Bank of Queensland is one of Australia’s Fastest growing retail banks which offers financial services that include reatail and business banking wealth management and general insurance

Case 1: PepTech

           

Case 2: BANK OF QUEENSLAND

A)        Bank of Queensland is one of Australia’s fastest growing retail banks which offers financial services that include retail and business banking, wealth management and general insurance. In the preceding years, the company had converged into several growth strategies. These include installing audible ATMs on branch-based network and owner-managed branches. Owner-Managed Branches (OMB) is a franchise approach on the provision of face-to-face banking services. The strategy came into realization in 2001 when then-appointed Managing Director embarked on a plan to increase the market presence. The plan includes expansion from 90 to 250 branches in five years. Liddy considers improving service levels while slashing down expenses. The strategy turns bank managers into small business operators. The parent company provided investment and loan products, sales and marketing support and technological support as well.

B)        The main purposes of BoQ is to double the digit of EPS growth, out-perform lending/deposit system growth and to improve cost/income ratio. In order to gain a maximum value from competitive advantage, the company introduced the OMB. The intention of the bank is to grow on reach and range through opening branches and launching new products, respectively. The bank focuses on three specific core strategies including data management, communications and infrastructure. BoQ engaged in enhancing several delivery channels, core systems, core banking support, sales and marketing, enterprise management and business support top achieved their desired outcomes. The bank also commodities and simplify. They followed a four-year roadmap and select and retained core capabilities in-house. Finally, the bank positioned itself in the middle of the value chain between suppliers and the business.

            What is plausible regarding the strategy is the reality of taking it step-by-step. The bank is not in a hurry to expand and their OMB strategy is well-planned. They focus on single networking and centralized storage and server base computing and standardized hardware and software applications and standardized communications. In addition, the company took advantage of their technological architecture toward its goal. However, there are no clear monitoring and evaluation programs on the OMB project in general. The roles of the stakeholders are unidentified as well. In addition, there are no established marketing and promotions strategies for OMB.            

C)        Following the strategy, BoQ exposed itself into different risks including:

·        adoption of different training and education especially on technological applications; costly and time-consuming;

·        OMB brand/trademark may be a threat on subsequent strategic alliances initiatives;

·        scales of required competencies;

·        competition and contestability in the banking industry;

·        inherent risks on ‘Points of Presence’;

·        community support, commitment and determination;

·        required leadership and business skills (Senate Report, 2004);

·        movement of interstate expansion; and

·        scales of BoQ’s infrastructure during the expansion. 

D)        Basically, BoQ maintains control over their expenses, brand, credit policy and procedures. The bank is also embracing virtual advancement. Their IT strategy is to accelerate the rate at which their business can exploit opportunities. Their branch and product rollout plan embed on their organizational capability to penetrate different markets, to introduce new product functionality, to easily comply with regulations and to fasten business banking centre rollout. The cross-functional resources like finance and human resource are honed through reduce cycle time and faster decision-making. BoQ’s formula on their success follows Business Model + Technology Architecture = Business Performance. Their main ability is placed on having an agile, scalable architecture which enables OMB to be accelerated.      

E)        BoQ encountered various issues on the subtleties of agency arrangements on the distribution of financial products and services with respect to Financial Services Reform (FSR) regime. FSR regulates four major issues about financial services that include financial products, licensing, disclosure and financial markets (AAR, 2004). FSR identified eight aspects that BoQ need to deal with. These are: 1) OMB operators must not be regarded as ‘reporting entities’; 2) designated services that are provided on behalf of another person; 3) appointing OMB operators as external agents; 4) application of continuous relationship test in business purchase setting. In the context of BoQ’s distribution model, it is critical that OM operators are not classified as a reporting entity. According to the Exposure Draft, a reporting entity is a person who provides a designated service. Then if OMB operators are reporting entities, each OMB operator must develop, maintain and comply with own AML/CTF program, report suspicious matters threshold transactions and international fund transfer instructions to AUSTRAC and comply with record-keeping requirements.

            A number of designated services are services that are provided on behalf of a person. However, BoQ does not distinguish between a service provided on behalf of a customer and a service provided on behalf of another reporting entity. The definition may be applied in circumstances where the person on whose behalf the service is provided is not a customer. Since there is an absence of clear premise of designated service in BoQ which is being provided on behalf of a reporting entity, then there is a possible conflict.

            BoQ needs to appoint the OMB operator as an external agent to facilitate carrying-out of customer or agent-identified procedures on BoQ’s behalf and there must be a written agreement. The reason is that OMB operators are not reporting entities and are not accredited under the AML/CTF rulings. The Exposure Draft also states that a reporting entity must not provide a designated service to a customer unless the reporting entity had previously undertaken applicable customer identification procedures.       

F)        The movement and the competition, whether domestic or international, within the retail banking industry are, according to Liddy, well within their control. These change customer needs and desires and include economic and social challenges.  Others are in government and regulations which have relative impact on the business. For BoQ, the regulations had caused them to review and restructure their compliance mechanisms and meet the high standards it has set for the banking sector. The imposed standards caused the bank to tighten margins and provide versatility on the value of customers’ money; hence a more personalized service and products (Liddy, 2006).

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