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project management in marketing

  1. 1. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982 REPORT ON PATAPESA DIGITAL SYSTEM PROPOSAL UNIVERSAL BANK OF KENYA PROJECT MANAGEMENT IN MARKETING Membership Number: - 13335982 Word count: Report- 6616 Company background: 2 pages Project Audit: 5 pages
  2. 2. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982…………………………………………………………………………………………………………………………………………………………… TABLE OF CONTENTS……………………………………………………………………………………………………………………………………………………………………………………………………… EXECUTIVE SUMMARY.......................................................................................................................................................3 TERMS OF REFERENCE.......................................................................................................................................................4 ABBREVIATIONS.................................................................................................................................................................6 1. BUSINESS CASE ..........................................................................................................................................................7 1.1. Project definition statement .............................................................................................................................7 1.2. Summary on business need...............................................................................................................................7 1.3. Business analysis ...............................................................................................................................................7 1.3.1 UBK’S Business Objectives......................................................................................................................... 7 1.3.2 UBK’S Current Competitive Position .........................................................................................................8 1.3.3. UBK’S Marketing Objectives/Goals ...........................................................................................................8 2. PROJECT DESCRIPTION ..............................................................................................................................................8 2.1 Project business objectives ...............................................................................................................................9 2.2 Impact on UBK’s business activities ................................................................................................................ 10 2.3. Resource requirements and cost estimates ....................................................................................................12 2.3.1. Estimates of resources required .............................................................................................................12 2.3.2. Cost and benefits .....................................................................................................................................13 Project Costs ............................................................................................................................................................13 Project Benefits .......................................................................................................................................................14 2.3.3. Cost/benefit analysis table ...................................................................................................................... 18 3. RISK ASSESSMENT & PROGRESS MONITORING ......................................................................................................20 4. PROJECT SCHEDULE .................................................................................................................................................21 APPENDIX A: Company Background ................................................................................................................................23 UBK’s history, vision and core values ..........................................................................................................................23 Industry performance vs. UBK performance............................................................................................................... 23 UBK’s Customer base and market position ................................................................................................................. 23 Product range ..............................................................................................................................................................23 APPENDIX B: PROJECT AUDIT ..........................................................................................................................................25 Demand analysis: Audiences: different needs, wants and desires of different audiences ........................................25 The digital marketing proposition for the organization; PATAPESA DIGITAL ACCOUNT ............................................25 Objectives for digital marketing activities ...................................................................................................................26 Project resource requirements (internal and external) ..............................................................................................26 External requirements.............................................................................................................................................26 Internal requirements .............................................................................................................................................27
  3. 3. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982 Cost/Benefit analysis ...................................................................................................................................................27 Strength and risks ........................................................................................................................................................28 UBK’s State ..................................................................................................................................................................29APPENDIX C: Tables and Diagrams ..................................................................................................................................30APPENDIX D: QUESTIONNAIRES ......................................................................................................................................31APPENDIX E: REFERENCES ...............................................................................................................................................34
  4. 4. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982............................................................................................................................................................ EXECUTIVE SUMMARY............................................................................................................................................................ David C. Edelman (2010) states; “Companies that understand the digital technology evolution are now carefully moving digital interactivity toward the center of their marketing strategies, rethinking their priorities and budgets, and substantially reshaping their processes and skills. “ The digital era is inevitable to our generation. Companies are no exception as they need to adapt to the changes in the world market. In Kenya, the situation is no different, what with the advent of fiber optic connectivity in the larger East African market. The digital era offers a myriad of opportunities to companies. In this paper, I evaluate the Kenyan market and its need as relates to digital marketing and technology. There has been a growing usage in mobile phones in Kenya. A Finaccess survey (2007) indicates that approximately 69% of the banked population owns a mobile phone. The unbanked population rely on the mobile phone to carry out financial services using the M-Pesa platform (a mobile transfer service offered by Safaricom mobile service provider) This report proposes the use of the mobile phone technology to provide an additional channel to two key segments in Kenya; the cooperative societies and the rural population, both unbanked and banked. Through collaborating with the already established mobile infrastructure of M-pesa, Universal bank of Kenya (UBK) will reach their core market base, the cooperatives as well as the neglected rural population with speed, convenience, affordability and accuracy. Other than the objective of increasing profitability, UBK will save on operational and set-up costs in its expansion strategies. The bank aims at growing through expansion and diversification efforts. However, branch networks which is one of their key expansion activities is high on costs, ever so increasing with increased competition in the Kenyan financial market. For a bank to boldly face competition, they need to embrace digital marketing and technology which offers more opportunities than threats. The system would also contribute towards increasing market share, customer deposits and loan book growth, which also form UBK’s marketing objectives. The report has covered a background to UBK and the project audit which identifies the need and value proposition digital marketing and technology. The audit was prepared through questionnaires to different groups, and sourcing information from secondary sources such as industry reports. The findings of the audit contributed to developing the business case and consequently the proposed project schedule. Risk assessment and performance monitoring proposals conclude the report.
  5. 5. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982............................................................................................................................................................ ............................................................................................................................ ...................................................................................................... TERMS OF REFERENCE…………………………………………………………………………………………………………………………………………………………..……………………………………………………………………………………………………………………………………… ………………….. Task definition & objectives The report is directed to Universal bank of Kenya’s executive steering committee which is in charge of the bank’s growth and development activities. The committee is comprised of the following; Group managing director & CEO Director, operations division Senior Manager, operations division Director, corporate and institutional banking division Senior manager, corporate and institutional banking division Director, retail banking division Senior manager, retail banking division Director, finance & administration di division Senior manager, finance & administration division Director, cooperatives banking division Senior manager, cooperatives banking division Task execution The project will involve a series of processes which need to be carried out before the final deliverables are achieved. This deliverables paper will take the following approach; leading to the actual project outline. Preparation is to be carried out to ensure the project meets its target goals with a fit to UBK’s objectives, timescales and resources. Figure 1 illustrates the steps to be trates followed in the report; FIGURE 1: Project steps from project definition to project planning phase PHASE 4 project 4: planning phase PHASE 3:project recommendatiuon phase •project proposal PHASE 2:project document analysis phase •develop develop •study study •compare compare PHASE 1:project definition phase PHASE 1 & 2 CONSITUTE THE PROJECT AUDIT PHASE 3 CONSTITUTES THE BUSINESS CASE PHASE 4 IS THE PROJECT SCHEDULE
  6. 6. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982Phase 1This is the project definition phase that issues a statement describing the Patapesa characteristics as a digital marketingtechnology and the nature of the project. This phase is outline within the project proposal segment of this paper.Phase 2This phase constitutes developing the business need, studying the technical and economic feasibility of the project, andcomparing the project to the organization’s objectives and overall state (either financially or in relation to the existingorganizational structures).This is a more problem-solving stage, where a suitable option to address the business need is elaborated. The areas that willbe covered in this phase will be the following; • Business problem analysis-Analysis of the business problem in context with UBK; • Identification of potential solution; • Solution’s feasibility analysis-Studies to determine technical and economic feasibility of potential solutions. An important study is a Cost Benefit Analysis;Phase 3The recommendation stage involves to processes namely i) preparation of business case and ii) preparation of projectcharter.Preparation of business case-this is a presentation of the business case indicating why the project is a viable one in relation to theUBK’s direction and how it will support the delivery of the organization’s set marketing strategies.The activities to be done in this stage include; • Project description • Project approach • Risk assessment The project report was to be prepared by 30th august 2010 after which to await approval. The implementation phase will take 4 months and is projected to be completed by January 2nd 2010.This also acts as the projected activity launch date.
