Commerce Bank Commerce bank has built its operation on the Premise that core Banking services can

be enhanced by introducing the element of retail experience which they termed as Retailtainment . They believed that when customers can pay $6 for a cup of coffee at Starbucks just because of the retail experience, so the customers should be willing to accept lower interest on the deposits if they are provided with the experience which the customer valued. One of the important advantage of Retailtainment is customer is more willing to spend more time in the Banks premises and is not too much concerned about the waiting time .

Schedule Nature of Service Seven days a week, open 10 min Branch Visit beyond midnight in some locations. Banking Service Level of Service WOWing customer Customer Role Customer needs to visit Bank branch and perform basic set of banking activities

And the differential can be ploughed back into operation to create experience for the customers for the Bank; they have envisaged multitude of the benefits emerging from this kind of customer experience, since it leads to greater amount of customer involvement which helps in generating WOW effect. This also meant that such experience will lead to: a) Increased Footfall. b) Retention of the customers which gets translated into higher lifetime value of the customer c) Strengthen the belief of the customer about the Brand Commerce bank that it is committed towards building customer relationship. All the above mentioned factors will lead to increased satisfaction among the customers because of WOW effect. While the competitors were in the process of shifting customer to low cost channels , commerce bank though provided option for alternate channels but did not forced customers to use them ,they thought like retailers the more the customers visited bank more revenue can be generated per customers.

81 1.37 Rate of growth of Interest 1.00 96831.00 216111.00 219976.00 116711.26 income Rate of growth of Non2.00 406232.00 2000 428448.00 83240.00 28.00 192142.00 2000 522941.00 105012.00 Net interest income/Non Interest income 2.00 302965.18 income Rate of growth of NonInterest income 1.00 222297.59 2.00 141855.00 73978.00 Net interest income/Non Interest income 1.33 1.00 424574.00 28.00 150.00 153370.00 1998 296765.00 237151.00 71491.00 215157.55 Commercial bank Industry Year Interest income Interest Expense Net Interest Income Non-Interest Income Non-Interest Expense Net income 2001 402853.05 Rate of growth of Interest 2.33 1.00 61752.00 185. For commerce bank non-interest income has increase much faster compared to interest income from the period of 1998 to 2001.00 194133.00 175149.48 .00 73837.00 69446.Banking industries income can be classified into two major parts interest income which is nothing but amount earned because difference in the spread of deposit and lending rates.00 28.00 218754.00 204213.00 1998 362016.00 120.00 197894.00 324470.19 3407.00 171420.00 155527.00 187696.00 88.00 224488.39 2424.00 157049.00 27.27 1.00 52232.00 251125.95 2.00 203960.00 144373.44 4228.00 1999 392980.68 Interest income Employee Branches Employee/Branch 5329.00 123642.00 180054.00 70945. Commerce bank Year Interest income Interest Expense Net Interest Income Non-Interest Income Non-Interest Expense Net income 2001 624986. and Non-interest income earned through banking transactions.00 182751.00 1999 367291.00 179265.

y From the case facts it appears that because of increased growth now even those segments are customer of Commerce bank for which Retailtainment does not carry the value similar to the one which this premise was built.26 in 1998 to 25. This is also an indicator that cost of operation for each branch of commerce bank is higher compared to that of industry and decrease in ratio for banking industry could attribute use of alternate channels for banking.Employee Branches Employee/Branch 1701721.00 26.92 in 2001. and increasing user base further though free hand to the branch managers in designing Retailtainment for their branches should be curtailed. At the same time is also observed while average no of employees per branch has decreased from 26.00 26. Opportunity for cross-selling and up selling that was possible because of high customer involvement will be lost. strengthening the premise of Retailtainment . which would mean cost of operation across branches will increase since the occupancy rate of the customers will decrease.00 25. which means cost of new customer acquisition will increase. since customer perception is changing and decrease in the customer satisfaction will have direct impact on Commerce Banks operations .55 to 28. One of the important concerns of the banking industry is customer churn rate because of the dissatisfaction with service levels expected and this may hit Commerce bank as well. but it should not be done away with. . These figures clearly demonstrate people do value the services of Commerce bank and are willing to pay additional price. All the more Commerce banks cost of operation per branch is higher compared to other competitors.92 1670861.also some of the aspects of Retailtainment has disrupted the core banking operations failure in quite a few incidences.27 .08 1657602.03 1626978. for them service efficiency is more important compared to Employees greeting customers and doing nothing.however now bank needs to decide if it could continue with same existing model . y y Referrals will go down.00 65654.00 63684.00 26. it has increased for commerce bank from 27. that Commercial banks Non-interest income has grown at 2. at this time strategy should be to build User patronage through shaping perceptions of value.26 By comparing the two Financial matrices one for the industry and other for the commercial bank it could be observed for the period 1998 to 2001 .68 time which is much faster rate compared to the industries non interest income growth at 1. quality. which means cost of serving per customer vis-avis revenue generated will go up.81 for the same period.00 61957. Till this stage commerce bank has done good enough to maintain the customer expectatio n through Retailtainment .00 64079. Over all operations seem to have stagnated.

Commerce bank should also focus on personalization of the banking services and try to bring in more prospects for its Loan products which are non -customers of commerce bank on selective basis . this will increase interest income of commerce bank.It is natural for the Commerce bank to have more revenue in the form of Non-interest income because of the way its operations is designed . and this time conversion can be from loan customers to banking customers. . this will also help in reducing the cost of operations of Commerce bank . but at the same bank should try to streamline/standardize some of the activities in Retailtainment which are valued least by customers . so commerce bank should try to introduce more such services for which customers are willing to pay at the expense of retail experience they would have when they visit the bank.

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