Strategic Planning For Darul Fulus Bank Limited DFB

Transcription

1. Abstract Darul Fulus Bank Limited (DFB), a full-fledged standalone Islamic bank has suffered three (3) consecutive years of financial losses. The main factor for the losses was the substantial non-performing financing of two of its major corporate customers which was a result of poor credit evaluation as well as lack of prudent supervision of the financing accounts. As a result, the bank’s reputation and image as one of the leading Shari’ahcompliant banks is tarnished. This someway has led to a loss of confidence among its existing customers and the reluctance of potential customers to have any relationship with DFB. There are also signs that the customers deposits both on safe keeping and profit sharing basis has dropped drastically and quite a number of customers especially those who enjoy home financing facilities have made earlier settlements and moving to other Islamic banks. Therefore, in order to renormalize Bank’s service and regain the public confidence towards the Bank , will take robust actions as follows: 1. To revisit the existing corporate strategic plan and review the existing vision, mission, culture and value 2. To aggressively promote the Bank and its products and services via profile, push and pull communication strategies 3. To strengthen the customer relationship management and retention program 4. To ensure all staff undergo series of intensive training particularly in Shari’ah, legal documentation, sales and marketing. 5. To come up with a comprehensive compensation scheme so as to motivate the bank personnel most of whom were demoralized due to uneventful episode. 6. To come out with at least one unique product for consumer and/or business financing, as to attract new customers and gaining the market share. 7. To re-brand the bank for a better public image that will serve both the Muslim and the non-Muslim clientele Table of Contents I
2. 1 .1-Introduction.................................................................................................................................. 1 2.1-Situational analysis ....................................................................................................................... 1 2.1.1-Political situation ....................................................................................................................... 1 2.1.2-Economic ................................................................................................................................... 2 2.1.3-Socio-culture.............................................................................................................................. 2 2.1.4-Technology ................................................................................................................................ 2 2.1.5-Company.................................................................................................................................... 2 2.1.6-Competition for Islamic Banks................................................................................................... 2 2.1.7-Customer power ........................................................................................................................ 3 2.1.8-Suppliers Power ......................................................................................................................... 3 2.1.9-SWOT Analysis ........................................................................................................................... 3 2.2.1-Vision statement ....................................................................................................................... 4 2.2.3-Mission Statement .................................................................................................................... 4 2.2.4-Values ........................................................................................................................................ 4 2.2.5-Objectives .................................................................................................................................. 4 3.1-Marketing Strategies .................................................................................................................... 5 3.2-Customer Relationship Management strategy ............................................................................ 7 3.3-Capacity Building strategy ............................................................................................................ 7 3.4-Compensation strategy ................................................................................................................ 8 4.1.0-Action Plan................................................................................................................................. 8 4.1.2-Conclusion and findings............................................................................................................. 9 4.1.3-Recommendation .................................................................................................................... 10 4.1.4-Refferences.............................................................................................................................. 10 4.1.5-Appendix.................................................................................................................................. 11 II
