Strategic Plan – 2019-2023 for People’s Bank
M.S.L. Perera (10716-9)
Assistant General Manager
31st July 2018
1 Industry attractiveness 4
2 Micro and Macro Environment of people’s Bank 6
2.1 Micro Environment 6
2.2 Macro Environment Analysis 13
3 Competitor’s environment:- 16
4 Stake holders 18
4.1 Stakeholders groups 18
4.2 Stake holder mapping 18
5.0 People’s bank’s current position in banking industry in Sri Lanka 19
5.1 Competitive advantage of the People’s Bank 19
5.2 Strategic group mapping for the banking sector in Sri Lanka 20
5.3 value creation of People’s Bank 21
5.4 Value chain: 21
5.5 Review of ‘People’s bank’ position in the current market 24
5.5 Positioning strategies for People’s Bank 24
5.6 Comparative market position of selected banking industry in Sri Lanka 25
5.7 Life cycle analysis 25
5.8 developing options for strategic planning in ‘People’s Bank’ 25
5.9 Peoples bank business level strategies 25
5.10 People’s Bank corporate level strategies 26
5.11 comparative understanding about the People’s bank 26
5.11.1. customer segmentation and target market 26
5.11.2 comparative understanding about the ‘People’s Bank’ 26
5.12 Future strategic options for People’s Bank 29
5.13 Ansoffs growth vendor matrix 29
5.14 Structure for strategic plan of the “People’s Bank” (2019-2024) 29
5.15 Assessment criteria for the plan 29
5.16 Resource implications 31
6 Action plan 32
6.1 Core organizational values and current business of the “people’s bank” 32
6.2 Developing a new vision and mission statement for People’s bank of Sri Lanka 32
7 management objectives 34
7.1 future changes for the People’s Bank management objectives 36
8 Measures for evaluating strategy plan 36
8.1 The balance score card 37
8.2 schedule for implementing strategies 38
8.3 Dissemination process for gaining commitment from stakeholders 38
9 Monitoring and evaluation system 39
9.1 Evaluation 41
10 Conclusion and recommendation 42
STRATEGIC PLAN FOR 2019-2024
1. Industry attractiveness:-
The industry attractiveness mainly depends on the relative profitability of the industry. There are various factors affecting to the profitability of the industry. The main threat is coming from the existing rivalry in the industry. At present there are several players in the industry and some of them have capabilities than us which earn competitive advantage to them. i.e. latest technology. High capital requirement in the banking industry is a barrier to new entrants and existence of strong brands also are barriers for them. Although High profit potential motivates new comers, such barriers made the industry dis-attractive to them.
Detail industry analysis using porter’s five forces model is as follows.
i. Rivalry among existing firms
The main driver is the number and capability of other players in the market. Many competitors, offering undifferentiated products, will reduce market attractiveness. People’s bank has market share on deposits 22% and there is a tide competition among the existing key players in the market. At present twenty five licensed commercial banks including foreign banks are operated in Sri Lanka. In addition to this seven licensed specialized banks are in the industry. Peoples banks has the biggest market share in rural areas and “People’s Bank” brand is well popular in Sri lanka and it is evidence by obtaining ‘people’s service brand of the year’ and people’s banking service provider for the 11th consecutive time at Slim Neilson’s people’s award.
Competition may generate the interest rates deviations among players, adding competitive features for products or creation of innovative products or reducing process time etc.
Therefore rivalry among the existing players is relatively high in the Banking industry.
ii. Threat from new entrants
Profitable markets attract new entrants, which erodes profitability of the industry. If industry may have strong barriers to new entrants it may resulted to reduce the threat. In the banking industry become attractive industry with increasing profitability due to the increase of per capita income and accordingly enhancing level of savings as well being a upper middle income country, it is increased the demand for advances.
i. The significant amount of capital required
ii. Strong Brand prepositions of People’s Bank due to the long lasting presence in the market
iii. Customers switching cost is relatively high
iv. High competition among the existing players will discourage new entrants to the market (low cost production due to economies of scale)
Based on above factors the threat from new entrants is relatively low which due to entry barriers.
iii. Bargaining power of customers
This is an assessment of how easy it is for buyers to drive prices down. People’s bank products are having a slight differentiation and are more standardized, the switching cost is very low and the buyers can easily switch from one brand to another
Due to the technological innovation, especially usage of internet customers can compared competitors rates and thus selected.
Customers expect higher rates for their deposits and lower rates for their advances as well lower charges. In the market there are large number of customers, no one customer tends to have bargaining leverage.
