). -.The Board has identified Key Management Personnel who are in a position to influence and exercise control as mentioned herein and deemed as ‘related parties’ in order that necessary steps could be taken to abide by/comply with the relevant Banking Act Directions [Ref: 3 (7) of this report] and Sri Lanka Accounting Standards disclosures on related party transactions. The KMPs were reviewed and approved by the Board during the year. -.The key responsibilities of key management personnel are defined in their job responsibilities, whilst the Directors derive their responsibilities from the regulations and directions, mainly, the Banking Act Directions.
  • 42. 41 - Ensure that there is appropriate oversight of the affairs of the Bank by Key Management Personnel, that is consistent with Board policy. - .Periodically assess the effectiveness of the Board of Directors’ own governance practices, including: i. the selection, nomination and election of Directors and Key Management Personnel; ii. the management of conflicts of interests; and iii. the determination of weaknesses and implementation of changes where necessary. -.Ensure that the Bank has an appropriate succession plan for Key Management Personnel. -.Meet regularly, on a needs basis, with the Key Management Personnel to review policies, establish communication lines and monitor progress towards corporate objectives. - . Communication of Board approved policies and decisions are conveyed through Board minute - - -- - extracts and the appropriate follow-up actions and reports/decisions of the relevant Key Management Personnel confirms this - Effectiveness of the Board’s own governance practices including i, ii and iii specified herein is ensured. Evaluation of the Board Performance including all governance practices are assessed by the Directors individually and collectively discussed/reviewed by the Board annually - . The appropriate succession plan for Key Management Personnel is reviewed by the CEO and the HR Division submits such succession plan to the Board’s Nomination Committee for its review and/or concurrence annually or as deemed necessary. -.Key Management Personnel are co-opted and/or attend by invitation to the Board Sub-committees. Minutes of the Subcommittees and action plans arising out of same are tabled at Board Meetings for the Board’s review and/or follow up. Key Management Personnel are also called by the Board when demand required explaining matters relating to their respective functions.
  • 43. 42 - Considering the above PESTLE analysis, it is safe to say that the current situation of the external environment is favorable to the Bank industry as well as Seylan Bank. - But, all these positive factors (stabilized political situation, potential of the economy, advances in technology and the expansion of customer base) reflects that competitors too will be lured to do commercial operations. - Although the bank industry is faced with opportunities to exploit, pressures from competitors will be inevitable. - . Understand the regulatory environment and ensure that the Bank maintains an effective relationship with regulators. - . The Board is updated of the changes in the regulatory environment and maintains an effective relationship with regulators. The process is managed by the Bank’s Compliance Officer.
  • 44. 43 Conclusion In conclusion we can safely say that Seylan Bank has stepped into an new era with its current asset base and further growth could be anticipated. And also Seylan Bank’s core strength is its people who are united to manage and overcome any form of crisis. Seylan Bank’s long term innovative services provided to customers have reap benefits and yielded results in favor of the bank. Offering of high interest rates & additional bonus on minimum deposit amount. Expanding its reach to rural areas .Highly diversified customers’ portfolio, Diversification in their operation in banking including insurance, investment banking assets management and increase the facility for mobile & internet banking. Developing a strategic vision of where the company needs to head and what its future products/ market/ customer/ technology focus. This managerial step provides long term direction, infuses the organization with a sense of purposeful action and communicates management’s aspirations to stakeholders. Setting objectives to spell out for the company how much of what kind of performance is expected and by when. Objectives need to require a significant amount of organizational stretch. Present unstable market condition increases their profit margin than previous year. Having the succession plan through talent management team. Increasing the earning per share than previous year. Increasing shareholders funds and earnings. Bank having a wider product line. Network of branches spread all over the country and provide easy access to entire spectrum of customers. Improving the access to financial service for customers and clients. Enhance higher ATM coverage in the country and newly open the ATM in rural areas. Enhancing the CSR activities than other competitors and creating a reputation, goodwill and adding value to the Brand of Seylan Bank. Crafting a strategy to achieve the objectives and move the company along the strategic course the management has charted. Crafting strategy is concerned principally with forming responses to changes in under way in the external environment, devising competitive moves and market approaches aimed at producing sustainable competitive advantages, building competitively valuable competencies and capabilities.
  • 45. 44 By practically crafting a strategy for Seylan Bank PLC we experienced that, a company’s strategic vision, objectives and strategy constitute a strategic plan for coping with industry and competitive conditions, out competing rivals and addressing the challenges and issues that stand as obstacles to the company’s success.
  • 46. 45 Recommendations In going forward with the Strategic Plan for the next five years below recommendations could be identified and implemented in phases to enhance the capacity of the Bank. Independent identity with a completely new board helps to boost the confidence of management as well as employees. Delivering higher financial value to its customers & investors. Highly market focused Strategic initiatives such as domestic & international business opportunities, Empower disadvantaged group Increase the profitability by accessing international financial market ( bank have only one balancer in Bangladesh for internationally ) Expand their business in product wise using related or unrelated diversification, achieve the competitive advantage.(minimize the risk)Stronger productivity growth Opportunities to access foreign market . Focusing to provide banking services to extend the product portfolio such as introducing services to Small & Medium Enterprises (SME) to encourage the existing entrepreneurs as well as new comer to the industry.  Establish small bank units in school to encourage minors’ savings.  Improve the existing innovative technologies that already have with the bank such as SMS banking & Phone banking.  Expand the banking services in overseas to gain global sales in Asia.  Provide customizable credit cards to different types of account holders according to their preferences.
  • 47. 46 References 1. Seylan Bank, Annual report (2012) 2. Peoples Bank, Annual report (2012) 3. Bank of Ceylon, Annual report (2012) 4. Hatton National Bank, Annual report (2012) 5. Commercial Bank, Annual report (2012) 6. Sampath Bank, Annual report (2012) 7. Thompson A. Strickland A J. Gamble,J.(2009)Crafting &Executing strategy. 16th edition. 8. Seylan Bank official website (2012).Available from: www.eseylan.com 9. Commercial Bank official website (2012).Available from: www.combank.net 10. Sampath Bank official website (2012). Available from: www.sampath.lk 11. Peoples’ Bank official website (2012). Available from: www.peoplesbank.lk 12. Hatton national bank official website (2012). Available from: www.hnb.net 13. Bank of Ceylon official website (2012). Available from: www.boc.lk 14. Central Bank of Sri Lanka (2012).Available from: www.cbsl.gov.lk
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