Thesis on "Convenience Banking"

Thesis 10 pages (2868 words) Sources: 1+

[EXCERPT] . . . .

Convenience Banking

BB&T - Convenience Banking

The contemporaneous banking system is extremely dynamic, facing increased competition not only nationwide, but on a global level as well. In order to strengthen and maintain their competitive position, banking institutions strive to increase the levels of customer satisfaction, while in the same time increasing the internal operational efficiency. A most relevant means of achieving this desiderate is that of implementing convenience banking. The system refers to an adaptation of the banking operations to the unique demands of each customer. It often requires additional investments in technologies or human resource formation, but its positive outcomes are worth it.

BB&T was among the first banking institution to implement the concepts of convenience and their primary agenda has been focused on improving online banking, offering money management solutions, travel solutions, payment of bills, mortgage access or other financial opportunities. The aim of this paper is to present the endeavours so far launched in regard to improving convenience banking within BB&T, but also to identifying current issues which could use improvement.

Before launching such an endeavour however, it is crucial for the reader to form an image of the company itself and the market in which it operates. This will be achieved in the BB&T section, through a general presentation, as well as a SWOT analysis, revealing the positive and negative features of the micro and macro environments. The following information will concentrate on the history of convenience initiatives taken by BB&T, to continue with a plan for future developments in convenience banking. The paper will come to an end with a section on concluding remarks.

1. BB&T

SWOT Analysis

2. History of Convenience Initiatives

3. Convenience Initiatives and Improvement Plan

Coin Deposit Center

Instant Issue Debit Card Machine

Fleet of Volkswagen Bugs

4. Conclusions

References

1. BB&T

The Branch Banking and Trust Corporation was established in 1872 and it is currently headquartered in Winston-Salem, North Carolina. The company employs an estimated 30,000 individuals and its revenues for fiscal year ended in December 2007 totalled more that 10 billions. It was ranked at #250 on the Fortune 500 (Hoovers, 2009). The company offers a wide array of financial products and services for both retail and corporate customers, while also serving governmental institutions. Its most outstanding solutions refer to savings, loans, credit cards, investment, insurance or cash management. The institution takes great pride in their security system, their motto being "Relax and bank with confidence" (BB&T Website, 2009).

BB&T is one of the oldest banking institutions in the United States, having managed to rapidly expand its operations and construct a favourable reputation. In the Southeast for instance, BB&T has differentiated itself by being among the first banks to offer mortgage solutions to its clients. Today, the company operates through more than 1,500 subsidies (Hoovers, 2009).

SWOT Analysis

Internal Strengths long lasting tradition and a favourable reputation wide variety of products and services offered to three categories of customers (retail, corporate (all small, medium and large size entrepreneurs) and federal institutions) focus on customer satisfaction and utility (through programs such as convenience banking) committed and capable staff members

BB&T has applied the financial principle of portfolio diversification, managing as such to reduce risks and maximize the chances of gains

BB&T closely collaborated with its partners and studied the market and this sometimes materialized in mergers and acquisitions, such as the merger with Coastal Federal Bank, which transformed it into "the No1 deposit market share in the thriving metro Beach market" (BB&T Insite, 2007)

Internal Weaknesses the company only operates across the United States its international competitive position is inexistent the diversified operations materialize in that the company competes in more sectors

External Opportunities given the financial difficulties due to the internationalized economic crisis, the retail and corporate customer could reveal an increased demand for more convenient banking solutions numerous technological developments have been advanced; these could be integrated within the BB&T operations to further increase operational efficiency and support the organization in reaching its overall goals however the banking industry depends directly on the economic background, the success of an organization is also due to its internal capabilities; this means that BB&T could achieve triumphs in spite of the existent financial challenges the banking industry is still expected to increase; a 5.1% increase has been estimated from 2008 to 2013 (Hoovers, 2009)

External Threats the current economic crisis negatively affects the industry, mostly since the banking sector is directly influenced by the features of the economic background the estimated annual wage of a banking employee is that of $300,000; this means that the company registers increased expenditure with the human resource; these costs could further increase in the future

2. History of Convenience Initiatives

The Branch Banking and Trust Corporation has historically been focused on increasing customer satisfaction and the most eloquent solution in this sense was the implementation of convenience initiatives. A most relevant example in this instance is given by the acquisition of Coastal Federal. It commenced in 2006 and was finalized one year later. BB&T acquired the Coastal Federal Corporation for the sum of $394.6 million and the operation led to the resulting bank being the number one market share in the Horry County. Coastal Federal had been founded in 1954 in Myrtle Beach and it became a public company starting with 1990.

With the completion of the take over, the newly formed entity assured the customers that it would preserve the Coastal features which generated customer satisfaction. "And we want to reassure you that the conveniences you enjoyed as a Coastal Federal customer are staying the same. We're keeping the things you loved about Coastal Federal because you asked us to. We're keeping extended hours and Saturday banking, free coin counters in the lobbies, and free Thank You gifts for opening new checking accounts or for referring friends" (Banking Insurance Investment). Foremost, not only did BB&T preserve these features within the prior Coastal Federal subsidies, but also implemented them in other 'pure' BB&T offices.

Relative to the extended working hours, the strategy has retrieved a dual benefit. First of all, as initially desired, it increased customer satisfaction. Secondly, by keeping the banks opened longer hours than the competition, BB&T managed to differentiate itself. "The launch of the Coastal Federal Bank - the Carolina's Most Convenient Bank initiative is designed to Exceed the Expectations of Customers through the consistent delivery of the Experience of Fantastic Customer Service and extended weekday and Saturday banking hours to further differentiate Coastal Federal Bank from the competition" (PR Newswire). Also, by making itself more available and more easily accessible than other banking institutions, BB&T managed to increase its number of clients.

In addition, Coastal Federal implemented a more flexible means of offering customer services. It revolved around the offering of 24/7 online services, cash management services and an extensive network of ATMs. These were already existent at BB&T, but were further emphasized as a result of the merger. Furthermore, Coastal Federal launched a free gift program, which rewarded customers opening a new account or referring friends to the bank. Instant issues debit card machines were also introduced, alongside with the Penny Pavilion, a free coin counter, found in the lobby of each subsidy. Finally, the banking institution also launched a nine Volkswagen Bugs and Checks / Check Card shared program. The latter initiative saw that customers could bring in old checks or debit cards and that the bank would offer a $10.00 credit in exchange for them. This latter initiative was the single one which was not approved by BB&T and as a result, Coastal Federal removed it from its product and service offering in early 2007.

In its history, BB&T has seldom adopted the practices of the companies it acquired. The situation was different however relative to Coastal Federal, as almost all convenience initiatives were adopted by the newly formed entity. Foremost, the banking institution continued to develop and improve them, believing that they would support it in reaching its overall objectives. All modifications came as a response to the changing needs of the retail and business customers and were also aimed to strengthen the competitive position of the organization within the market.

3. Convenience Initiatives and Improvement Plan

Today, BB&T operates through 1,500 subsidies. Out of these, thirty are involved in processes of increasing the convenience. These include all the branches in Horry (former headquarters of Coastal Federal) and Georgetown counties and eleven other subsidies in the Charlestown County. While this represents a net step forward, it is still insufficient in achieving superior levels of convenience. A simple calculus will reveal that only 2% of the BB&T branches are currently engaged in convenience initiatives. An initial recommendation could be that of significantly increasing the number of subsidies involved in convenience banking. Such a decision would however generate additional expenditure. Ergo, it would be most appropriate to sustain convenience efforts in reduced numbers of branches, as a means of first testing the positive outcomes of the procedures, and only… READ MORE

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