By evaluating overall response the customer bargaining power is relatively low.
iv. Bargaining power of suppliers
Suppliers are institution given loans to the bank, Depositors as well borrowers. Bargaining power of supplier of People’s Bank will have a long term negative impact which subtracts from the value of the bank. It may lead to an increase of cost and decrease of profit.
These facts indicate that supplier barraging power in long run is relatively high.
There are substitutes for banking products that is informal market lenders,”seettu” unorganized individuals like Daduwam Mudalali and shakwithi. But there is very negligible impact from such sources in Sri Lankan market.
2. Micro and Macro Environment of people’s Bank
2.1 Micro Environment
While analyzing internal environment of the company, it’s necessary to identify the Strength of the company to eliminate its weaknesses. The Six decades of presence in the industry as a state bank and the strong brand name created over the time with island wide spread branch net work are the key strengths of the bank.
Over dependence from SOE sector as well Lack of modern technology which stands as barrier to gain a competitive advantage in the changing environment are the main weakness in the ‘Peoples Bank’
The bank can obtain more business using the present relationship with government which creates opportunities to the bank. The bank can play as a banker to the project role and could reap benefits from this relationship.
Detail SWOT analysis can be performed to analyze the external and internal environment.
1. Scale of operation
Peoples bank as one of a leader in the banking industry in Sri Lanka it has the largest branch net work of 348 Branches, 390 service centers and just passed 1000 digital units including at 676 ATMs. The customer base is 18Mn. customer accounts which give it a stable base for scaling and revenue generation. Last financial year it has recorded profit before tax of Rs. 29,868Million recording a annual growth of 17.4%.
2. Availability of different brands
People’s bank has all branded products which have been built over long period of time from their presence over more than 5 decades.
3. Loyal customer base
The bank has grown the customer base sustainably over the years which are a reflection of customer trust and loyalty towards the bank. Especially in the rural areas we have a fair number of loyal customer base and even they do not bother the rates, facilities available in the bank and what competitors offer.
Brand name and strong customer relationship were the reasons for same.
4. Long presence
People’s bank has presence over five decades since 1961, which has earned good reputation and well established island wide branch net work.
5. Connection to the government
It brings more business from government and non government sector. In the other hand it creates more confidence to the public at large
6. Large work force
We have around 11000 employees which has created more job opportunities for local people who are closer to the branches under district basis. It will help to keep satisfied employee since he can work in their hometown which is more convenient to them …
7. Extended business hours and availability of digital banking unit island wide
People’s bank has the 24 hours 7 days branches at business hubs which provides customers convenient to do transaction without the time constrains.
8. market leader for Pawning product
We are the pioneer for pawning as well market leader in Sri Lanka and which is a star product of the bank.
9. Density of branches
The branches are located in urban as well rural areas which customers are very convenient to reach which gives additional competitive advantage over the other players.
10. Strong deposit base
The deposit base has grown by16% during 2017 and market share is 22.% . we offer various deposits products for customers in Sri Lankan Rupees as well foreign currency.
11. Well experienced staff strength
Due to life time employment, employees are mostly well experience and they are easily trainable as well motivatable.
12. Easy access for finance
As the bank has long presence in the industry , having a good rating , and the brand name we have easy access for finance.
1. Overdependence on SOE sector
People’s Bank is highly dependent on government related organizations or otherwise state owned enterprises. For example corporate banking division’s profit is mostly generating from SOE sector .
People’s Bank is not par with the most of the competitors which create competitive disadvantage. As today’s world is a single universal village the bank should have equipped with latest technology
3. Lack of technical knowledge of front staff
Knowledge of front end staff is less in relation to available products hence cross selling is very minimal
4. Busy counters with unprofitable business and staff of the branches have heavy stress
In general People’s Bank has busy counters but that busyness do not generate profits as most of the transactions are unprofitable.
5. Limited SME customer base
SME sector is very minimal in the advances portfolio but People’s Bank has good opportunity to cater such target market as we have island wide branch network
6. Deviation from prime objectives
The bank has established to help the unprivileged group of the country and the People’s Bank is more popular in lower income level customer group it is not performing Micro finance satisfactorily.
7. High cost income ratio
People’s Bank has very high cost income ratio and which exceeded industry norms. It may have direct impact to the profitability.