  7. 7. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982ABBREVIATIONSFaulu Kenya-a microfinance institution based in KenyaIMF-International monetary fundGDP-gross development productM-pesa-Safaricom’s mobile transfer servicesFSD-Financial sector Deepening KenyaROSCAs-rotating savings and credit associationsSACCOs-savings and credit cooperative societiesCBK-Central bank of KenyaMFIs-Micro finance institutionsUSSD -Unstructured Supplementary Service DataSIM- Subscriber Identity Module
  8. 8. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982 1. BUSINESS CASE1.1. Project definition statementThe universal bank of Kenya needs to reach the cooperative societies and the rural remote population to buildon its customer deposit number, loan book growth; in line with the bank’s marketing objective of expansion andgrowth. This can be achieved through a partnership between Safaricom’s M-pesa (leading mobile serviceprovider in Kenya) and UBK. Two digital accounts, whose services are to be accessed through the user’s mobilehandsets, namely Patapesa individual and Patapesa cooperative will be developed and is expected to addresstheir financial needs through increased accessibility, convenience and reliability.1.2. Summary on business needKenya’s economy largely depends on agriculture, with over 23% of Kenya’s GDP attributed to agriculture and relatedactivities. As Kenya’s economy grows, however, some segments are still missing out. Surprisingly, 62% of Kenyans are stillunbanked, even with the massive expansion strategies carried out by most financial institutions in Kenya.Following amendments in Kenya’s banking act, the Central bank of Kenya was given the mandate to allow and overseenon-bank activities such as 3rd party agency banking to be carried out by financial institutions. These place significantimplications on Kenyan banks, as most banks have already embraced the changes in different capacities.Digital technologies, most specifically M-pesa, have come up to address the unbanked population. Safaricom is Kenya’sleading mobile service provider with a great reputation on innovation and new technology. Mobile banking in itselfprovides an extra distribution channel other than traditional systems. It brings about efficiency, speed and accessibilitywith cost effectiveness carrying the highest merit. The cost of setting up branches or ATM’s is expensive, whereasoperating costs slow down even market leaders. In comparison to point of sale third party stations, the resources thatwould have otherwise been used to set-up an run such activities could be used in other marketing activities aimed atimproving existing products.Service providers such as Safaricom’s m-pesa and Zain’s Zap have largely contributed to the infrastructure required for arobust mobile phone banking system. Introduced 3 years ago, M-pesa alone has a well-established network of over 17,000retail stores all over Kenya. Safaricom has enjoyed a commendable consumer base of 9 million using the m-pesa platformto carry out daily transactions. With Kenya’s population being slightly less than 40 million, M-pesa is beyond doubt asuccessful system. According to a report by Financial sector Deepening Kenya (2009), a mere 19% of Kenya’s populationhave access to formal financial services; and that approximately 78% of Kenyans are living in rural areas.Partnerships with service providers are the most viable business ventures currently, as the urban market has been coveredto a large extent. Financial institutions such as banks should focus on reaching the unbanked, mainly those in rural remoteareas.1.3. Business analysis1.3.1 UBK’S Business ObjectivesUBK is a player within Kenya’s banking sector which is comprised of 44 commercial banks with UBK placed as 4th amongbanks with large asset base. The bank’s mission aimed at offering value-added financial services to their select marketsmainly the cooperative movement in Kenya, through a well-established network of service points and superior customerservice.
  9. 9. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982At the core of UBK’s corporate objectives is growth in profitability. This is to be achieved though a countrywide presence,fundamentally focusing on cooperatives as their key customer base.1.3.2 UBK’S Current Competitive PositionUBK has the following core competencies; Strong market acceptance from its main customer base; cooperatives. Cooperatives banking, which falls under the bank’s wholesale division registered a pre-tax profit of over ksh 3.3 billion, whereas retail banking’s per-tax profit was just below ksh 2.5 billion. Large asset base-the bank’s total assets grew from ksh. 84 billion in 2008 to ksh 111 billion by 2009 year end, a 32% increase. Countrywide branch network of over 79 branches and 260 ATM’s across Kenya. Sales oriented, experienced staff-The staff number currently stands at 2288.UBK’s key competitors are Equity bank, Barclays bank of Kenya and Standard Chartered. In pre-tax profits as at 2009,Kenya Commercial bank is the leader followed by Barclays bank, whereas UBK comes in 3rd.Barclays bank of Kenyaregistered the highest pre-tax profit as at 2009. (See appendix Figure 2)1.3.3. UBK’S Marketing Objectives/GoalsThe bank has for three 3 years since 2008 focussed on three key areas; namely growth in access points, growth in customerdeposits and loan book growth. These have been elaborated in Appendix A.2. PROJECT DESCRIPTIONThe project aims at providing a digital alternative channel to two segments, Banked and unbanked individuals in Kenyaand Cooperative societies in Kenya.The areas of focus will be the rural remote areas, followed by more accessible areas. This is in line with the project’s needidentification, where research found out that a majority of members of cooperative societies lack access to financialservices but own a mobile phone. To address this need, the project suggests two accounts to be made to meet specificneeds of these target segments;A Patapesa individual account to reach the Excluded group/segment This population comprises the segment of the population that lacks any form of access to financial services. Also referredto as the unbanked population, these mainly store their money at their home.A Patapesa cooperative account to reach the Informal and formal other groups/segmentsWill cater for 2 segments, namely the informal(those who use alternative non-formal associations such as Rotating Savingsand Credit associations(ROSCAs) and the formal other(financial services offered by institutions other than banks, such asSavings and Credit Cooperative societies, SACCOs)A further analysis on the segment groups is in section 2.4.3.2 & Figure 7
  10. 10. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982The following diagram describes the segments that will be addressed and the basic links related to the project. Rural population Universal M-pesa Roscas & (Banked & Bank of Kenya System unbanked) Saccos Patapesa Patapesa individual Co-op account accountFIGURE 3: The Patapesa system’s relationship with the m-pesa system towards addressing different segment needs2.1 Project business objectivesThe following are the targets for the digital marketing project and how they will suit UBK’S marketing activities; 1. Digital marketing objective for Growth in sales -contribute towards increasing the overall growth in customer deposits by 4% By January 2011 The digital marketing activities are to account for 4% of the year’s 16% growth expectation in customer deposits. This will come about due to the large contribution the greater access to its core markets, mainly Sacco’s, will have on customer deposits. The customers will enjoy efficiency and accessibility of financial services facilitated by Safaricom’s m-pesa and the formal banking structure laid out by UBK. 2. Digital marketing objective for Value addition -increase service access by offering an additional channel to both UBK’s existing and new customers. UBK’s marketing objective for growth in its access points is through expanding its network of branches, ATM’s and other appropriate channels, whereas the bank’s objective for loan book growth by end of 2010, to increase its loan book growth to 19% from its 2009 net loan of ksh 62.3 billion.(see appendix A) Following the value addition objective, UBK will employ digital marketing technology to increase its access points digitally. This brings in an already established network distribution already placed by Safaricom, with the use of a mobile handset being the tool for accessibility. With the increasing ownership of mobile handsets in Kenya, especially in the rural remote areas, cooperative members will have a more available option to deposit, withdraw and carry out other financial services remotely, and through the m-pesa agents across Kenya. Taking up of loans will also increase as access points increase. The holders of the Patapesa account will be regularly evaluated and updated on their status for loan acquisition. They will also gain access to loan repayment services, which will cross over to all the accounts within UBK.
