Case Study 1 -Ivanedit

Case Study 1- CIBC By: Silvia Ghonata (15114679) 1. What are the major challenges facing the Canadian banking industry in general and CIBC in particular? In general, changing preferences of customers is the major challenge faced by Canadian Banking Industry. In the 90's customers preferred the convenience of banking activities. These types of costumers are most likely transaction oriented. They demand banks to provide basic transaction quickly, cheaply, and accurately. Service is not something
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  Case Study 1- CIBC By: Silvia Ghonata (15114679) 1. What are the major challenges facing the Canadian banking industry in general and CIBC in particular?  In general, changing preferences of customers is the major challenge faced byCanadian Banking Industry. In the 90's customers preferred the convenience ofbanking activities. These types of costumers are most likely transaction oriented.They demand banks to provide basic transaction quickly, cheaply, and accurately.Service is not something they expect from bankers. However, now there is a change in customers’ trends. Nowadays, customers are more demanding towards additionallevels of personalized service rather than just convenience. They asking forconsultancy service and expect to build relationships with their bankers.However, for CIBC itself, changing costumers’ trend is also a trait that should be noticed. Realizing that the transaction-oriented customers are no longer theirpotential target market, CIBC has to change its strategies to attract personalized- service” costumers in buying its product. Nevertheless, competition is also one of thechallenges faced by CIBC. Personalized service customers are the typical ofcostumer who are very profitable for the company. Therefore, lots of other banks arealso targeting their products to this type of customers. Therefore, CIBC must truly beable to distinguish themselves from other competitors so that they will reach a largermarket share. 2. What obstacles does CIBC need to  overcome to fully develop “relationshipbanking”?    Relationship banking is a strategy used by banks to offer some additional level ofpersonalized service instead of just selling their product. They encourage bankers tomove away from a product-focused marketing strategy and to concentrate instead onproviding an integrated, tailored package of banking services designed to meet theneeds of individual clients and households. To become a “relationship bank”, CIBC must change its position strategy. Previously ,CIBC had been very focus on products which were sold based on price and productattributes. All the promotions done by CIBC was trying to emphasis on the features oftheir products. But now, CIBC needs to change its position from product-based tocustomer-based. CIBC must make sure that its potential customers who valuedpersonalized service are aware that now CIBC offers relationship banking. Changing  the perception of customer is not an easy thing but also it is not an impossible thing.One of the ways is by using advertising that reflect more on personal relationship. The second obstacle that must be considered is the bankers’ ability. Previously, bankers is trained to have a deep knowledge of their products but they are nottrained how to build relationships with customers. When CIBC want to developrelationship banking, it needs to train the bankers to have not only good productknowledge but also to have strong people-oriented focus.The third obstacle is the CIBC banking system. CIBC requires access to a completelyintegrated, comprehensive customer database that consolidates all of customers’ interactions with the bank into a single client portfolio. With the new system added, itwill ease CIBC personal banking. 3. What would you recommend that CIBC do with Bankware II? Why?  Bankware II is one of Bankware software system extension which was developed byCIBC in facilitating personal service to its customers. Bankware II is not onlyconcentrated on service and products offered primarily by the Consumer Creditgroup but also show much wider range products and services available from CIBC.Moreover, it allows customers to print personalized mortgage amortization tables andto compare cash back offers with discounted loan interest rate offers. Having suchgood features do not make Bankware II highly demanded by costumers. This isbecause these several factors:    Many of bank’s customers were unaware that the product existed  .The branch managers often kept copies of Bankware II and only distribute thediskette to customer upon request.To solve this problem, CIBC needs to encourage the branch manager todistribute the diskettes to customers. CIBC’s branch manager must also hel pthe costumers understand how this Bankware II will help them in makinginvestment. By doing so, customers are aware and this will also profit CIBC.     Although Bankware II actually helps CIBC address customers’ need and allowing customer to make well informed decisions about their finance, (kaloudah ada although di depan, ga prlu pake but lagi...) there is a hesitance whether Bankware II fits with bank’s current strategy. It seems like the diskette is completely product focused and completely different with themission of CIBC which is relationship-focused.It is probably because the convenience offered by Bankware II made contactbetween banker and customer thus reduced. Customers only rely onBankware system to get all the information. Consequently there is no  relationship that is built up between banker and customer. One solution thatcan be done is CIBC train its bankers to establish contact with the customer.Bankers still can do further consultation and provide information that may notbe available in Bankware to customers Thus although Bankware emphasiseon convenience but good relations with customers is also maintained.  The third issue was the discrepancy between the systems with Bankware IIprogram. DOS system is not able to support this program that requires OS/2system. CIBC will have to upgrade its systems from DOS to OS/2.Technology is one thing that is very crucial in running a business. To be ableto compete efficiently, CIBC must always be aware of technologydevelopment and adapting it. But this is also after taking into considerationthe cost to pay and the benefits to be received by the adaptation. 4. What steps would you recommend that CIBC’s Consumer Credit Division take in preparing its promotional plan for the next year?  To determine next year promotional plan, CIBC should consider whether it wants touse Bankware III or it can use other promotional tools. In my opinion, it is better forCIBC to use Bankware III As its promotional tool in the coming year. One of reasonsis Consistency of the marketing promotion. By maintaining the same promotionaltools, it's easier for CIBC to approach to the customer because they are alreadyfamiliar with Bankware. Moreover, to create a new promotional tool that will be verycostly (eg. R&D cost).However, there are some things that need to be done by CIBC to develop BankwareIII.  CIBC must do research to understand what are the needs of potential targetmarket. They have to really understand who its target markets are and whattheir needs are, in order to develop promotional tool s’ attributes which arereally beneficial for customers and themselves.  CIBC shall provide a relationship banker to maintain their relationship with thecustomer. CIBC should not let the target market feel that Bankware IIIcontradicts CIBC's mission which is relationship-focused.  CIBC must make sure that the delivery of these promotional tools are evenlydistributed and can reach all potential target markets.
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