8. No proper R;D
R;D function in the bank which will not provide effective information for strategy formulation or developed strategies may not able to match with the industry requirement
9. Availability of Poor segments
Credit card business is also at very low level and the Bank is not performed leasing and Insurance business
10. Poor culture
The bank’s culture is not market oriented as a state bank it has Beauracatic red tape
11. Demotivated staff
The staff of the Bank in general less motivated due to less carrier development opportunities, no equal opportunities, and no proper grievances handling process in the bank
12. The bank does not reap benefits from well spread branch network by correctly positioning with the rural population
13. Utilization of casual staff for front line
As University students does not have required knowledge about banking products , practices as well no ownership, it may bring bad publicity to the bank by utilizing them as front line staff
1. Ongoing development projects
Using the existing relationship with the government information on proposed huge projects and try to become as banker to incoming projects. There are high number of projects are ongoing across the island focusing rural areas development at present
2. Overseas market
Approach to overseas markets as the bank operates in its growth stage with high profitability. In the local market bank has performed well and act as a leader to the banking industry.
3. Un tapped market
As per the recent survey 50% of populations are earned less than Rs. 50,000/- income per month. There are avenues to cater them as a development banker to the nation and there is an untapped market in the country, and serving to that less privileged social class is among our prime objectives. The bank can cater them supplying quality development loans
4. High unemployment rate
Unemployment rate of the country is 4.5% hence there is an opportunity to granting self –employment loans and upgrade their living standard which may be a CSR activity as a state bank
5. Availability of low cost finance
Ability to use donor funds for rural development with low cost of funds to the bank
6. Power of huge staff strength
Bank can utilize 11000 staff and subsidiary staff as an alternate channel to provide banking service which is untapped yet
7. Children’s deposits
By visiting schools People’s Bank can reap higher benefits than competitors. As minor deposits sector is at present underperforming it can be utilized to upgrade the sector.
8. Low cost financing
The bank could access the international financial market to have low cost of funds.
9. Develop new product
There is an opportunity to offer innovative new products to the market and expand the portfolio.
10. Availability of debt instruments
Raise funds via debt instruments using the brand name and strong rating to minimize the cost of capital
11. Islamic banking
As Islamic population is increasing there are more opportunities to develop Islamic banking
12. Least cost advertising
Sales and marketing can be promoted through the social media since 30% of the population use internet which is further growing.
i. Innovation and efficiency of peers
There is a challenge from innovation and efficiency of the competitors in the market. As a state bank overcoming such situation is a great challenge.
Technology itself is a threat. Especially latest technology is a must to the industry without that it is uneasy to carry out the banking business in large scale. In addition to this security risk and innovation requirements have vital role in this behalf.
iii. Regulator’s requirements
Rules and regulation imposed by Central Bank and other global industry practices may create threats to the industry
iv. Industry profitability
Squeezing of net interest margin in the industry is a threat to the industry. It will have direct impact to the industry profitability.
v. Intense competition
It will hinder the profitability as well industry attractiveness. Competitiors strategies to winning the market may lean the margins.
vi. Social media channel
Bad or false information can be quickly spread among the public through the social media channels. This will damage the reputation of the company even without valid reason
vii. Government policies
The changes in government policies may have impact to the banking industry directly as well indirectly. For example Changes in government tax policies may have direct impact to deposits volume.
viii. Customer satisfaction
Improving the level of customer satisfaction to achieve sustainability with loyal customers
ix. Dependence on deposits as finance source
It is highly dependent on customer deposits as a funding source. The bank is rarely use other funding options available in the market.
x. Influence of employee unions
As the unions are well organized and powerful in state banking sector of Sri Lanka it has more influence to the activities of the bank.
xi. Beauracatic red tape
As a state organization our culture is not a commercial focus it is more beauracatic. For a commercial organization it is not suitable and it may delay decision making process
xii. Political influence
There are political influence for commercial activities as well staff Transfers , promotions and other HR functions
xiii. Customer’s confidence
It can be decreased due to failures in non banking financial institutes in the market.
xiv. Forced consolidation
During last regime it was proposed to forced consolidation of Banks and non banking financial institutes
2.2 Macro Environment Analysis
While screening external environment it’ll able to identify the potential threat to the existing business and develop strategies to convert them into to the opportunities.
We can use PESTEL analysis to analyze the macro environment.
As a major stake holder to the bank government has more influence to the bank as a owner. Other than this political factors referrers how government and organizations try to understand these influences on their strategic actions. It includes political stability, tax policy, tariffs, various laws imposed to the entity.