  11. 11. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982 3. Digital marketing objective for cost saving - reduce costs by 30% within the 2009-2010 through establishment of a robust alternative digital channel. UBK’s marketing objective for growth in its access points through expanding its network of branches, ATM’s and other appropriate channels With a 30% cost reduction through establishing the digital channel, UBK will be able to expand more, as financial resources will be more available now that the budgeted costs of expansion will be able to ensure a greater reach than relying on the traditional channels only.2.2 Impact on UBK’s business activitiesAll departments within UBK will actively participate in the project right from initial planning, management, set-up andmeasuring/control. The following diagram illustrates the core departments in UBK and the impact/contributionassociated with the proposed project. The departments have been listed in order of their expected level of involvementwith the project. DEPARTMENTS Level of IMPACT/CONTRIBUTIONS involvement1 Marketing department high Formulating product goals, marketing intelligence activities, budget proposal preparations, project schedule preparations,2 Information technology high Internal/external system linkage/connections, collaboration with department Safaricom on software development, system administration, internal/staff system support, database & network management,3 Operations department/ high Project financing and Funds management, project risk management Finance department4 Sales/business medium design of user manuals and service charter, user training on new development department product usage & business process department5 Human resource medium Project manpower recruitment and development, structuring department compensation, maintaining staff relationsFIGURE 4: Business impact and projected levels of involvement and departmental contributions The marketing department will have the greatest involvement in the project with market intelligence andforming/steering objectives taking the centerfold role. Market intelligence was carried out and the following areas wereobserved; Market needs and their demographics-this focused on establishing the gaps that exist within the Kenyan banking sector, areas of opportunity and the demographics of banking facility users in Kenya. Customer requirements based on new product –what customers expect on the product. This involved structured questions which sought answers on what type of product they would consider appropriate for them. Elements such as convenience, speed, accuracy and affordability were the critical areas of discussion. Legal conditions regarding the digital marketing product-these involved restrictions that govern digital activities in Kenya, their requirements and implications to the design/initiation, preparation and development of the digital marketing project. Amendments done to the country’s finance act was the most notable regulatory change, which led to CBK being granted mandate to permit banks to utilize 3rd party agents for the provision of financial services. Competitor analysis-3 banks are actively involved in mobile banking in Kenya, namely Equity bank, Kenya Commercial bank and Family bank. Equity bank has proved more successful especially due to their public relations efforts and mainstream advertising they have been carrying out as from early this year.
  12. 12. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982An ongoing market intelligence process needs to be established to ensure that the market needs are met the best waypossible, changes in the legal environment are monitored, and that competitor developments or counteractions are wellprojected and addressed.In liaison with the finance/operations, information technology, business processes and business developmentdepartments, preparing a feasible budget for the project is one of the contributions that fall under the marketingdepartment.The marketing department will also participate in providing information on existing planned activities within UBK.Thiswill assist in preparation of the project schedules keeping in mind what had been planned for the financial year, thusavoiding a clash of activities. They will also assist in providing information on which teams exist, clearly outlining theirroles and level of flexibility. The information technology department will largely focus on facilitating a steady connection between UBK’s bankingsystem and the m-pesa platform. This will mean a sub-team should be formed comprising members from the I.Tdepartment and the Safaricom’s m-pesa technical department. The core activities of the sub-team should focus on thefollowing; Networking (involving both a theoretical and physical approach) the M-pesa platform to the UBK’s core banking system. Providing regular maintenance and servicing of the back-end functions of the project. Preparation of regular progress reports addressing the functionality of the system integration. Providing efficient support to the bank’s staff in using the system, in liaison with the business processes and development team. Maintain the digital user databases which assist in account monitoring, control and user evaluation activities.Operations and finance departments will be in charge of allocation of resources for the digital marketing activities andmanaging its appropriate usage, all processes should take into consideration the total marketing budget for the companyand the cost benefit element of each digital marketing activity.Of crucial importance is the risk assessment role the departments have to carry out before, during and after the projectimplementation. The risk management department and the internal audit department fall under the finance department.The former deals with carrying out independent risk-related processes whereas the internal audit department is engaged inindependent assessment of risk management procedures of all business units within the bank. The following are the areasof risk that need to be addressed by the risk management team;Operational risk-the bank’s 2009 annual report describes an operational risk as;“The risk of direct or indirect loss arising from a wide variety of causes associated with the company’sprocesses,personnel,technology and infrastructure, and from external factors other than credit, market and liquidity riskssuch as those arising from legal and regulatory requirements and generally accepted standards of corporate behavior.”In line with the bank’s definition of operational risk, two objectives were made to manage this risk namely; To balance avoidance of financial losses and damage to the company’s reputation with overall cost effectiveness To avoid control procedures that restricts initiative and creativityThese objectives are in favour of the digital marketing initiative as the digital project brings cost effectiveness with its set-up and implementation.Product/service risk-through the bank’s business change management department, new services/products are scrutinized soas to address the needs of its target customers and assess their alignment to the banks corporate strategies. This is done to
  13. 13. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982ensure that losses in overall earnings, either through reputational or financial fronts, delivery or management activities ofthe products/services or meeting of customer expectations are identified measured and monitored in good time and withefficiency. The Patapesa accounts are new products, with a different path of delivery, and require distinct managementstructures and approaches. This risk assessment will assist in achieving the project’s objectives.Sales/business development department & business process department-The business development department(BDM) works in close contact with the bank’s business change management department (BCM) which fall under theoperations department. New or existing products are evaluated through the collaboration of the two departments, withone addressing the change and financial elements (BCM) and the other (BDM) focusing on the groundwork, actualdevelopment and monitoring of the project’s processes.In this project, two functions will be at the core of their activities; Design of user manuals and service charter User training on new product/service usage-. The department will contribute towards attending to the following areas, but not limited to these ; • Informing customers on the existence of the service • Informing customers on the functions of the service, and the product characteristics • Opening the Patapesa individual and cooperative accounts • Issuing the user manuals and communicating the service charter to the customersThe human resource department will contribute towards planning for and recruiting manpower relevant to the project.This also includes sourcing for appropriate agency partnerships that best fits the project’s budget, such as any specialisttechnology agencies that might be required in setting up the system’s infrastructure. Appropriate compensation andrelations are also maintained by the human resource team to ensure a smooth flow of the project’s activities.2.3. Resource requirements and cost estimates2.3.1. Estimates of resources requiredFor the project to be successfully implemented, the following resources are required;1. Financial funding-for government license, buy-out, project team remuneration, operational costs2. Project team-composed of a cumulative 8 members from marketing-3, information technology-3, operations-2, finance-1,sales-2, business development and processes-2, human resource-1, Safaricom/m-pesa technological representatives-2,Safaricom/m-pesa marketing representatives -2, Outsourced engineers to set-up hardware3. Equipment (software & hardware) requirements-Patapesa system- front end user menu back end system hardware linkage between bank’s core banking system and the m-pesa platform(such as satellite posts to link regional 3rd party agents) back end software system linkage between bank’s core banking system and the m-pesa platform