3. Strategic planning for Darul Fulus Bank Limited (2016-2018) 1.1-Introduction The launching of Islamic Development Bank (IDB) has inspired up the creation of many Islamic banks in a number of muslim countries; the pioneer of these counties which are Malaysia, Pakistan, Gulf states, Bangladesh, Egypt, Sudan and Iran established their Islamic product based, somewhere in the end of 1970 and early 1980. Thought Darul Fulus Bank was one of the leading shariah compliant product gained valuable customers through providing several modes of financing to it is clients; there was financial losses for the last three years which result from poor supervising of its credit financing . Therefore, in order to regain our reputation and sustain our public acceptance we will have further action to restructuring the bank’s exiting strategies, the new strategies will compromise revising the existing mission,vision,cultural value , and also developing new product financing intended to restore the hope of our existing customers and to retain potential customers and also upheld our personnel skills and provide them compensation schemes. 2.1-Situational analysis In this topic we will apply environmental scanning by using PEST in external environmental and 5Cs for the internal analysis as follows. 2.1.1-Political situation After the collapse the government of Somalia in 1991 and followed by two decades of civil war, Somalis and international followers have paid a lot of efforts and made success. In 2012 it was informed Federal government in the country which has decree of legitimacy and authority recognized by the international community. Therefore, there is relative stable situation in the country; even thought there is no complete assurance for long term investment due to the risk uncertainty. The new central Bank of Somalia is working to regulate credit system and managing external reserves of the country, though it has not gained adequate capacity to decline Dollars which mainly used in the country. 1
4. 2 .1.2-Economic The economics of Somali is not informal and mostly based on livestock, remittances, and telecommunication. Somali GDP per capita was recorded at $187 USD in 2010, the GDP per capita equal to 1precent of world’s average, and also the Somali GDP annual growth is 2.60 percent, and the unemployment rate is 61% for men and 74% for women. The unregulated state of economy has made private sector to grow and shape their business, therefore there a signs of investment in the Islamic Banking sector in the country. 2.1.3-Socio-culture Most Somali people have simultaneous culture, Islam is the religion of the entire people of Somalia, therefore the lifestyle and consumer’s behaviors are favorite the Islamic Banking. 2.1.4-Technology Technology is gradually advancing in the country and these developments has been reached in the telecommunication sector, such as storing money in mobile and paying bills and services through the Mobile and also access of speed internet in every ware in the country. And also in the Banking sector such providing ATM and Master Card services. 2.1.5-Company DFB is a full-blown and shariah leading products and it is main objectives include serving our clients with sariah financial instruments that will enable receiving public acceptance and good image within our community, though the Bank had experienced hardship for the last three years; in order to store our community’s confidence to our bank, we will concentrate the need of our customers by innovating new products, improving our employees moral and skills, strengthen our customer relationship. 2.1.6-Competition for Islamic Banks The product provided by the Islamic Banks is very low, since there is uncertainty investment scenario. There are few banks which are providing save custody services to their customers, beside others which provide Murabaha, Musharaka facilities. 2
5. In conclusion : competition about the Islamic financing products is very low since there are many areas in which are needed to be concentrated. 2.1.7-Customer power Customers will more concentrate to our finance modes, since the other banks are fixed return oriented and they are not probably like to finance agriculture and trade financing due to their afraid of risk, and Most of our people are dependent to the agriculture and they need some way to invest their farmers, nevertheless, we will explore financing these areas in the future. Therefore, the bargaining bower of our customers to switch between different Banks will be low. 2.1.8-Suppliers Power Suppliers in Islamic Banking are those who producing Islamic product opinions and information related to it, so they are the shariah scholars and they might demand higher costs for their services as they are product designers. The availability of Islamic banking professionals may also become shortage. Therefore, the supplier power is so strong in the Islamic Banking products. 2.1.9-SWOT Analysis  Opportunity 1) There is opportunity of establishing Islamic product facilities in Somali since there is many people who need to refund according to their needs such financing their housing, agriculture, trade and gradually repay the loans being financed. 2) Business industries whether Islamic product providers or others, there is opportunity to invest the country due to the low of taxes. 3) Lack of conventional Banks in the country since the population is muslims. 4) The beliefs and attitudes of the Somali community toward the Islamic Banks is good sine they are Muslims.  Threats 1) The stability of the country is now moderate but adversely it might be unstable in a certain time in the future which will have adverse affects in the economy. 2) There are no limited regulations from government about the Banks which will facilitate to inter more Islamic Banks in the country. 3) The corruption for the said government officials in the country is high which might lead credit risk. 3