Impact can be identified as follows
i. It has been created more opportunities in the northern, north central and Eastern provinces due to cessation of ethnic war.
ii. Political stability of the country creates more FDIs
iii. Enhances confidence and morale of the business community which in turn improve the potential business opportunities in the country.
iv. Tax rate changes have direct impact to profitability
v. Government imposes rules and regulations related to banking industry time to time. It may have a negative impact to the industry.
vi. High number of development projects are coming to Sri Lanka focusing rural economy
? Economic factors
i. Increasing per capita Income
In Sri Lanka, Per capita income is rising ($4065in 2017) and being a upper middle income country, the level of saving is also increasing. It will enhance demand for deposits products.
ii. Gross domestic product growth
It is recorded high GDP rate in North central, north western and uva provinces in which more opportunities are created for banking industry.
iii. Country Move to upper middle income earning status
Sri Lanka has moved upper middle income earning status from lower income earning status.($4036-12475)
iv. Interest rates
Interest for loan products are increasing and interst for deposits products are decreases in the market. It gives way for international players to the market.
? Socio cultural factors
i. As a developing country, multi cultural society in Sri Lanka People’s Bank is being affected by the circumstances of the society in which they are in use
ii. High literacy level of the country which is above the regional presence creates more opportunities to the bank in rural areas
iii. Life style changes of Sri Lankans also generate opportunities for People’s bank. ie. More demand for vehicle loans by middle income earners
? Technological factors
In this fast moving world, information technology and internet has a vital role in the banking industry. Improvements in technology change the people’s bank drastically in today context we have gone to digitalization as first mover to the industry as a state bank.
It will help bank to advance the productions and operations and also make them to achieve their goals.
Technological breakthroughs can create the downward/negative effects in the operations and performance.
Overall People’s Bank business should understand the environment that the bank is working and also to take the advantages and benefits to minimize the threats and the challenges in the industry.
? Legal factors
It has been sheltered by the regulations and policies made by governments in the island where they are working. It has been able to remain to the policies agreed by each government to make sure that the bank will be able to accomplish business operation successfully and effectively.
People’s Bank is committed to minimizing and measuring carbon footprint and generating the positive impact through projects that preserve natural eco system.
? Environmental factors
People’s bank as a financer to the nation it should be demotivated non environment friendly projects and give more and more hands to the environmental friendly projects.
Overall People’s Bank is benefited from the macro economic conditions that prevailed throughout last year. The last year did not pass without challenges that predominantly stemmed from un-conducive external conditions and also affected by adverse global trends, overall reduction in global growth and capital outflows.
We can conclude that the recent situation of the external environment is favorable to People’s Bank as well as in the banking industry well in the island and all these favorable factors.
3. Competitor’s environment:-
There are nearly 30 + local and foreign banks available all around the island. But connection to government and position strategy helps us to aquire the minds of customers.
Primary competitors Secondary competitors Possible new competitors
BOC LB Finance PLC
Commercial bank Alliance finance Insurance companies
HNB LOLC John keels
4. Stake holders
Being the people and groups who have an interest in what the organization does, they might have influence the organization and what it’s management decide to do. Different stakeholders have different expectation about what the organization should do to provide value. The interest of different stakeholders may conflict with each other.
4.1 Stakeholders groups
? Since banking industry showing growth government’s pressure also may be increasing
? As the regulator government impose restrictions
? Government charges various taxes and levies that would have impact to profitability
? Bank should try to develop strategies which are aligning with government policies
? Employee unions have power to influence bank’s strategies
? Demotivated and stressful employees should handle carefully to minimize the bad impact to their bank
? If unions make negative pressure on bank’s operation, that would make bad impact to reputation of the company
? Customers may have high interest due to brand name
? Since there are large number of customers and most of the customer’s transactions are not material to the total turnover they do not have power
? But there are some customers who have more power as their transactions became a large portion of the turnover. i.e. CPC
? All SOE customers or other vice government can make high impact to the bank. Hence bank should keep close relationship with government
D. Funding organizations
? Money market operators may have power hence handle them carefully
? They can erode our reputation
? Bank would be a profitable business partner to them since they don’t have to bear additional cost to market their goods
? They do not have ability to influence strategy , although their level of interest is high
? We have a social responsibility to take care about this group
? Create value to community though investment in job security, extending opportunities for inclusive economic growth, enhanced social sustainability and promoting environmental protection
? Implement special CSR projects targeting children, women, self employee youth or unemployed youth
? Environmental pressure groups can have impact to the bank
? Adopt environmental sustainability concept
4.1 Stake holder mapping
We can analyze the interest and power of different stakeholder groups and indicate how management should respond to the concerns of each stakeholder group.
The degree of various stakeholder interactions and their level of expectations are as follows.