  14. 14. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982Internal system- system linkage between the Patapesa system and the bank’s Customer relationship management system(CRMs)2.3.2. Cost and benefitsThe following are the related costs and benefits that the project is exposed to.Project CostsONE-OFF COSTSHardware/software costsIt includes the cost of setting up and maintaining the Patapesa system and the internal system. This also constitutes thecosts for purchasing server computers and routers for running the Patapesa system.Promotion costsThese will mainly involve below the line marketing; educational campaigns, road shows, sponsorships, public relations andMobile messaging. These activities will be carried out during the implementation phase of the project and further.Facility costsThese will mainly involve expenses incurred in setting up the Patapesa system operations, monitoring and control roomand involve costs such as flooring, lighting and wiring.ONGOING COSTSOperating costsAllocated by the bank’s group risk and group credit bodies, these include expenses that are required for the day to dayrunning and maintenance of the system. The expenses include the remuneration for the outsourced hardware engineersrequired for maintaining the system, including regular upgrading and training of relevant employees related to the Patapesasystem.Mobile telecommunication service costsSafaricom requires monthly service costs on using their platform to be paid by the financial institution.Government licensing costsThe government requires that for any 3rd party agency business to operate, an annual license has to be acquired by theorganization.Personnel costsThis involves the financial costs required to pay the project team members. These include the project head and the projectteam composition members which in total are made up of 18 members. See figure 4 abovePromotion costsThe promotion activities mentioned under the one-off costs will also need to be carried out on an ongoing process for theproject to be sustained and remain profitable. Customer awareness is an ongoing process required for any project toensure the product/service remains at the top of the customers mind. Fewer promotional activities will be carried out on
  15. 15. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982an ongoing process, such as public relations and mobile messaging to inform users on product changes/improvements oroffers.Supply costsVariable in nature, these include expenses such as for office stationery.OTHER COSTSCost on risksSo as to complement for operation and service risks, risk costs need to be included which is usually calculated for thewhole period of the project.Project BenefitsTANGIBLESGrowth in customer depositsIncrease in customer deposits is one of the key objectives for the project. The Patapesa system is expected to contribute20% towards the growth in customer deposits target for the organization. The figure below gives a graphicalrepresentation of access to financial services in Kenya in rural and urban areas. 100% 90% 21.1% 32.7% 35.9% 80% 70% 60% 16.5% 29.6% Excluded 26.8% 50% Informal 21.4% 40% Formal other 30% 17.9% 17% Formal 20% 41% 10% 22.6% 17.6% 0% Overall financial access Rural financial access Urban financial accessFIGURE 5: Graphical comparison on access to financial services between the rural and urban populations :1) Excluded- Kenya’s population with no formal, informal or other formal financial services2) Informal-Kenya’s population using accumulating savings and credit associations (ASCAs) and Rotating savings andcredit associations (ROSCAs)3) Formal other-Kenya’s population using services from non-bank financial institutions e.g. Savings and credit cooperative Kenya’s banksocieties (SACCOs) and Micro-finance institutions (MFIs) finance
  16. 16. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 133359824) Formal-Kenya’s population using commercial banks, Postbank or insurance firmsFrom figure 7 about 60% of Kenya’s financial population either lack any form of financial service or use informal services.An extra 18% rely on Sacco’s and MFIs.This leaves the over 44 commercial banks to share the 22% remaining populationbase. In the rural areas, about 17% people use other Sacco’s and MFIs, with an additional 50% relying on informalbanking and a large percentage lack any form of banking.in comparison between the urban and rural financial access, alarger portion of the urban Kenyans use formal banking (41%) compared to the rural population which is past half that ofthe urban.This implies if banks are to increase their customer deposits, which in essence constitute the largest funding for banks,they have to focus on reaching the rural areas as the urban population already has a big pool of formal banking options.Efforts geared at expanding its customer deposit numbers should seek channels that reach them, while at the same timepromising functionalities that are even better than those already available in the conventional banking services. TheFinaccess survey (2009) points out that over 26.3% of m-pesa users use the service to mainly save money. The partnershipwill therefore contribute towards increased deposits, generally from individuals in the rural areas as well as the ROSCAsand SACCOs which make up the greater majority of the formal other group. The report on usage of savings productsplace ROSCAs percentage at 31%, the highest usage for savings whereas SACCOs enjoy 8.9% usage. This places SACCOsin fourth position, behind formal banks’ ATM/Debit and with- interest savings accounts. UBK’S focus on ROSCAs,SACCOs and the unbanked will expose them to a large customer deposit base which constitutes members from theexcluded, informal and formal other groups.Safaricom’s 23% and increasing market share of the population and over kshs 400 billion in money transfer within the2009 period, it is a significant pool for UBK to tap into.Loan book growthThe Patapesa system will have a loan application menu which will enable users to remotely apply for loan qualification.This will however require an individual/society to have an active balance and transactional activity for over 4 months.Individuals will set off the loan application process from UBK selected m-pesa agents who will relay documentrequirements to the interested users.The bank’s 2010 objective is to increase its loan book to 19%. This is a high target going by the 2009 15% target. The keymarket segment for UBK is the over 11,000 cooperative societies but currently they serve only about 100 societies. Thisimplies new channels need to be used so as to bring in a good percentage of the remaining 10,000(assuming other bankshave secured the rest), and consequently increase it loan book. The Finaccess survey (2009) reported that SACCO’sprovide about 3% compared to a 2.6 % usage of credit products in Kenya .Significantly, Informal service providers;especially shops/kiosks constitute the largest credit providers, about 24% of usage. As more of Kenya’s population whofall under the excluded, informal and formal other groups use the Patapesa system, UBK’s market share will increasewhich will contribute towards greater access to loans and finally loan acquisitions.Accessibility, convenience, speed and affordability will be selling points for the loan facilities offered by Patapesaindividual and coop accounts.Lower set-up and operational costsExistence of the well-established M-pesa agent distribution network contributes towards the low set up costs of the digitalchannel system. The m-pesa agent distribution network is over 17,000 across Kenya. Actual set-up costs will be mainlycomposed of hardware/software purchase and linkage costs.Operational costs will be minimized to system maintenance and management costs. In comparison to the use of branches,the Patapesa system will significantly substitute if not eliminate transaction entry staff, which consequently related toreduced spending on manpower. This is a cost cutting mechanism which has limited negative effects on businessoperations.
  17. 17. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982INTANGIBLESIncreased customer satisfaction levelsThe implementation of the Patapesa project will increase access point s to the Kenyan market. The banked, unbanked andcooperative societies will be able to carry out their financial activity needs with increased accessibility and convenience.Users will enjoy speed, accuracy, reliability and affordability as product benefits, which greatly constitute what the Kenyancustomers constitute as viable parameters for their satisfaction.The Patapesa product will be accessed through a user’s mobile phone handset. They will be required to access the servicethrough a Patapesa menu which will be customized to address the financial needs of the user such as depositing,withdrawing, interact with UBK’s customer service team, buying airtime as well as other functions. This will provide accessto the very remote of areas in Kenya, areas where formal traditional banking channels fear in investing, considering the setup and operational costs involved in such channels.The following are the product value offerings to the Patapesa users;To the Patapesa individual userAccess of Patapesa menu on their m-pesa menu-users will have an additional menu added on their m-pesa menu, whichusers already know how to use for their m-pesa transactions. Through this menu, users will be able to carry out thefollowing functions; 1. Account activities-carry out money transfer between their M-pesa account to their UBK Patapesa account, loan application and repayment , request for mini-statements 2. Value-added functions-customer enquiries, loan forex and share information updates, cash-back loyalty program (on major retail stores in Kenya such as Nakumatt, Tuskys) on deposits made to UBK account. These menu functions are complemented by the m-pesa agent distributions for access of physical deposit or withdrawal of money, account opening as well as loan application.To the Patapesa cooperative userIn addition to the functions provided to the Patapesa individual user, the Patapesa coop user is provided with these extrabenefits; 1. Bulk transfer of money-unlike the Patapesa individual account which has a transfer limit of ksh 40, 000, the p- coop account will give the cooperative societies a kshs 350,000 transfer limit. This will assist in safekeeping money that would otherwise be kept in homes. 2. Increased loan amount-depending on the credit scoring which will be evaluated by the bank taking into account the cooperative society’s transactional and balance history in their p-coop account.Competitive advantageKotler (1997:53; Kotler, 2000) cited in a report by Mahmoud al-Rousan (2009) defines competitive advantage as anorganizational capability to perform in one or many ways that competitors find difficult to imitate now or in the future.Mahmoud al-Rousan et al in an Eurojournal report (2009) notes however that another view of competitive advantage aspointed out by other authors is that it is an organizational ability to produce products or offer services different to whatcompetitors do, by utilizing the strengths that organizations possess so as to add value in a way that competitors find itdifficult to imitate (Pitts & Lei, 1968:68).In the report, four competitive dimensions are observed, namely cost, quality, time and flexibility.1. Cost-the cost element can be viewed in two ways, one relating to the set-up and operations cost, the other on usagecosts to the service users.