6.  Weakness & strengths Though our Bank was one of the shariah leading there was a decrease about the Banking financing modes due to the loss resulted from financing supervision in the last three years which caused loss of public confidence against our Bank. Thus, there is a need of improvement about the Banks reputation, new product innovation, enhancing employee morale and their skills of Islamic Banking. On the other hand, while our CMR has tarnished still we have options to regain their proper confidence to our Bank if we design them a new Islamic complaint product since our competitors will not provide similar to our new brands. 2.2.1-Vision statement To become Shariah pioneer Bank in Somalia, fully admired with the acceptance of the public and positioned the spiritual of the market. 2.2.3-Mission Statement To organize and actively evolve shariah compliant product instruments and be adherence our clients’ needs and wants through research and innovation. 2.2.4-Values     Commitment to Excellence Justice Transparence Trustworthy & transparency 2.2.5-Objectives The objectives of this study are:     Regain our Bank’s public confidence by innovating shariah compliant products with quality services via push, pull and profile strategy. Acquire well empowered personnel in both their skills of (Islamic Banking practice, shariah and legal documentation), and also acquire well satisfied and moralized personnel. Develop new brand of financing and re-build our customer relationship. Re-organize the corporate strategic of our Bank by revising it vision, mission and cultural value. 4
7. 3 .1-Marketing Strategies Generally our marketing strategies will focus upon satisfying customers’ needs and wants through mutual consent of selling and buying not through deception, fraudulent practice and taking other people’s properties by force. Therefore, we are focus on developing new products and service in concentrating following marketing plan in order to achieve our marketing objectives as shown in Figure 1.1. Figure 1.1 Three Years Marketing strategy:Markting Mix and Marketing Communication. I. Product Strategy Under this strategy our Bank will focus customer driven strategy through innovation of new shariah compliant products. Under the following table 1.1 there is a list of new facilities beside the old Instruments. Old Financing Instruments For D Saving Account Current Account Mudarabah Financing Musharakah Financing New Financing Instruments For DFB Ijarah Muntahiya Bi Altamlik Murabaha Financing(LC) Bay’al Salam 5
8. II . Price DFB Pricing mechanism will be cost based pricing and appraising the real value of the product that we providing to our clients. Our pricing techniques will focus on self operation tool of price adjustment and competition encouraged by the Qur’an. The principal that we will follow in order to pursue our objectives is to dictate that there is no hoarding, no unjustified price exploitation. III. Promotion To achieve our objectives in the promotion, we will use informative and moderation tool in order to avoid compelling our customers and also we will apply three marketing strategy communication in which we exhibited figure 1.1 which is push, pull and profile communication strategies as hereunder. 1. Push strategies: we will hire agents and brokers for the purpose of distribution our products in the market place, we will give sales promotion for these agents in a form of commission. 2. Pull strategies: in this strategy we will create sub branches in all regions of Somalia in which our customers can reach and available in any time, our customers will also receive this scheme sale promotion such as free save custody (Wadiah) gifts and sales discounts. 3. Profile strategies: we will develop profile strategy in order to rebuild the image, attitude and reputation of our bank within our community this may be through promotional techniques like the: A. Public Relations: establish a contact and improve the good conduct with the community such as community relations, media relations, investor’s relations. B. Corporate advertising: we will construct public awareness to our product by hiring shari’ah and Islamic finance experts which will publish shariah and persuade the community through the TV and Radios. C. Sponsorship: developing sponsorship events such as: research and publication of Islamic banking instrument practice, professional courses, workshops, discussion forum, and seminars. 6
9. IV . Place In our distribution channels will provide ethical and accessible satisfactory services to our clients, this will be serving to the nearby branches in a fastest and efficient way. 3.2-Customer Relationship Management strategy In our strategy for the CRM philosophy we will develop techniques to attract and retain our customer’s mind in concentrating the following main aspects.  Customer identification This will involve analyzing and segmenting the customer’s data; this will analyzing through customers’ attributes, while customer segmentation involve customer’s reclassifying in to small groups based to their gender, age , occupation etc.  Customer attraction On this stage our Bank will focus direct marketing mechanism such as distribution product channels, direct advertisement and etc.  Customer retention For the purpose of retaining our current customers we will upheld our customer’s positive disconfirmation against our product and services, and the more our customer’s expectation be confirmed, the more they will be satisfied. Therefore, within this strategy to regain our customer’s pleasure, we will provide quality product with low price, and on-time shipping. 3.3-Capacity Building strategy In our strategy related to improving our personnel skills and understanding shariah ethics, we will mainly focus on the following three areas. 1) Ideological which related to the shariah such providing principals of Islamic marketing, shariah governance, shariah compliance manuals, shariah relevant documentation such as contracts, terms and conditions. 2) Theoretical which concerns training employee with Islamic modern Banking system and also teaching them professional of accounting programs. 3) Practical training: it is about conducting employee training through seminars, discussions and some of them may conduct on-job training which about the sales and marketing. 7