5. People’s bank’s current position in banking industry in Sri Lanka
5.1 Competitive advantage of the People’s Bank
Following factors are an advantage that People’s Bank has over its rivals, improving its prospects of selling its products to customers and creating value.
i. Connection to the government
It creates advantages over private banks in Sri Lanka especially for rural sector people believe government bank has more reliability than private bank. There is a believing that government will responsible for deposits of the bank
ii. Good reputation
Since People’s bank is an long standing bank which was incorporated in 1961 and the brand has been positioned in the minds of the people of such areas as their bank
People’s bank has 345??? Branches and ….. service centres ……ATMs across the country and being one of a leader in the industry it can approach the whole island effectively
iv. Know how
Almost all staff is life time employees and they have the required level of caliber to handle the operation in a way different from the competitors by using the experience in banking industry
People’s bank handles their operations across the country where prime locations in the cities and urban areas are mostly secured by the bank
5.2 Strategic group mapping for the banking sector in Sri Lanka
5.3 value creation of People’s Bank
High Medium low
High Product and services, Risk Management, Economic Performance, Market Presence, Employment, customer Privacy Channel Migration, Energy Innovation, Product Portfolio, Supplier Environmental Assessment T
Medium Indirect Economic Impact Bank CSR Activities, Financial Literacy
5.4 Value chain:
a. Inbound logistics
Cash, all stationeries including forms, letter heads, envelops etc, customer database, system manual and computerized are the components of inbound logistics.
It creates the quality of service, efficiency and effectiveness of the process of the bank. As the bank has own printing unit quality can be assured through this.
Obtaining deposits, granting loans , trading, settlement of payments, treasury activities, including branch banking, corporate banking and foreign currency unit.
Automated banking transactions using the digitalization process will enhance the smooth functioning of branch network.
c. Outbound logistics
Branch network, ATMs, web sites, customized products and quality customer service are the features of outbound logistics. Though online banking facilities it is easy to bring the bank to finger print of the customer. Enhancing the efficiency of delivery points and availability of same increased the quality of outbound logistics.
d. Marketing and sales
Advertising, business promotion, direct selling, sponsorship, delighted customer service , branding and knowledge banking are components. As a state bank People’s Bank can use such connection to the government to enhance customer confidence.
Online promotions through social media can be used to minimize the cost to a considerable amount. Introduction of ” high valued customer” conceprt and cater them as separate segment is also popularly used by competitors than us.
a. Firm infrastructure
All managerial functions of overall management of Finance, legal, banking activities, IT, monitoring and control should be performed efficiently. High standard of performance of Such activities creates advantage over competitors.
b. Human Resources
Recruiting, training and development, performance management and retention of employees are to be managed efficiently than competitors. It will create better margins to the bank.
As the technology is the number one in banking industry it has a greater importance in the industry. Digitalization plays a vital role in this behalf. The service can be outsource or in-house as well related IT polices should be available for same.
Supplier management and managing of funding sources are considered as procurement activities in the banking industry.
5.5 Review of ‘People’s bank’ position in the current market
Boston consultant matrix is a suitable tool to understand the position of the ‘People’s Bank’ in the current market.
As at latest audited financial statements and interim reports People’s Bank’s average growth rate for last five years is 18% and growth rate during 2017 is 16% Market share is increasing competition is high as well marketing expenses also high. People’s bank is one of the leaders in the banking industry which will lead to large amount of cash consumption and cash generation. It has resulted to highest profit through growth opportunities available in the industry Hence People’s bank can be classified under star category according to BCG matrix.
The strategy is the hold the markets share if not it will pass to the cash cow category.
5.5 Positioning strategies for People’s Bank
People’s bank has positioned the banking services through make available different product for different needs that based on the needs and wants of the customers.
People’s bank positioning strategies are as follows.
• Availability of products for different needs
• Customer centric
• Service orientation
5.6 Comparative market position of selected banking industry in Sri Lanka
According to the information reviewed from the annual reports of each respective bank.
It shows People’s bank has the better market position in the context of Sri Lankan banking industry.
5.7 Life cycle analysis
According to the information reviewed from the annual report 2017 of People’s bank that indicates currently ‘People’s Bank’ products and services are in the growth stage in the industry.
5.8 developing options for strategic planning in ‘People’s Bank’
‘People’s Bank’ current policies and strategies has been formulated in order to ensure the rapid growth of business activities towards securing greater market share while mitigating the higher risk exposure associated with further expansion. .
