Banking Operational Models and Service Quality Flashcards
How does the Ashridge mission model of mission statements link business strategy to culture and ethics?
- Purpose: Why does the company exist? Who does it exist for?
- Values: Beliefs and moral principles that underlie the organisation’s culture
- Strategy: Provides the commercial logic for the company
- Policies and standards of behaviour: Provide guidance on how the organisation’s business should be conducted
What are the potential benefits of a company of establishing a mission statement?
- Values are integral elements of consumers’ buying decisions
- Studies show that people are motivated by many things other than money
- Some writers believe there is an empirical relationship between strong corporate values and profitability
What are characteristics of a mission statement?
- Stating the purpose of the organisation
- Stating the business areas in which the organisation intends to operate
- Providing a general statement of the organisation’s culture
- Acting as a guide to the direction of the strategy and its goals/objectives
What are criticisms of mission statements?
- They can be public relations exercises
- They can often be full of generalisations
- They may be ignored by the people responsible for formulating or implementing strategy
- They become obsolete, as they fail to evolve over time
What are Mintzberg’s componants of an organisation?
- Strategic Apex - Ensures organisation follows mission – prefers Direct supervision
- Operating Core - People involved in obtaining inputs and converting to outputs – prefer Standardisation of skills
- Middle line - Converts aims of strategic apex to work of operating core – prefers standardisation of outputs
- Technostructure – best way to do job, planners determine outputs, standardise skills – prefers standardisation of work processes or outputs
- Administrative support staff - Ancillary services such as public relations, legal counsel, café – prefers manual adjustment
What configurations did Mintzberg say an organisation could adopt?
- Simple structure: The strategic apex is dominant; no formal structure and little planning. Control is exercised by direct supervision.
- Machine bureaucracy: The technostructure is dominant; control is exercise through rules and procedures. Work is highly standardised.
- Professional bureaucracy: The operating core is dominant; processes are too complex to be standardised, and so control is exercise via training, individuals’ expertise and their professional ethos.
- Divisionalised form: The middle line is dominant. The organisation is too large or complex to be managed as one unit so it split into autonomous divisions. Control is exercised via performance measures such as profit.
- Adhocracy: Support staff are dominant in an adhocracy; Innovation is critical and work tends to be project-based. Teams with a mix of skills will form and disperse as required. There are few formal controls and work is complex and ambiguous.
- Missionary organisations: Missionary organisations have little structure or formal control but are held together by a shared set of values, reinforced in a strong culture.
What are the advantages and disadvantages of a tall organisational structure?
For
- Narrow control spans
- Small groups allow team members to make decisions
- Large number of steps on promotional ladder
Against
- Large number of steps on the promotional ladder
- Rigid supervision may block initiative
- Work may pass through too many hands and increase costs and slow down decision making
What are the advantages and disadvantages of a flat organisational structure?
For
- Greater opportunity for delegation
- Relatively cheap
- Should speed up communication between strategic apex and operating core
Against
- Requires that jobs can be delegated
- Managers may only get a superficial idea of what goes on
- Sacrifices control
- Middle managers are often necessary
What is delayering an organisational structure?
Delayering describes the reduction of the number of management levels from bottom to top. Removing middle line jobs. Organisations are reducing management levels and becoming flatter.
What is a horizontal structure?
Horizontal integration makes use of an organisation’s current capabilities by developing into activities that are competitive with or directly complementary to a company’s present activities. Faced with the new environment they operate in, banks are now restructuring their operations around a horizontally-integrated model based on common services and activities, rather than products.
What is a vertical org structure?
Vertical integration occurs when a company expands backwards or forwards within its existing value network and therefore becomes its own supplier or distributor.
What cost efficiency models are there?
- Straight through processing (STP)
- Self-service channel usage
- First-time resolution (FTR)
- rationalising their branch networks. An efficient ‘hub and spoke’ branch model can help enable a bank to decrease the branches in its overall network and reduce branch staff with a mix of flagship, full-service, light and kiosk branches.
What are common Features of Banking Operation Models?
- Cost efficiency Models
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Analytics: designed to produce intelligence, not information and can enable the bank to more effectively understand and meet customers’ needs. Key features:
- Advanced multichannel integration focusing on digital channels and an integrated architecture
- Pervasive analytics based on effective customer data collection, segmentation and predictive modelling to determine the most effective basket of products
- Advanced advisory services leveraging digital channels and personal analytics
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Mobile Technology: Key components of a mobile technology model are:
- Mobile payments based on near field communication (NFC) or mobile wallet
- Enriched propositions through mobile commerce focused on financial and non-financial offerings
- Alliances and partnerships with non-banking operators and creation of related content
- Social Media: Key components of a social media model are:
- Social media monitoring to identify opportunities to engage customers, mitigate risks and promptly react to issues
- Social digital marketing enabling the bank to better define the best content for individual customer profiles
- Social customer relationship management (CRM) enriching customer data with social media data
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Micro-segmentation: ‘Micro-segments’ describe the smallest set of customers with uniform demographics and social behaviours. It is the first step in understanding the motivational drivers behind customer actions. Micro-segmentaion forms a foundation for customer value and lifecycle management. The key success factor in effective micro-segment management is integrating different dimensions, such as:
- Device performance
- Visiting time
- Marketing campaign responsiveness
- Making predictions about customer behaviour
What aspects of service quality are there?
- Technical quality of the service encounter – what is received by the customer?
- Functional quality of the service encounter – how is the service provided?
- Relationships between employees – do these relationships appear to be professional?
- Appearance, personality and skill-set of service personnel
- Service-mindedness of the personnel
- Accessibility of the service to the customer
- Approachability of service personnel
How do gaps in service quality arise?
Gaps frequently arise from the differing perceptions and expectation of customers and those managers and staff who are actually involved in delivering the service (front office and back office).