10. 3 .4-Compensation strategy DRF Bank will compensate it is personnel and should be based upon the volume of the employees efforts to the work, and it will start their employment while it will vary according the standard of the performance they are doing. Our compensation scheme will based on extrinsic that our employee will get benefits against their performance, and it will compromise salaries, incentives, bonuses and employee benefits. The compensation types in which we will provide our personnel is as shown in figure 1.2. Figure 1.2-Compensation Schemes Compensation Direct Pay Indirect Incentives Services Benefits 4.1.0-Action Plan 1- Policy Environment Action Plan Review and amend of current regulation to remove unsuitable instructions Develop well adopted strategies to protect our customer’s dignity and their assets Establish relation with central bank about the updates of Banking licensing and taxes Revising current strategic, vision, mission and value Deadline 2016 Responsibility President with the executive directors 2016 Executive directors 2017 Public Relation Department 2016 Executive Directors 8
11. 2- Islamic Product awareness & enhancing personnel capacity building Action Plan Promote shariah standards issued by the AAOIFI Develop mass media about Islamic products awareness Establish shariah manuals, contracts, terms and conditions Conducting Islamic finance conferences Organize training sessions on Banking for shariah advisors Develop advanced course of marketing and Islamic commercial law learning Deadline ongoing Responsibility Shariah Committee 2016-2018 Shariah Committee ongoing Shariah Committee Once every year DFB with the stakeholders Shariah committee On-going 2016 Shariah committee with the institutional of Islamic banks 3- Improving the motivational of our personnel Action Plan Enhancing our personnel moral through direct and indirect compensation Deadline Monthly & on-going motivation based their performance Responsibility HR Department 4- Product innovation Action Plan Develop new financing modes such as: Forward sale, Murabaha for Credit letter and leasing ending with ownership Promote low cost leadership with quality service for the purpose of customer relationship formulating Maintain marketing mix & marketing communication strategies for our product in order to distribute to the end users and thereafter regain our reputation within the public Deadline 2016 Responsibility Corporate investment & Marketing strategies. 2016-2018 Corporate investment & Marketing strategies 2016-2018 Corporate investment & Marketing strategies 4.1.2-Conclusion and findings Islamic Banking is operational in many countries including Somalia. Our essay has represented the current situation for Islamic Banks in the country compared to our Bank which suffered three consecutive years of financial years by using macro environmental scanning, five forces model, and SWOT analysis. 9
12. Our practical findings show that the Somali people are prospects the increasing Islamic financing modes in the country , while there is a shortage of Islamic instruments. Moreover, most of the Somali people are not familiar with Islamic instruments due to their high illiteracy rate of Islamic banking services; therefore in order to survive again and acquire public acceptance we need to develop new areas of financing. The situation of the country is in recovery period and relatively stable, while there is uncertainty for long term investment. There is a gradual progress in the technology sector while some of the banks are started ATM, master card services and electronic money. 4.1.3-Recommendation      In our analysis most of the Islamic Banks in the country are risk averse they only practicing a few products in which they are seen as their fix return investment; therefore, we recommend our bank should design customer driven marketing strategy in order to meet our clients’ needs and their satisfaction. Promote Bank for all which will deliver quality and valued services to our clients whether muslims or not. We also recommend to develop media campaign in order to persuade to our consumers about the products and services we serving to. Enhancing our staff capacity building in terms of Isalmic Banking field and adequate knowledge of shariah. Regulate clauses for penalty toward the default payments of the customer facilities in order to mitigate credit risks. 4.1.4-Refferences Professor Sudin Haron & Dr. Wan Azami (2005) Marketing strategy of Islamic Bank State Bank of Pakistan (2014) strategic plan of Islamic Bank industry of Pakistan Ahmed Noraffifah & Sudin Haron (2002) corporate customer perception of Islamic Bank Grant, R. 2002 contemprory strategy analysis, concept, techniques and applications 10
13. Hussein 2005 , Banking sector refors (the people’s magazine) American Development Bank Group (country brief –Somalia 2013-2015) Marketing of financial services: Bank Islam perspective 10th March 2012 Azizul Haque, Sandra sinthiah, Naim & S.M Dec-2011Employee compensation& benefits (American International University Bangladesh.) 4.1.5-Appendix The structure of DRF Bank 11