Customer Satisfaction on Premium Banking of BRAC Bank

Customer Satisfaction on Premium Banking Services of BRAC Bank Limited

Internship Report

Customer satisfaction on Premium Banking of BRAC Bank

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BRAC Bank Limited is a scheduled commercial bank in Bangladesh. It established in Bangladesh under the Banking Companies Act, 1991 and incorporated as private limited company on 20 May 1999 under the Companies Act, 1994. BRAC Bank will be a unique organization in Bangladesh. The primary objective of the Bank is to provide all kinds of banking business. At the very beginning the Bank faced some legal obligation because the High Court of Bangladesh suspended activity of the Bank and it could fail to start its operations till 03 June 2001. Eventually, the judgment of the High Court was set aside and dismissed by the Appellate Division of the Supreme Court on 04 June 2001 and the Bank has started its operations from July 04, 2001.

Bank goal is to provide mass financing to enable mass production and mass consumption, and thereby contribute to the development of Bangladesh. BRAC Bank intends to set standard as the market leader in Bangladesh by providing efficient, friendly and modern fully automated online service on a profitable basis aiming at offering commercial banking service to the customers’ door around the country, BRAC Bank limited established 36 branches up-to this year.

This organization achieved customers’ confidence immediately after its establishment. Within this short time the bank has been successful in positioning itself as progressive and dynamic financial institution in the country. It is now widely acclaimed by the business community, from small entrepreneur to big merchant and conglomerates, including top rated corporate and foreign investors, for modern and innovative ideas and financial solution. Thus within this short time it has created a unique image for itself and innovated significant solutions to contribute in the banking sector of the country.

BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shore cap International, has been the fastest growing Bank in 2004 and 2005. The Bank operates under a "Double Bottom Line" agenda where profit and social responsibility go hand in hand as it strives towards a poverty-free, enlightened Bangladesh.

A fully operational Commercial Bank, BRAC Bank focuses on pursuing unexplored market niches in the Small and Medium Enterprise Business, which hitherto has remained largely untapped within the country. In the last six years of operation, the Bank has disbursed over BDT 11,158.15 million in loans to nearly 60,000 small and medium entrepreneurs. The management of the Bank believes that this sector of the economy can contribute the most to the rapid generation of employment in Bangladesh. Since inception in July 2001, the Bank's footprint has grown to 36 branches, 413 SME unit offices and 48 ATM sites across the country, and the customer base has expanded to 2,58,601 deposits around 2007. In the years ahead BRAC Bank expects to introduce many more services and products as well as add a wider network of SME unit offices, Retail Branches and ATMBRAC Bank, for the first time among local commercial banks, starts providing loan facilities to small and medium trading, manufacturing and service oriented enterprises all over the country.

2. Statement of the Problem

BRAC bank is serving its customers for more than five years. At present there are numbers of national and international banks coming up with new services. Hence, the competition has increased to a great extent. The services provided by the banks needs to be satisfactory to its users. The study has tried to explore the potential opportunities and threats regarding the Premium Banking Service provided by BRAC Bank. Hopefully, the results of this perception survey will assist the company (BRAC Bank) in identifying the strengths and weaknesses of its service and also to identify potential opportunities and threats. It is also hoped that the results from this study will help management in taking decisions regarding its service features. The Premium Banking Service has been chosen because they are the potential and the prospective clients for the banks. If they are aware and satisfied about it now, they can be the part of this exclusive service for a long time. Finally this study will provide a better understanding of the premium client in general so that the product can be positioned more effectively

3. Purpose of the Study

The study is mainly a descriptive study. The main purposes of this study are as follows:

Identifying the consumers’ satisfaction level about the service of Premium Banking of BRAC Bank LTD.

Finding out the weaknesses of their service.

Making the solutions that can remove those weaknesses.

4. Methodology

The data generated is primary in nature. Data has been collected through survey questionnaires containing both structured and unstructured questions. One set of questionnaires has been prepared. It was given to clients who are main service holder of Premium Banking Service in order to identify their satisfaction level.

4.1 Sampling Method

Convenientsampling method was adopted whereby most of the respondents available at Motijheeil Branch.

4.2 Research Design

A descriptive research under conclusive research was used to conduct this research because according to N.K. Malhotra (2003) a descriptive research is a type of conclusive research and it can e conducted to determine the perception of product or service characteristics.

4.3 Target Respondents

For the sake of simplicity and the reason of easy availability the study concentrated on existing Premium Banking clients only.

4.4 Sample Size

The selection of the sample was random and size is 25. One set of questionnaire has been used to conduct an investigative research. Data analysis was mainly done through graphical presentation, frequency and percentage. Finally the implications of the analyzed data have been discussed in the result section.

4.5 Data Collection Procedure

The gathered data was collected from the customers when they came for service at the Motijheeil branch of BRAC Bank and the questionnaire was provided to those customers who were interested in participating in the survey.

