Commerce Bank case

Commerce Bank Case Analysis GROUP 7 – Tarini DM15163 Mudita Bhandari DM15130 Vishvender Singh DM15167 Shubham Sanghal DM15155

Situational Analysis The following differentiators provided a competitive advantage to Commerce Bank 

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Tangibles- Coffee and newspaper in waiting lobbies, helpline phones at ATMS, Standardized ambience in the banks, Uniformity in terms of infrastructure, Lollipops and biscuits at drive thru windows. Reliability- Quick Updating of ATM transactions in online statements. A ‘Check View’ feature on Commerce’s website Empathy – Multiple roles played by one individual. For example the Branch manager advices customers on loan applications and helps them manage deposits. Assurance – Commerce bank assured its customers by providing 24 7 customer service and also opened the branches at busy location at midnight. Weekend banking facilities were provided to allow customers to bank on Saturdays & Sundays. Responsiveness - Commerce decided to use live agents over the phone instead of Voice Response Unit (VRU) to talk to customers.

Commerce bank was ready to reduce the listening gap by rightly understanding the customers need and competing on convenience, service and other such intangible service differentiators. Another differentiator between the Commerce bank and its competitors was the Employee to Branch Ratio. As per Exhibit 1b and 3b we can interpret the following:  

The Employee to Branch ratio at Commerce Bank was approximately 28 employees per branch. On the other hand the employee to branch ratio in the industry was 26 employees per branch. This shows that Commerce bank clearly understood the customers as revenue generators and not cost centers.

Customer Oriented services Commerce Bank worked in a different manner when compared to the industry.    

Its branches were closely located to the competitors. The design of the branches was inviting, open windows and ample parking space. First time customers were given a free gift for opening an account. Loan applicants were encouraged to open deposit accounts first.

These factors enabled Commerce bank to grow in the industry without considering mergers and acquisitions. Commerce bank also introduced the program known as “Wow” aimed at evaluating the impact of the framework implemented for teaching folks service.

Problem 

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The current problem being faced by the bank is to whether continue with the retailtainment concept or not. Jacovelli was not sure of the fact that whether the customers wanted entertainment while they banked. Commerce bank should also focus on its core products such as providing loans to the customers. Currently Commerce bank has been limiting itself too much on the deposits when compared to the industry standards. It should focus more on the sustainability in the long run by considering the expenses involved in standardizing all the branches. The increment in the salaries and benefits provided to the employees exceeded the increase in revenue in 2001. While a 36% increment was witnessed in case of the former, the latter increased by 19%.

Solution 

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Commerce bank should continue with the retailtainment concept as banking is not all about accepting deposits and providing loans but also providing an experience to the customer. Commerce bank has been successful till now compared to its competitors because it has managed to focus on the customer needs. 62 % of the customer wanted banks to provide services and convenience. So commerce bank should continue with its services such as long working hours, assistance in loan applications, friendly staff, and midnight banking hours in busy locations. Commerce bank should curtail on some of the entertainment aspects which do not add any value to the customers in terms of banking experience. Instead they should allocate these resources in the core banking area and should deploy the deposit money in providing loan to the customers and increasing its customer base. Currently a lot of wastage of resources is being done by Commerce bank in providing some unnecessary services to the customers. Commerce bank aims at standardizing all its branches in terms of not only experience but also the infrastructure. This seems less sustainable in the long run as it would add to the expenses of the immensely. The Commerce bank should focus more on standardizing the experience. It would add value without creating a cost burden on the bank. Commerce bank should continue with its core competencies but in a manner which balances efficiency along with meeting the customer expectations. The customers standing in a busy queue would rather prefer a helping hand behind the counters rather than over dosage of entertainment without any saving in time.