5.9 Peoples bank business level strategies
Differentiation Low Cost Competitive Scope
Industry Differentiation Cost Leadership
People’s bank has selected a narrow competitive scope within the industry. The bank follow cost focus strategy to succeed in the industry. From the inception it has low cost structure, due to low cost funding from government
5.10 People’s Bank corporate level strategies
5.11 comparative understanding about the People’s bank
5.11.1 customer segmentation and target market
High 1,2,3,4,5 3 2,3,4,5
Medium 1,2,4,5 4
Low 1,2,3,4,5 1,2,3,5 1
Corporate SME’s Micro Customers Mass Market High net worth individual
Number of transactions 1
Price sensitive 2
Number of banking relationship 3
Level of competition 4
Level of engagement 5
5.11.2. Comparative understanding about the ‘People’s Bank’
PB BOC COMB HNB SAMP SEYLAN
Loans ; Advances-(Gross) 1,121,216 1,245,603 798,083 684,323 611,952 295,509
Total Assets 1,497,177 2,047,821 1,218,076 990,774 846,457 412,747
Deposits 1,263,693 1,624,851 905,634 720,639 643,731 310,904
Borrowings 109,278 194,399 70,814 90,113 104,163 26,334
Growth as a %
PB BOC COMB HNB SAMP SEYLAN
Loans ; Advances-(Gross) 4% 2% 6% 5% 7% 3%
Total Assets 2% 5% 7% 4% 6% 1%
Deposits 2% 5% 7% 3% 3% 1%
Borrowings 4% 8% -12% 0% 29% -3%
PRODUCT MIX 611952.269
PB BOC COMB HNB SAMpath SEYLAN
Term Loans 711,324 852,325 534,338 438,546 323,480 160,625
Pawning 139,539 52,566 1,425 16,112 20,603 10,479
Overdrafts 102,641 178,013 121,978 116,896 109,793 62,779
Trade Finance 146,791 81,454 83,608 48,502 90,748 27,699
Credit Cards 2,402 3,919 10,123 6,968 11,202 4,950
Leases – 49,063 38,367 44,080 21,691 17,114
Staff loans 16,282 16,730 8,245 12,517 6,316 6,110
Others 2,237 11,534 – 703 28,120 5,754
Loans ; Advances-(Gross) 1,121,216 1,245,603 798,083 684,323 611,952 295,509
Impairment (62,912) (59,130) (18,468) (11,515) (9,667) (6,207)
Loans ; Advances-(Net) 1,058,304 1,186,473 779,615 672,808 602,286 289,302
Demand Deposits 60,886 122,706 71,696 42,189 35,234 20,656
Savings Deposits 461,197 449,482 288,173 231,386 190,021 76,498
Fixed Deposits 738,463 1,048,352 545,604 445,110 417,106 213,751
Other Deposits 3,148 4,311 1,955 1,955 1,372 –
Total Deposits 1,263,693 1,624,851 907,428 720,639 643,731 310,904
Growth as a %
PB BOC COMB HNB SAMP SEYLAN
Term Loans 8% 3% 6% 7% 8% 5%
Pawning 2% 2% 6% 4% 5% 4%
Overdrafts -13% -2% 4% 5% 6% 0%
Trade Finance 3% 4% 11% -3% 4% 0%
Credit Cards 9% 2% 5% -1% 1% 1%
Leases 0% 1% 1% 3% 3% 5%
Staff loans 0% 4% 3% 4% 4% 0%
Others 68% -17% 0% -3% 25% -7%
Loans ; Advances-(Gross) 4% 2% 6% 5% 7% 3%
Demand Deposits 0% -10% 17% 8% 1% 3%
Savings Deposits 0% 2% 6% 10% 3% 1%
Fixed Deposits 3% 8% 6% -1% 3% 1%
Other Deposits -19% 6% 0% 4% -14% 0%
Total Deposits 2% 5% 7% 3% 3% 1%
5.12 Future strategic options for People’s Bank
According to the above extensive strategic analysis and the understandings of the ‘People’s Bank’ the bank has better position in the banking industry in Sri Lanka. As I mentioned earlier, the brand name of the bank is the core strength of the bank.
But People’s bank is not using advanced technology like competitors . in the current situation People’s Bank has very busy counters but that busyness do not generate big profits as most of such transactions are unprofitable business.
By using the advanced technology it is possible to do innovative banking services in the market to reduce the unprofitable business.
Therefore I recognize sqeesing the unprofitable business and introduce advanced technology
5.13 Ansoffs growth vendor matrix
Ansoff growth matrix is a planning tool that helps to a business to determine it’s product and growth strategies.
People’s Bank can attract more customers from existing market by targeting non customers of People’s /bank and who either not come to bank at all or who go to our competitors. We have to identify what the competitors do differently to attract customers especially by private banks. Sampath bank use latest technology, commercial bank use different strategies to penetrate market.
Also loyalty of customers can be improved in terms of financial terms and thereby to improve value of services obtained by our bank.