4.6 Data Analysis Procedure

After completing the survey the data was analyzed by Microsoft Excel. Then the findings were made. Based on the findings the present situation was explained and recommendation was made.

5. Limitations of the study

BRAC Bank authority did not want to disclose all the information needed.

Load at the work place was also a barrier to prepare this report.

Although the officers of the BRAC Bank Ltd. have been very helpful, they didn’t have enough time to provide, as they are very busy with their assigned works. So, in some cases, observation was needed.

The sample size was small.

The survey was based on Premium Banking customers of Motijheel Branch only.

Finally, the length of this internship program is not sufficient conduct a detailed study on the subject of research

6. Organizational overview

6.1 Background

BRAC Bank Limited, with institutional shareholdings by BRAC, International Finance Corporation (IFC) and Shorecap International, has been the fastest growing Bank in 2004 and 2005. The Bank operates under a "double bottom line" agenda where profit and social responsibility go hand in hand as it strives towards a povertyfree, enlightened Bangladesh.

BBL started off in July 2001, and has now grown to 26 branches, 368 SME unit offices and 54 ATM sites across the country, and the customer base has expanded to 200,000 deposit and 45,000 advance accounts through 2006. In the years ahead BRAC Bank expects to introduce many more services and products as well as add a wider network of SME unit offices, Retail Branches, POS and ATMs across the country.

6.2 BBL Achievements till date

BRAC Bank Limited, the fastest growing bank in Bangladesh has recently received ICMAB National Best Corporate Award 2007 for the criteria of its Capital Adequacy, Asset Quality, Profitability, Liquidity, Corporate Governance, Market Share, Contribution to National Economy, Risk Management, Regulatory Compliance, Disclosure, CSR in the category of “Financial Institutions”.

One of the four sustainable SME banks in the world.

Leader in SME financing through 368 offices.

Biggest suit of personal banking & SME products.

Large ATMs (Automated Teller Machine) & POS (Point of Sales) network.

6.3 Corporate Vision

Building a profitable and socially responsible financial institution focused on Markets and Business with growth potential, thereby assisting BRAC and stakeholders build a just, enlightened, healthy, democratic and poverty free Bangladesh.

6.4 Corporate Mission

Sustained growth in 'Small & Medium Enterprise' sector.

Continuous low cost deposit growth with controlled growth in Retained Assets.

Corporate Assets to be funded through self-liability mobilization.

Growth in Assets through Syndications and Investment in faster growing sectors.

Continuous endeavor to increase fee-based income Keep our Debt Charges at 2% to maintain a steady profitable growth.

Achieve efficient synergies between the bank's Branches, SME Unit Offices and BRAC field offices for delivery of Remittance and Bank's other products and services.

Manage various lines of business in a fully controlled environment with no compromise on service quality.

Keep a diverse, far flung team fully motivated and driven towards materializing the bank's vision into reality

6.5 Corporate Values

Our Strength emanates from our owner - BRAC. This means, we will hold the following values and will be guided by them as we do our jobs.

Value the fact that we are member of the BRAC family.

Creating an honest, open and enabling environment.

Have a strong customer focus and build relationships based on integrity, superior service and mutual benefit.

Strive for profit & sound growth.

Work as a team to serve the best interest of our owners.

Relentless in pursuit of business innovation and improvement.

Value and respect people and make decisions based on merit.

Base recognition and reward on performance.

Responsible, trustworthy and law-abiding in all that we do.

6.6 Objectives

The objective of BRAC Bank Limited is specific and targeted to its vision and to position itself in the mindset of the people as a bank with difference. The objective of BRAC Bank Limited is as follows:

►

Building a strong customer focus and relationship based on integrity, superior service.

►To finance the industry, trade and commerce in both the conventional way and by offering customer friendly credit service.

►To encourage the new entrepreneurs for investment and thus to develop the country’s industry sector and contribute to the economic development.

►To work as a team to serve the best interest of our owners

►To develop the standard of living of the limited income group by providing Consumer Credit.

►To base recognition and reward on performance

►To responsible, trustworthy and law-abiding in all that we do

►To mobilize the savings and channeling it out as loan or advance as the company approve.

►To establish, maintain, carry on, transact and undertake all kinds of investment and financial business including underwriting, managing and distributing the issue of stocks, debentures, and other securities.

7. STRUCTURE

7.1 Capital Structure

BRAC Bank has started with an initial capital of amount BDT 250 million, while the authorized capital is BDT 1,000 million. Over time the bank has increased it capital base because of its steady growth and within three years of operations, it has doubled its capital base to BDT 500 million. The Bank has planned to go public by the last quarter of this year (2006) and raise it’s paid up capital to BDT 1000 million. BRAC Bank originated with Local and International Institutional shareholding including BRAC as promoter with IFC and ShoreCap International, UK. Here is the break-up of BRAC Bank’s shareholdings positions.

