Tag Archives: Consulting

Banking

Plat5 Consulting Offer Banking on better Service and Product Innovation

THE complexion of the banking sector has changed dramatically in terms of products and services in a market where the customer has more options than ever before and banks are compelled to review constantly their package of products and services.

Banks in India, traditionally, offered mass products. With the reforms came a massive expansion of products and services driven by technological advances that had a dramatic impact on the delivery systems and the ability to service a greater number of products.

Profitability, the new mantra in banking, forced banks to transform into financial supermarkets. The focus has shifted to class banking with value-added and customized products for diverse customers.

Banks with differentiated products targeted at customer groups, rather than treating products as homogenous commodities will be the winners. Many banks such as SBI, HDFC, and ICICI are designing products for every stage of an individual’s life – from childhood to old age. Retail ban king is the buzzword, and banks are developing innovative products tailored to customer needs.

Product promotion and marketing product innovation in banks call for newer strategies. For historical reasons, product promotion has so far remained low on banks’ agenda. Product marketing and market intelligence are still in their infancy. Certain companies like Plat5 have the right domain expertise and point solutions to address the industry’s key business drivers and strategic imperatives. Blending strategy, implementation and support for diverse industry players across the sales, fulfillment and service valuing chain. It helps its client to transform, innovate and optimize towards Building Tomorrow’s Enterprise. Plat5 have provided solutions to whole range of multinational banks in India to white good manufacturers to financial services companies.

Marketing has become crucial for a bank’s success – in terms of profitability, innovative product development, optimum use of infrastructure, expanding market, and so on.

The bank of the future has to be also a marketing organization. HDFC, ICICI, AXIS, SBI and some foreign banks are setting new trends in effective marketing of their products and achieved unprecedented success. Their offsite strategy with collaboration with companies like Plat5 – such as Plat5 privilege holidays – to push personal banking products tries to catch the customer at places he visits regularly. Banks are eying one another to offer freebies and add-ons such as free accident insurance cover, free doorstep account opening, and person alised cheques as value additions. Due to deregulation and competition – among themselves and from new players such as mutual funds, NBFCs, post-offices, housing finance companies and financial institutions – banks have to create their own niches.

Technology to rescue

The contours of banking are being redefined through the all-pervasive influence of information technology and there is a marked shift from conventional to convenience banking. Product distribution channel is one key issue that should continue to engage bankers’ attention with “innovative products at lower prices” as the guiding principle. Many of the recent product innovations have used the networking technology.

Product branding

Customers today are looking for convenience – where and how to offer the product no longer matters. This is why branding is gaining in importance, especially with escalating competition. Traditionally, banking brands have been particularly difficult to build. This is largely because the financial products offered by most banks are not exciting or do not usually enhancing image. In fact, with fierce competition, there is little or no sustainable product innovation/differentiation — either in product features or the price. Clearly, there is room for powerful and winning brands, Plat5 consultancy pvt ltd offers different solutions regarding branding of products.

Pricing of products

 

Stiff competition is making it difficult for banks to price their products and services on cost-plus basis as hitherto. In the current competitive scene and the levels of product sophistication, the traditional cost-benefit approach to product pricing needs to be supplemented with more scientific and product specific pricing strategies.

Activity-based pricing with the aid of scientific methods based on customer preferences is essential. Most customers do not mind paying a little extra if they get the service they want. With shrinking spreads, banks will have to do a tight-rope walking to meet the depositors’ demand for increasing interest, and the borrowers’ clamour for lower the coupon. In such a situation, only product innovation can help. The strength of the banking system is its resilience to adapt itself to the changing times and to the ever-changing needs of the customers. Ever-escalating customer expectations, coupled with widespread deregulation, globalization initiatives and severe competitive forces, have added new dimensions to the challenges banks face in the areas of product design, delivery, pricing and so on.

Banks that have the strength and the competence to convert these challenges in to opportunities will be the winners.

PLAT5 is a group of strategically linked companies with complementing domain expertise and a well experienced client focused team.

Finance

Business Finance Consulting – Avoiding Bad Banks

For small business owners, one of the most perplexing situations is a realization that there are now essentially “good banks” and “bad banks”. To make matters worse, it is rarely easy to distinguish between the good and bad ones. For many commercial borrowers, business finance consulting has emerged as a helpful tool to determine which banks are still effective. But overall, the world of banking has changed dramatically for almost everyone, and many business borrowers are angry and confused by a new commercial banking landscape that does not seem to be working very well.

One of the more difficult aspects associated with the “good bank and bad bank” analogy is that there are so many competing explanations as to what constitutes a “good bank”. One popular analysis has focused on how much banks are really worth in view of the toxic assets that are so complicated to evaluate. With this analysis, “bad banks” are typically those with assets worth less than their liabilities and as a result such banks have been referred to as “dead banks walking” or “zombie banks”.

It is fair to say that we have not yet encountered a bank which has openly agreed that they deserve to be looked at as a zombie bank because their liabilities exceed their assets. This would be tantamount to describing themselves as a bankrupt bank. If a bank is truly deserving of the bankrupt status (and there are a number which certainly appear to be in this category), the current banking laws do not permit such a bank to go through the kind of bankruptcy process being considered by General Motors and Chrysler.

Instead the Federal Deposit Insurance Corporation (FDIC) is supposedly required by law to assume the operation of the bankrupt bank until a new management and ownership arrangement can be established. For a number of smaller banks, this has in fact occurred during the past few months. What has been missing so far from this legal bank takeover approach by the FDIC has been the inclusion of larger banks which appear to have problems that are much more serious than the smaller banks which have already been liquidated and transferred to new owners by the FDIC.

The FDIC and other public officials have not made public why large problem banks have not been liquidated. One obvious possibility is the belief that the public failure of a major bank would create a crisis of confidence for virtually every other bank whether they are financially healthy or not. An equally strong likelihood is that the FDIC simply does not currently have sufficient assets to cover the failure of a big bank. This viewpoint is supported by the recent announcement that the FDIC is in the process of raising fees paid by banks in order to replenish the FDIC insurance funds.

Small business owners need their own evaluation standards to determine what constitutes either a “bad bank” or “good bank” as it relates to the future financial health of their own business. Business owners should include an assessment that focuses on results as to which banks can provide the needed help for their specific business circumstances involving working capital financing and commercial loan needs. While such information would go a long way toward establishing a good bank-bad bank distinction, the banks themselves are not likely to be helpful in providing the needed data to produce this candid evaluation.

There are possibly several large bankrupt banks that have not rushed to advise the public that they are in serious trouble and are still functioning normally. Similarly we are already seeing that while most banks proclaim that they are making small business loans and SBA loans in a normal fashion, in reality virtually all banks have reduced commercial lending dramatically during the past few months. Some specialized business lending such as commercial construction financing has been frozen altogether in many areas.

In addition to the critical importance of identifying “good banks”, we have published a related report which describes the delicate issue confronting many business owners who might need to fire their banker. Just as there are “good banks” and “bad banks”, there are also “good bankers” and “bad bankers”.

Business finance consulting has emerged as an important tool to help small business owners work their way through a complicated commercial banking maze. In the Bernie Madoff fiasco, one of the common questions asked repeatedly is why investment advisors did not evaluate the Madoff internal operations prior to placing investor funds with Madoff and his Ponzi scheme.

Our candid final point is that the use of a commercial finance consultant should be at least considered by commercial borrowers in their search for new working capital loans and commercial mortgage financing. Businesses now need to act more aggressively than before in order to protect their own financial interests.

Stephen Bush is a business finance expert who has worked with business owners for 30 years => AEX Small Business Loan Programs – The Working Capital Journal