  18. 18. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982Johnstone Ole Turana (Business daily, January 11, 2010) points out that a majority of Kenyan banks who have focused onbranch expansion as their growth strategies have been forced to slow down their efforts. This is because of the risingcapital expenditure costs, especially operation costs entailed in branch business. Bank executives further noted that breakeven points for new branches have increased significantly; one of them indicating that it moved from 3 months to 6months, a big impact on a bank’s overall performance. He also notes that the direction some of the banks are taking toaddress this situation is through innovation and technology, as reported by standard chartered banks use of informationtechnology. Manpower increase and capacity building also work against expansion through branch networks.On usage costs, the mobile banking facility reduces costs that the user is charged for services such as withdrawing. Overthe counter, UBK customers pay ksh 100, whereas the Patapesa system reduces the charges by about 70% to ksh 30.Thiscomes in addition to the accessibility that the system brings to the users through the expansive m-pesa agent distributionthat already exists. There will be no deposit costs for users, and although the same exists in branches, costs oftransportation to the user might be significant. This includes the physical distance the user has to take coupled withassociated risk of handling sums of money in transit in their pockets for a considerable distance.2. Quality –the Patapesa system brings in a unique offering to the Kenyan market. Although equity bank and family bankoffer a similar products, the attributes to be offered by the Patapesa system is unique in different ways. The abovementioned core functions offered to Patapesa individual account holders and the extra benefits that are provided to p-coop users will be achieved through a simple to use menu. A key characteristic of the rural population is a low level oftechnological know-how mainly brought about by poverty and weak access to electricity. The cooperative societies arewidely located both in the urban and rural areas, although the rural numbers are higher. This predisposes them to the stateof the rural population too. Most of the cooperative society members and rural population in general own mobilehandsets. A good percentage also runs on the Safaricom platform which enjoys the highest subscriber base. It is believed agood number of them use the m-pesa application already, and if not, one of their neighbours uses the system. This makesit easier for them to operate the Patapesa menu which will be added to their m-pesa menu. In addition, the menu will havethe multi-language functionality which will bring in better functionality to the users, who might prefer, for instance,Kiswahili; Kenya’s national language.3. Time- Mahmoud (eurojournal report, 2009) cites Stonebrake &Leong (1994: 53) as follows;“Organizations can consider the time factor to compete among each other’s. Delivery time can be asource of competitive advantage when organizations try to reduce the period of time between receivingand accepting customer orders and provisions of products or services to customers “Equity bank’s M-Kesho is the only bank offering a menu embedded in the m-pesa menu. Family bank’s pesapap and KenyaCommercial bank’s Kcb-Connect use the Unstructured Supplementary Service Data (USSD) technology which is significantlyslower than the Subscriber Identity Module (SIM), which is essentially embedded into the phone’s menu thus offeringphone scrolling real-time access.4. Flexibility- the Patapesa account is structured around digital technologies. A fusion between new digital technology andthe marketing function within organizations brings about one of the strongest leverages to a company facing close-knitcompetition, more so within Kenya’s banking sector. A white paper by Experian (Experian ltd, March 2010) on agilemarketing points out that what gives competitive advantage to organizations is the speed of recognizing and responding tochanges in consumer trends and customer behaviour.The adoption of the Patapesa system provides a digital channel, which gives users an alternative option to banking. Whatthis relays to them is that UBK is dynamic and innovative, and that they are aware of their customer’s needs. This has asignificant influence on their perception of UBK which in turn build on customer’s loyalty to the bank.
  19. 19. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982The Patapesa system also bears a unique advantage of customization, as through the product’s open-design, UBK will beable to add other functions and services using the same platform.it is easier to customize a system to carry out a certainfunction than, for instance, setting up a business function within a branch as it requires more staff and capacitymobilization.Business continuityDespite the rising costs incurred in setting up and running branches, they contribute towards bringing in customers andproviding physical points for customer interactions. What Patapesa offers is a form of security, such that when times ofslow performance leading to long break even points in the new branches arise, the Patapesa system brings in a stablealternative channel which contributes to more than half of customer deposits, which is the main source of funding in thebanking sector, contributing over 79% of total funding liabilities (Central bank of Kenya monthly review, March 2010)Builds a more reliable databaseThe linking of the m-pesa system, the bank’s core banking system, the customer relationship management system and thebusiness logistics information system, the bank will build an elaborate pool of information sourced from the user details ofthe Patapesa account users, all the while following privacy requirements. The users will be required to provide someinformation which will contribute towards building their credibility status for loan access. Points of depositing of the bulkamounts will also provide good insight on the user’s demographics. 2.3.3. Cost/benefit analysis tableMAIN CATEGORIES SUBCATEGORIES SUB COSTS ESTIMATE COSTS/BENEFITSEstimation of major costsOne-off costs 3,640,000Hardware/software costs Patapesa system 2,890,000 Internal systemPromotion costs Educational campaigns 500,000 Public relations Mobile messagesFacility costs 250,000Ongoing costs 2,580,000Operating costs 1,650,000Mobile telecommunication service costs 130,000Government licensing costs 60,000Personnel costs 400,000Supply costs 40,000Promotion costs Educational campaigns 300,000 Road shows Sponsorships Public relations Mobile messagesOther costs 550,000Cost on risk Operational risks 250,000 Product/service risk otherTOTAL COSTS 6,770,000Estimation of major benefitsTangibles 10,600,000Growth in customer deposits 6,000,000Loan book growth 4,500,000Lower set-up and operational costs 100,000
  20. 20. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982Intangibles 5,680,000Increased customer satisfaction levelsCompetitive advantageBusiness continuityBuilds a more reliable databaseTOTAL BENEFITS 16,280,000FIGURE 6: Table on estimated costs and benefits
  21. 21. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982 3. RISK ASSESSMENT & PROGRESS MONITORINGKey areas of risk assessment will involve financial risks and functional risks.1. Financial risk-these relate to risks associated with the financial conditions of UBK. The following are the assessmentsthat cover this risk;-Cost benefit analysis-these are covered in chapter 2 above.-Internal financial risk management-these are carried out by UBK’s finance and operations department and focus onoperational risk and product/service risks earlier discussed in section 2.4.2.These will be carried out in the project’s initialpreparation stage and its begin-end dates and parties involved outlined in chapter 4 below.2. Functional risk-these relate to the risks associated with the actual functioning of the system, what needs to beestablished and its effects to different stakeholders of UBK. The following are the key areas of assessing the project’sfunctional risk; -System security assessment-Since the project involves the use of technology, security issues are bound to arise. There should be a plan to address these security needs. Figure 9 describes the main issues and how best they can be addressed.Key system Internal assessment & Monitoring External assessment &interfaces monitoring1.UBK and M- System protection System Monitoring Response measurespesa measures measures2.M-pesa andUsers 1. Prepare Patapesa 1.Establish real time 1.Simulate system breach 1.Regular assessment of system security policy hardware, software and scenarios so as to establish the Service level3.UBK and Users personnel monitoring system breach response time agreement with M-pesa system 2.Set up a data encryption 2.Apply system breach 2.Evaluate and communicate 2.Collaborative effort protocols detection techniques system developments and with m-pesa to maintain changes to the employees m-pesa outlet’s liquidity system 3.Set up authentication 3.Regular audit of the systems authentication systems rd 4.Merge UBK’S security 4.Involve 3 party security policy with the Patapesa policy audits system’s security policy 5.Signing of security policy 5.Random employee tests confidentiality & on security policies acceptance form 6.Employee training on 6.Assess reports prepared security policies by the bank’s risk management department 7.Involve the bank’s risk management department on regular monitoring and evaluationFIGURE 7: Table on proposed risk assessment plan-Business impact assessment-This has been discussed in section 2.4.2.