To increase market share bank can apply across selling concept.
i. Re -launch deposit products
ii. Develop data base of customer relationship management
iii. Strengthen government base brand confidence
iv. Scale up SME business
v. Autonomous corporate banking division
vi. when granting a loan
? Offer a credit card
? Ask to open sisu udana account for children
vii. To Improve loyalty of customers introduce personal banking units for high net worth customers
viii. Appoint acompetitive marketing research team to identify changing consumer behavior and adopting new technologies
People’s bank can introduce more varieties of products to the market. As Sri Lankan consumers’ spending on discretionary items has been increased during recent past than essential items there is an opportunity to the bank to grant more and more loans to buy such items. Hence more attractive products can be offered as new products.
i. Launch economic enabler products
ii. Overhaul commercial credit
iii. Aggressive credit line push
There is an untapped market in the north western, northern and eastern province for banking industry. At present cities of that area were covered but still there is a potential to grow in the Jaffna peninsula as well eastern province which has recorded higher GDP growth.
Being one of the leaders of a banking industry people’s Bank has a potential to enter into foreign markets starting from south Asian region having the same pattern of living style, similar to Sri Lankans. People’s Bank can enter into partnering agreement with an existing brand in selected countries to mitigate extent of risk associated. Eg. Operations can be expanded by entering into markets such as Maldives, Thailand, and Vietnam after doing a feasibility report. Dedicated sales channel is a important requirement for this purpose.
As we are not highly successful in the industry without SOE, before diversifying business into related or unrelated diversification we have to be strength in the banking industry further. Hence this strategy is not recommended in this stage.
5.14 Structure for strategic plan of the “People’s Bank” (2019-2023)
Where we are now 2nd highest profit earner in the banking industry in the total profit before tax.
Where do we want to go Becoming the premier provider of financial services by earning highest profit in the industry by 2023
How de we reach there Achieve high level of growth through innovation in the industry
5.15 Proposed targets
product Annual Growth target
Low cost deposits
Foreign currency deposits
Fixed deposits 25%
Fee based income 30%
NPL ratio Below 2.5%
Cost income ratio Below 40%
Profitability growth 25%
5.16 Assessment criteria for the plan
The main concern of this strategy is to identifying new ways of doing things both inside the People’s Bank and with external partners. Therefore that will lead to improved banking services.
Model for cost efficiency through innovation towards achieving the targets of the “People’s Bank”
Professional development and training
Resources and financial support
Strtegic planning governance
Enhance teaching and learning
Quality, reliable and flexible technology
Ease of use
5.16 Resource implications
Skills and competencies required for the above strategy
Financial stability and strength
Committees and competent staff
Strong relationship with government
Quality marketing team with good mentor
Efficient Research and development division
Strong corporate and brand image
Widespread correspondent network
State of art information technology
Cost effective operations
Strong internal Audit division
6. Action plan
Some action plans to achieve cost efficiency via ….
4. Invest In Research and Development
3. Rationalization, Flexibility
2. increasing growth level with efficient ways
1. Identify penetration strategy
6.1 Core organizational values and current business of the “people’s bank”
People’s bank has shared a unique culture based on value systems that have been evolved over the time and for the future.
6.2 Developing a new vision and mission statement for People’s bank of Sri Lanka
vision To be recognized as Sri Lanka’s undisputed market leader for financial services.
• To become a premier provider of financial services in Sri Lanka by 2023
6.3 Values of the bank
Being the Pulse of the Nation
Our bank from humble beginnings has become the pulse of every Sri Lankan by enhancing their living standard whilst supporting State endeavors and socio economic development considering the aspirations of the nation.
Customer Focus & Agility
We provide customized solutions to satisfy our customers always placing them at the centre of decision-making and striving to enhance value in our services. We are responsive and flexible to meet the unique needs of our customers by redefining ourselves to embrace change.
Integrity & Accountability
As a financial institute, Honesty and Righteousness have been our strengths, which have been preserved in our culture from our very establishment, and we pride being who we are. As a responsible and a dependable bank, we are liable to our key stakeholders for our conduct.
Continuous Learning Culture & Team Spirit
We seek to improve our knowledge base by enhancing the extrinsic knowledge, tracing and recording the tacit knowledge to improve our efficiency & effectiveness. We believe in our people for our success and everyone working together for a common goal with team spirit.
Empowerment & Diversity
We empower our people and enable their creativity through innovative products, services & processes. We value our customers’ differences, understanding that diversity makes us even stronger.