7.2 BRAC

BRAC, a national, private organization, started as an almost entirely donor funded, small-scale relief and rehabilitation project initiated by Fazle Hasan Abed to help the country overcome the devastation and trauma of the Liberation War and focused on resettling refugees returning from India. Today, BRAC has emerged as an independent, virtually self-financed paradigm in sustainable human development. It is one of the largest Southern development organizations employing 97,192 people, with 61% women, and working with the twin objectives of poverty alleviation and empowerment of the poor.

7.3 International Finance Corporation

The International Finance Corporation (IFC) is the private sector arm and the commercial wing of the World Bank Group. IFC promotes sustainable private sector development in developing countries. Using certain channels and overseas representatives, IFC helps local financial institutions find profitable ways to target small and medium sized companies. Funding comes from the Asian Development Bank, Canada, the European Commission, the Netherlands, Norway, the United Kingdom and IFC itself. IFC is a 19% shareholder in BRAC Bank. A new assistance program signed in August 2005 aims to double the bank’s number of small and medium enterprise clients in 18 months through campaigns to target women entrepreneurs and rural clients, introduce new products and train branch managers.

7.4 ShoreCap International

ShoreCap International Ltd. (SIL) is an international private non-profit, equity company seeking to invest in small business banks and regulated micro finance institutions in countries with developing and transitional economies. ShoreBank Corporation, America’s first and leading community development and environmental Banking Corporation launched SIL. ShoreBank's international work began in 1983 advising Muhammad Yunus and for 10 years doing the financial feasibility work for the major institutional donors to the Grameen Bank in Bangladesh.

Founded in mid 2003, ShoreCap has a current base of $28.3 million in capital commitments and seeks to support the growth of development finance institutions in Africa, Asia and Eastern Europe. The institution has made investments totaling $7 million in Bangladesh, India, Cambodia, Armenia, Mongolia and Kenya. ShoreBank is a 9% investor of ShoreCap and runs the management company, which oversees investment activities.

ShoreCap typically invests between $500,000 and $2 million for an ownership position of 10-25% of a company. As a minority shareholder, ShoreCap seeks financial institutions with a strong, experienced management team and a committed set of local development-minded investors. ShoreCap currently owns 18% of BRAC Bank Limited.

Customer Satisfaction on Premium Banking Services of BRAC Bank Limited

Organizational Structure

Customer Satisfaction on Premium Banking Services of BRAC Bank Limited

8. Organizational Structure

BRAC Bank Limited has two sets of reporting lines, one that reports directly to the MD and another that reports to the DMD. MD is the representative of the Board of Directors as well as responsible for all the business decisions taken by the bank. The Support Manager assists him. Under him work the Heads of the Business and some of the Support Units. They are: Head of SME Banking, Head of Retail Banking, Head of Corporate Banking, Head of Probashi Banking, Head of Treasury & Financial Institutions, Head of Marketing & Corporate Affairs, Head of Enterprise Risk Management, Head of Human Resources, Head of Financial Administration,

Company Secretary & Head of Regulatory & Internal Control, Head of Impaired Assets Management, Manager-Complaint Handling Cell & Credit Inspector. There is another part of the Organogram, which deals with the reporting line of Deputy Managing Director & COO. This line constitutes of the Heads of the Support Units. The Units are: Head of Retail Banking Operation, Head of Corporate Banking Operations, Head of SME Banking Operations, Head of Probashi Banking Operations, Senior Manager-Card Operations, Head of Business Solutions, Head of Technology, Head of General Infrastructure Services, Head of Central Operations, Senior Manager-Call Centre, Senior Manager, Project Admin, Service Quality, Operations Risk Mgt. & Operations MIS.

8.1 Functional Units

BRAC Bank has a centralized banking structure through online banking system that resembles the ABN.AMRO Model. Overall, BRAC Bank is divided into three major units – business unit, operations unit and support unit. All the functional divisions are discussed below. Besides these divisions, there is another support division for infrastructural support of BBL – Channel Infrastructure Development and one more operations divisions - General Infrastructure Services. Among the functional units only five are business units and the rest work as support units. They are:

Small and Medium Enterprise
Retail Banking
Corporate Banking
Probashi Banking
Cards

8.2 Small and Medium Enterprise

The biggest operational division of BRAC bank is the SME (Small & Medium Enterprise) Division. SME is directly related to business of the bank. BRAC Bank extends loans to potential small and medium trading, manufacturing and service enterprises. This loan is able to provide quick and quality banking services to targeted business at any places of the country. Potential women entrepreneurs will also get the facilities of SME loan; this initiation is to play a role in the socioeconomic development of the country by expansion of business as well as creation of employment. BRAC Bank was titled to be the fastest growing bank in 2004 & 2005, and it had a profit of 14 crore taka. The profitability of the bank came mostly from the SME sector. SME division is enriched with more than 700 staffs and it has 367 unit offices all over the country.