  22. 22. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982 4. PROJECT SCHEDULEThe project implementation process will require several management approvals before commencing. The table belowindicates the different management milestones for the project.Event Estimated date Estimated durationProject plan completed 30th August 31, 2010 4 monthsProject plan approved 15th September,2010 15 daysProject execution-started 20th to 25th September,2010 4 daysProject execution 25th September to 28th December,2010 3 monthsProject execution completed 28th December ,2010 to 2nd January,2011 5 daysProject launch 2nd January,2010 to 5th January,2011 3 daysFIGURE 8: Management milestonesThe actual project implementation project will take 6 stages namely initial preparation, business blueprint, initial execution,final preparation, final execution and project maintenance. This has been elaborated in the figure 9 below.Activity Activity specifications Begin date End dateInitial preparation 2010 2010Setting up project team Assembling the kingdom start team 20th Sep 25th SepInternal financial risk management -analysis of the financial risks that the project is subject 20th Sep 25th Sep -implication of the risks to the project th thResource allocation Procurement and allocation of physical and human 26 sep 28 sep resources to where it is required th thdocumentation Consolidating financial, physical and human costs and 27 sep 27 sep resource requirements into a report. th thTechnical assessment and Assessing the bank’s and M-pesa’s existing technical 27 sep 28 sepprocurement infrastructure and procuring any required hardware and software. th ndTechnical/system set-up Setting up the system link between Mpesa,UBK and 29 sep 2 Oct SACCOS th ndDevelop user interface program Concurrently with above step, develop the mobile 29 sep 2 Oct menu interface relevant to the project. rd thFocus group A meetings Group A composed of members from cooperative 3 Oct 5 Oct societies and rural representatives from all key provinces meet. th thRunning of system test Internally The digital system is activated internally in the head 5 Oct 7 Oct(head office only) office.Stage 1 deliverable System test 1 report to be tabled to the executive steering team then the top management.business blueprint th thBusiness processes and business ---- 8 Oct 8 Octchange department ‘s report onbusiness impact th thProject team reviews stage 1’s ---- 9 Oct 9 Octinternal system test performance th thStage 2 deliverable Business impact and change report to be presented to 10 Oct 13 Oct the executive steering teamInitial execution th thInitial preparation and ---- 5 Oct 14 Octdevelopment of user manuals th thSetting up and developing system planning and allocation of specific duties to be carried 15 Oct 19 Octadministration activities/roles out by the system administrators th stFurther testing of system resources The system requirements are re-evaluated 20 Oct 31 Octand requirement st ndLinking system with Customer To enable logistics & database management 1 Nov 2 Nov
  23. 23. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982relationship Management systemand information logistics system rd thRunning of system test ---- 3 Nov 19 NovInternally(inter-branch) th thStage 3 deliverable System test 2 report to be tabled to the executive 20 Nov 24 Nov steering team then the top managementFinal preparation th thNationwide branch System tests -system failure test 25 Nov 8 Dec -system back-up test -system restore test, -system volume -stress test - disaster recovery test th thHelp desk training and support set Training on handling customer queries especially on 3rd Nov 8 Decup usageStage 4 deliverable Pre-execution report to be presented to the top management for go aheadFinal execution th thEnd user training Involves training real end users i.e. cooperative 9 Dec 14 Dec societies and general rural population th thSystem security tests Further tests on system security 9 ,dec 15 Dec th thPilot test(focus group A) Final test on Group A after fine-tuning 16 Dec 20 Dec th rdSystem performance audit System monitoring and support 20 Dec 23 Dec nd thPre-rollout promotion activities Educational campaigns 22 ,dec 27 Dec Road shows Sponsorships Public relations Mobile messages th thProject rollout Systems fully running countrywide 24 Dec 28 Dec 2011 th thPost-rollout promotion activities Public relations 29 Dec 12 Jan Mobile messages Educational campaigns 2011 2012011 th thProject team board meeting Team holds a meeting with executive steering team 13 Jan 15 Jan and top management th thDecision on future project team Discussed by executive steering team 20 Jan 20 Jannature st thStage 5 deliverable Project assessment report 21 Jan 26 JanProject maintenance thRegular system maintenance and --- 29 sep As-need-arisesupgradingUser feedback from focus group A --- On-going monthly -Continuous Project development Innovation and market change adaptation On-going monthly - th ndStage 6 deliverable Progress report to be presented to top management 30 jan,2010 2 feb,2010FIGURE 9: Project implementation stagesProgress measuring & monitoring toolsThe key project phases
  24. 24. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982APPENDIX A: Company BackgroundUBK’s history, vision and core valuesFormed in 1965, Universal Bank of Kenya (UBK) started as a cooperative society and opened business in 1968 with acapital base of ksh 255,000 and a ksh 214,000 government supplement. It became a fully-fledged commercial bank in 1994and 14 years later became listed on the Nairobi Stock Exchange through a public offer to achieve an 81% sharesubscription.Vision is to be the leading and dominant Kenyan bank with a strong countrywide presence, playing a central role in thecooperative movement and providing relevant and innovative financial services to our customers for the optimum benefitof all our stakeholders. Their mission is to offer value-added financial services to our chosen market segments with specialemphasis on the cooperative movement through a highly effective network of service points, excellent customer serviceand a highly motivated team of qualified personnel.Core values-We are Proud to be the cooperative bank, value our bank’s reputation, employ best practices, value ourcustomers, execute at speed, grow our peopleIndustry performance vs. UBK performanceUBK is a one of the players in Kenya’s banking sector which is comprised of 46 institutions; banking and non-banking,and 15 micro financing institutions, as at 2008. The banking sector in Kenya is stabilizing from the 2007 post-electionviolence that greatly affected all key sectors in Kenya. Increased Assets and deposits, capital injections and profitretentions have contributed to a significant growth in the profitability within the sector. With the sector facing a fall ininflation from 5.2 % to 4.0 % February –March periods; coupled with a marginal decline of commercial bank’s lendingrates to 14.8%, Kenyans are expected to take on more economic activities with confidence. The sector has embraced newtechnology mainly for improving service delivery.UBK’s financial performance