Saturday, 25 May 2013

Strategic Marketing in Seylan Bank in SriLanka




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Introduction

Seylan Bank is a Public Limited Liability company, which was established in Colombo, 1987 as ‘Seylan Trust Bank Ltd’ and subsequent on 6th July 1990, changed its name to ‘Seylan Bank Limited’.  Its vision is to be the most caring and trusted bank. Its mission was to build a strong bank serving the needs of all its customers within and outside Sri Lanka. Seylan bank took over the management of two local branches of British based bank of Credit & Commerce International (BCCI), which went into liquidation. The bank has introduced mobile banking as a strategy into remote villages in order to develop the saving habit among the masses. Having the dynamic and innovative team, the Bank increased its reach to be available at the customers’ door steps. Throughout the SWIFT network, the bank enhances its international product & service portfolio. It thereby reaches to the large numbers of expatriates working in the Middle East. The bank has identified and developed a learning & growth culture with the motive of value addition to its staff and consumers, thereby creating shareholder wealth. E-leaning is being introduced to the staff which enables more people to access training modules and more techno savvy which giving the Seylan team a knowledgeable workforce in the long run.


1.      Key Performance Indicators & It’s effect on Bank’s performance

Seylan Bank presented itself customer friendly, flexible and up to the commitments given to the customers and caught the attention as ‘The Bank with the Heart’. Seylan Bank has differentiated itself in the Sri Lankan market place with the range of various innovative services, such as:
§  Extended week-day working hours as well as Saturday service
§  1% bonus interest providing on minimum average balances for saving account.
§  Special high-interest saving account with contracted monthly deposits
§  5% thank-you bonuses on interest reinvested in fixed deposits
§  Personal Assistance Loans for customers with limited credit opportunities
§  Cash card access to NRIs (often used by Sri Lankan residents to transfer funds to their dependants)
The Bank has maintained its reputation as an industry innovator, leading the market with a mobile palmtop banking solution, launched the country’s first corporate website in all 3 official languages: Sinhala, Tamil & English. The bank has also found the ways to strengthen customer relationships. Such as, bank has introduced the ‘Reward plus Program’ featuring the lucky draw price for some fortunate depositors was replaced by a more sophisticated loyalty program called ‘Merit Rewards’, which recognized customers’ academic & professional excellence, sporty achievements or bravery achievements.
Seylan Bank enjoyed an immediate success after that in terms of asset management as well as profitability. Other key measures also showed the dramatic growth in terms of steadily increase in the workforce; rapidly increase in the number of branches worldwide. Seylan Bank became the fifth largest bank in Sri Lanka and ranked 3rd among the privately held financial institutions.

2.      Problem Statement and its impact on Bank’s performance

The incredible growth achieved by Seylan Bank is the classic case of overtrading. Its aggressive expansion in terms of business volumes as well as physical infrastructure had made a tremendous pressure on the limited amount of capital available. It’s gearing ratio i.e. degree of leverage to finance operation i.e. total assets divided by the total shareholders’ funds have shot up the highest in the industry. This pointed to be the serious problem ahead. This problem laid the Bank’s financial performance creates a long gap between business needs and available resources. Its capital adequacy ratio also goes down as growth in capital failed to keep the pace with the growth in the volume of the business.
The Central Bank of Sri Lanka moved to impose restrictions on Seylan Bank’s expansion plans. This includes restrictions on the number of branches, planned expansion of student service centres and even its ATM network.
The other problems were related with the management that they are not aligned with current professional standards for industry. The customers’ perception was that the Bank was not being performed and run properly.
Over the next few years, there were long queues of branch staff outside the Seylan Bank locations across Sri Lanka. Branch staff faced some severe problems related with upset customers and securing additional funds from head office to meet the extra ordinary demand for withdrawals. The management faced shrinking number of funding lines from other banks. Capital Intelligence, the international credit rating agency announced the overall weak financials of Seylan Bank which is below the sovereign rating. 

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