7. management objectives
7.1 future changes for the People’s Bank management objectives
Focused area strategies
Prudent growth • go for private sector customer than SOE
• Cost efficiency via innovation
• Convenience customer satisfaction
• venturing into new markets (overseas)
• responsible investment
• efficient R&D
Corporate conscience • Community engagement business ethics
• Customer delighting
• Efficient procurement practices
Winning team • Employee motivation
• Employee relations and union relations
• Employee productivity
• Training & development
Operational excellence • Improvement in productivity
• Channel migration
• Earnings growth
• Environmental impacts
• Improve CSR activities –ex. Scholarship for unprivileged students similar to 1 rupee for each 100,000 interest paid on sisu udana
• Promote corporative movement to fulfill our prime objectives
8. Measures for evaluating strategy plan
8.1 The balance score card
Objectives measures Target tactics
Financial perspective This measures how bank should create value for owners to success in financially , % increase in low cost deposit
% decline in expenses Growth of low cost deposits by 25%
Profitability by 25%
Cs ratio below 40% Strong relationship with schools nurseries , foreign employment agencies
Customer perspective Increase customer satisfaction and market share Repeat visits of customers Zero complains
Customer servie and satisfation
Internal business process perspective Improving the operational performance Operational quality control Reduction in the operational cost and wastage Review of operating efficiency
Learning and growth perspective
As an innovative banking service provider Higher profit margin compare with last years Achieving the value of operating ration through cost saving Investment in R&D
8.2 schedule for implementing strategies
? Establish 24/7 automated banking services at the identified locations
? Encourage accounts opening through electronic platform that targeting specific customer segments
? Establish a comprehensive management information system for enhance the productivity
? Improved the centralized approval process
? Introduce cost effective model for branch network
? Reducing customer turnaround time by centralizing certain identified customer related functions
? Specialized and centralized marketing and recovery team to improve the operational efficiency
? Strengthen activity based cost allocation
? Promote channel migration
? Centralize core business function
? Automate existing business functions
? Achieve greater process efficiency through above activities
? Promote corporative movement to respect our initial objectives
? Enhance CSR activities to develop living standards of unprivileged social class of the country
? Giving hands to reduce the intermediary margin threats to the farmers of the country by introducing farmers collaborations through corporative movment
Overall the above mentioned innovative processes should be done in the period of 2019-2024 towards achieving the higher performance.
8.3 Dissemination process for gaining commitment from stakeholders
Major stakeholders Engagement activities Areas of consern
government Annual reports, press conferences Financial /performance, sustainable growth, risk management, shareholder communication policy
employees All island Manager’s conferences, workshop, training Invest in HR, work life balance, career progression, investment in HR , rewards and performance management,
customers Customer satisfaction survey, relationship management, media advertisement Service quality, customer service, customer privacy and security, financial inclusion, affordability
Society and environment Public events, exhibitions, information centers , delivery channels, press releases Ethical business conduct, community investment, environmental performances
suppliers Supplier relationship management Responsible sourcing
9. Monitoring and evaluation system
Strategy Pursuit of high growth through innovation
Structure Functional department, line and staff distinction ,job specification
Control Hierarchical monitor and control standard formalized operating procedures, short term performance target
incentives Financial incentives for individual performance
Other financial and non financial incentives, promotion opportunities
The monitoring and evaluation system also includes the efficiency, effectiveness, relevance, impact and sustainability of the strategy.
Efficiency Did methods use to pursuit high growth through innovation lead to similar numbers of participants as previous or other strategies
Relevance Does the topic and contents meet the information needs of the target group
Effectiveness To what extent the growth via innovation effective?
outcome To what extent has the strategy led to more sustainable behavior? Were there any other unintended positive or negative outcomes from this strategy
sustainability To what extent has the project led to the long term behavior
Inputs Financial, human, technical expertise equipment and material resources used for innovation idea /product/service in the industry
Activities Actions taken training and development ,workshops conducted for employees, waste management
outputs Products and services that results from innovation, number of people trained and no. of worshops conducted for innovation , increased positive operational cost ratio
outcomes Achieve short-term and medium term effects or changes of the strategy increased skills implementation , employment opportunities
impacts The long term consequences of the cost leadership may be positive and negative effects. Ex. Competitive advantage
10. Conclusion and recommendation
According to my strategic analysis the ‘People’s Bank’ is high profitable and stable in the banking industry. They have threat from its competitors and also they have good brand image and trust that is giving more benefits to them in the industry.
Overall, it is also in the excellent market position in the banking industry in the island. The main negative feature of People’s bank is over dependence of SOE. It is to require quick actions to broaden the non SOE contribution to the portfolio of the bank.
Assistant General Manager
Internal Audit Department