is largely driven by a capital base boost from the bank’s 2008 IPO, which has contributedtowards its extensive expansion goals. In 2009, the bank made a 3.74 billion pre-tax profit, a 11% growth compared to2008’s 3.4 billion profit. They also increased its total assets by 33% and saw customer deposits increase from 65.8 billionto 91.5 billion, both within the 2008-2009 period.UBK’s Customer base and market positionThe bank registered a 71% growth in its customer base to 1.3 million from 700,000 million customers. UBK’s focus hasbeen over the years in cooperative societies. This has driven most of their business activities, most notably through itscooperative movement efforts. Sacco-link and Front office service activities have spearheaded UBK’s core focus whichcontributed towards the bank serving up to 150 cooperative societies. The bank has also diversified its product portfolio toaddress different banking needs within the Kenyan market; such as Yea Youth account, Good Home mortgage, andKingdom securities stock brokerage services as well as embracing technology through m-banking (mobile banking).Thebank has 79 service outlets and 9 upcoming branches locally. They plan to venture regionally to Uganda, Tanzania andSouthern Sudan.As at December 2009, Central bank of Kenya’s bank supervision annual report place UBK’s market share at fourthposition, with Kenya Commercial Bank, Barclays bank of Kenya and Standard chartered bank leading respectively. Thisplaces UBK second local commercial bank in net total assets over ksh 110 billion. UBK holds 9% of Kenya’s customerdeposits (ksh 91 billion) with the market leader holding just over 13 %( 138 billion).Barclays Bank of Kenya leads in pre-tax profit with ksh 9 billion compared to UBK’s ksh 3.7 billion, the fourth largest.Product rangeUBK offers 4 broad products which are customized to the different banking needs of the Kenyan market. These aredivided into divisions.Co-operatives division-The core customer base of UBK, it offers banking services specialized to Kenya’s cooperativemovement who mainly comprise farmers. These constitute a large portion of Kenya’s population as agriculture is thebackbone of Kenya’s economy, contributing 23.4% of Kenya’s GDP. Considering that over 63% of Kenyans earn theirliving either directly or indirectly from cooperative based societies (international monetary fund 2007),it is of great value tofocus on the movement. The bank’s efforts to fuse cooperatives financial systems and those of the bank through FrontOffice Service Activities (FOSA’s) and Saccolink which facilitate over 3000 cooperative societies to bank efficiently andwith ease. Among other services, it offers overdraft facilities and Sacco revolving
  25. 25. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982Retail banking division-Offers current and deposit accounts such as Yea account (youth market), Salary account,Hekima and Haba na Haba savings account, Goldfish access account (premium deposit account with high returns ondeposits).These are backed up by an extensive branch network of 79 outlets and 260 ATM’s all over Kenya. The bank hasrecently introduced retail products such as GoodHome mortgage facility as well as executive current accounts. Plans areunderway to set up POS (point of sale) display units in malls and shops to increase accessibility to financial services for itscustomers.Corporate/Institutional banking Division-business current accounts, UBK asset finance, Custodial services tocustomers such as unit trusts and foreign institutional investors. Letters of credit, bonds and guarantees, insurancefinancing and bill discounting are some of the specialized services UBK offers to its business clients. Educationalinstitutions such as universities hold educational partnership accounts whereas government banking account complimentsthe public sector.Investment division-UBK investment services offers fund management services to both private and public organizations.These services are complimented by their subsidiary stock brokerage division Kingdom securities ltd.Electronic banking brings in efficiency in service delivery through offering increased accessibility of bank servicesthrough mobile banking, with emphasis in M-pesa and UBK service merging which enables on the go transfer of moneyand utility bill payments. UBK-net is still working on facilitating full internet banking usability to its customers in additionto the current functions of in-house transactions and viewing account details. Through electronic banking, the bank is ableto offer a direct debit scheme which is essential in processing regular payments of UBK’s customers.UBK’S marketing objectives and goalsGrowth in access points- The bank plans to grow its access points through expanding its network of branches, ATM’s and other appropriatechannels, with the branch and ATMs target being 110 and 280 respectively by end of 2011.Several efforts have been made in line with expansion strategy in UBK. The bank has the following growth avenues;1. Regional expansion-the bank has partnered with cooperative alliance of Kenya to grow regionally. UBK has made itspresence in Tanzania, Uganda and southern Sudan.2. Branch network growth- Currently, the bank has 81 branches and 260 ATMs across Kenya and has plans to open 10other branches and 9 more ATMs before the close of 2010.Growth in customer deposits-Last year, the bank targeted 16% growth in customer deposits by year end while for 2010, their target growth in customerdeposits is set as 14%. The bank registered growth in customer deposits, as deposits grew from ksh 65,854 million in 2008to ksh 91,519 million in 2009.This fell short from the years target, partly due to a slow economic recovery witnessed in2009.Savings accounts registered the largest growth (210%) whereas current accounts, transaction accounts and fixeddeposits were the biggest contributors to the total customer deposits in 2009 respectively. This objective is supported bythe branch expansion goal as it gives customers more access points to deposit their money.Other facilities contribute tothe growth in customer deposits such as the bank’s partnership with SACCOS to offer the Sacco link facility whichenables cooperative societies to share the ATM network as well as FOSAs, cooperative societies’ Front office services inUBK branches.3.3.3.4. Loan book growth-In 2009, UBK targeted a net loan growth of 15%, from ksh 52.9 billion in 2008 to ksh 61 billion by year end. For 2010,their targeted growth is to increase its loan book growth to 19% from its 2009 net loan book numbers.The bank experienced a 17% growth in net loans to customers, from ksh 52.9 billion in 2008 to ksh 62.3 billion in 2009.Personal banking constituted the largest portion with 43% followed by corporate banking with 28% of the loan portfolio.Sacco banking was 3rd with a 21% contribution towards the portfolio. The bank’s sectorial analysis points out that theservice sector held the largest portion of the loan book with over ksh 20 billion contribution to the ksh 66,620,704.Theagricultural sector was 2nd contributing approximately ksh 3.9 billion to the total amount.
  26. 26. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982APPENDIX B: PROJECT AUDITDemand analysis: Audiences: different needs, wants and desires of different audiencesCooperatives drive the Kenyan economy in a fundamental way. With over 11,200 registered cooperative societies and over6 million Kenyans being members, they play a crucial role in sustaining Kenya’s economy. According to an InternationalMonetary Fund 2007 report Over 63% of Kenyans rely either directly or indirectly on cooperative related activities. As at2009, 32.7% of Kenyans still lack access to basic financial services, having declined from 38.4% in 2006, Central Bank ofKenya reports. This was largely attributed to an increased use of non-bank related institutions such the m-pesa system.Kenya’s Ministry of information points out that Kenya holds the strongest cooperative movement in all of Africa, withover 50% of the cumulative cooperative annual turn-over in Africa coming from Kenya. Although cooperatives in Kenyacross through all of Kenya’s sectors, the agricultural and financial sectors hold the largest percentage in membership.Agriculture contributes heavily towards the country’s GDP constituting 23% of the country’s total. This has contributedtowards most Cooperatives being mainly agricultural-based, and with most of its members being farmers. Coffee, tea,dairy, pyrethrum and cotton are the main agricultural areas of focus. Coffee societies account for about 658,000 ofmembers in the agricultural societies (Ministry of Co-operative and Marketing provincial report). Agricultural cooperativesconstitute approximately 37% of the registered cooperative societies in Kenya.Within the financial sector, Savings and credit cooperative societies (Sacco’s) pool 45% of the total number of registeredcooperatives in Kenya, over 6.2 million users from the total 8 million members. Approximately 18% of Kenyans receivefinancial services from SACCOS .In line with UBK’S vision enabling access to financial services for its stakeholders, UBKactive in its efforts to ensure this is achieved. Over the years, UBK has established integration between its core bankingsystem and SACCOS through Saccolink and Front Office sales activities (FOSAs) which bring financial services closer tothe cooperative societies. Through the Sacco link facility, UBK provides wholesale banking to the SACCOS who thenoffer retail services to its members. This collaboration has seen UBK facilitating over 100 SACCOS from the 11,000registered cooperative societies. This leaves a greater majority of the cooperative societies operating as stand-alone units orwith other banks.It therefore implies that over 68% of all cooperative societies in Kenya fall under SACCOS and Agricultural based groups.Rural SACCOS constitute a large percentage of SACCOS in Kenya, and are mainly located around areas of large cash cropfarms such as coffee and tea. Graham Owen (Agriculture and Rural Development Internal Report) reports over 34% ofcooperative are producer cooperatives. Most Cooperatives in Kenya are thus located within Kenya’s rural areas, regionsthat seem remote to most commercial banks hence the limited attention given to them.Access to convenient, affordable and reliable financial services remain at the core of financial needs of cooperativemembers; with access to credit as one of the key services sought after. Surveys carried out in 2002 and 2004 report thatabout 71% of the credit demands were primarily for farming needs.UBK’s core business customer base is the cooperative movement right from 1965 when it started as a cooperative society.On ownership, the top shareholder, co-opholdings co-operative society limited has 64.56% share holding. Their focus oncooperatives has driven their 75% growth in customer base and the 3.74 billion pre-tax profits in 2009, consequentlycontributing to the company’s number 4 position in the country as indicated by central bank’s reports.The digital marketing proposition for the organization; PATAPESA DIGITAL ACCOUNTThe paper issues a proposal that UBK introduce an account which offers money transfer services using Safaricom’s M-pesa platform.M-pesa, a mobile money transfer service from Kenya’s leading mobile service provider Safaricom, enjoys over 9 millioncustomers(40% of Kenya’s adult population) and has an extensive agent network of over 17,000 all over Kenya. This hasbeen made possible due to collaboration between Kenya’s central depository The Central Bank of Kenya and the(Communications Commission of Kenya, the country’s communications sector regulator.
  27. 27. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982M-pesa has in the recent past been inclined on offering ATM services, more of a one way service where M-pesa was thekey beneficiary. However, several banks such as Equity Bank (M-Kesho), KCB (KCB Connect), and family bank (PesaPap) have engaged the m-pesa service to offer bulk money transfers among othersPaynet, the provider linking banks with m-pesa, has pointed out that the cross transactions from m-pesa to banks are on arapidly expanding and large scale rate. A report done by Ignacio Mas et al in 2009 suggest an average of ksh 52 billion incash deposits and withdrawal transactions are transacted every month at the m-pesa retail centers. The main use of m-pesais receiving money (28%).M-pesa customers use the service fundamentally for sending and receiving money. Speed, safety,convenience and cost are the strongpoints for the m-pesa service.The account, to be dubbed Patapesa, will target cooperative societies and generally the unbanked population in Kenya. Itwill offer financial services to otherwise remote areas as it will only rely on an individual having access to a mobile phone.A study conducted by Portio projects Kenya’s mobile subscriber numbers to increase exponentially to 21 million by theend of 2010.The country currently has a subscriber base of 14 million. Mobile handsets have significantly increased innumber as well as become more affordable as Kenya’s 2009 budget removed value added tax (VAT) charge on mobilehandsets. This plays a key role in mobile subscribers’ increasing trends. As the access to mobile phones is favourable, thebank’s core target customer base, the cooperative movement will have access to a faster, reliable as well as affordablechannel. With mobile phone having risen to 47.5 % and Safaricom’s M-pesa facilitated transfer of over ksh 401 billion,the partnership will be a catalyst in UBK’s expansion objectives as well as profitability.Objectives for digital marketing activitiesSelf-help groups account for over 50% of the channels used in the rural areas for financial related services. These are welllocated in rural areas across Kenya, and hold huge amounts of money cumulatively. Most commercial banks are skepticaltowards investing in such remote areas largely because of the return on investments posed by the demographics. Set-upcosts contributed significantly to this (see fig. 2 in appendix c)Digital marketing communication and technology offers an alternative channel which can be employed by UBK. Theobjectives of the digital marketing activities will focus on three areas, adopting an approach by Smith and Chaffey (2001)and in context with the prevailing conditions in Kenya and UBK;Sell (Growth in sales objective)-contribute towards increasing the overall growth in customer deposits by 20% By January2011Serve (Value addition objective)-increase service access by offering an additional channel to both UBK’s existing and newcustomers.Save (cost saving objective)-reduce costs by 30% within the 2009-2010 through establishment of a robust alternativedigital channel.In February 2009, the Central bank of Kenya was given the role to license as well as supervise Credit Reference Bureauswhich would systematize credit information gathered from banking institutions. As credit information is shared, Kenyanswill have an increased access to credit as pricing of credit risk will be affected.Project resource requirements (internal and external)External requirementsGovernment licensing/certification- a license from Kenya’s central depository Central bank of Kenya is required beforestart of project implementation. Certain clauses in the Finance Act of 2009 sufficiently amended the Banking Act to allowthe appointment of agents by banks. This also includes POS (point of sale).The changes allow the CBK to awardpermission and control the very nature of alternative channels taken by banks. Therefore permission from CBK isrequired, together with the organization’s intended mode of operation.Partnership contract with Safaricom’s m-pesa-a partnership contract needs to be agreed upon with a relevant service levelagreement.
  28. 28. PROJECT MANAGEMENT IN MARKETING MEMBERSHIP NUMBER: 13335982Inter-link infrastructure- so as to connect UBK with m-pesa, services from Paynet would need to be employed, especiallyfor setting up the connection infrastructure. Paynet Group was used in building the Pesa-pap system (family bank), M-Kesho (Safaricom) and KCB-Connect (Kenya Commercial Bank) right from its pilot stage to its implementation. Theirservices have proven to be successful with little backlogs.Internal requirementsAccommodative Internal structure-To facilitate the management of the Patapesa account, cross functional teamworkis essential so as to manage the project’s logistics. Channel managers and officers have to be in place so as to maximizeperformance of the marketing project. Managing directorHead Head Head Head Head Head(Operations) (Human resource) (Finance) (IT) (Marketing) (Sales/businessdevelopment) Patapesa team (To manage the proposed Patapesa account)Figure 10: simplified organizational structure of UBK with a focus on the proposed headThe head of the Patapesa account will be linked with all departments to manage the functions of the m-pesa/UBKpartnership. His overall role will involve; Project Planning Project Implementing Project controllingThe alternative channels division would liaise with UBK’s business process team together with the bank’s informationtechnology department to come up with a working system that will facilitate the project goals. The business processesdepartment manages all the bank’s activities, whereas the IT department is in charge of computer based/technologicalsystems that are in place within UBK.Collaborative Logistics information management system-the existing system needs to be re-structured so as toaccommodate the new digital account as well as address performance monitoring and evaluation for the project. Throughestablishing a robust electronic data interchange system, the organization will be able to collate customer transactions anddata which will enable the organization to establish regional demographics and customer patterns, which in turn willprovide relevant data for marketing intelligence purposes. Through such a system, UBK will be able, for example, to carryout evaluation for qualification for loans to its UBK customers. The logistics information management system would belinked with UBK’S Customer Relationship Management system (CRM system).Cost/Benefit analysisDigital marketing offers many opportunities to organizations. Digital marketing can be viewed in two perspectives, as atool for direct marketing and as an alternative channel; roles which overlap each other. Each of the perspectivescontributes to potential costs and benefits that would arise from the digital marketing project.

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