Bank Alfalah Limited project, business plan

BANK AL-FALAH LIMITED

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SUBMITTED TO

Madam Faiza Rehman

SUBMITTED BY

Rehan Aqeel MBA-FA08-119 Sara Shahid MBA-FA08-133 Tahira Shaheen MBA-FA08-149

COMSATS Institute Of Information Technology Lahore

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Table of Contents

Company History………………………………………………1 Industry Analysis………………………………………………3 Company Analysis……………………………………………..4 SWOT Analysis………………………………………………..10 Competitive Analysis………………………………………….12 BCG Matrix……………………………………………………13 Problem Identification…………………………………………14 Solution to Problem……………………………………………14 Conclusion……………………………………………………..15 Recommendations……………………………………………...15 Bibliography…………………………………………………....16 References……………………………………………………...17 Annexure……………………………………………………….18 Evidence………………………………………………………..23












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Bank Al-Falah Limited Company Background and Introduction

Bank Alfalah Limited was incorporated in June 21st, 1997 as a public limited company under under the the Comp Compan anie iess Ordi Ordina nanc ncee 1984. 1984. Its Its banki banking ng oper operat atio ions ns comm commen enced ced from from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance 1962. The Bank is currently operating thro throug ugh h 45 bran branche chess in 21 citi cities es,, with with the the regi regist ster ered ed offi office ce at B.A. B.A.Bu Buil ildi ding ng,, I.I. I.I. Chundrigar, Karachi. Since, its inception as the new identity of H.C.E.B after the privatization in 1997, the management of the bank has implemented strategies and policies to carve a distinct position for the bank in the market place. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates their commitment to a culture of innovation and seeks out synerg synergies ies with with client clientss and servic servicee provid providers ers to ensure ensure uninte uninterru rrupte pted d servic services es to its its customers. The bank percei perceived ved the requir requireme ements nts of custom customers ers and matches matches them them with with quality quality products and service solutions. During the past five years, bank has emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow as well as today. To continually upgrade the quality of service to the customers, training of team members in all the integral aspects of banking, customer service and IT was specially focused. The portfolio concentrates on all aspects of conventional banking as well as the financial needs of corporate sector. Dynamic and high value product includes Car Financing, Home Home Financ Financing ing,, Rupee Rupee Travel Traveller lerss Cheques Cheques,, Credit Creditss Cards, Cards, Debit Debit Cards, Cards, On line line Banking, ATM and consumer Durables. In addition to this, Islamic Banking Division is a












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Management (See Table 1.1 in Annexure) Goals & Objectives

Goals and objectives are factors through which the company’s devotion and commitment to the the job job can be seen seen.. If the the goal goalss are are real realis isti ticc and achi achiev evab able le,, than than sure surely ly that that organization is doing it’s job. Bank Alfalah also has certain goals and objectives which it is trying to achieve, through it’s various strategies and operations. The goals and objectives are mentioned below: 1.

To crea creatte a sound ound base base,, and and throu through gh eff efficien cientt sys system tems achi achiev evee mode modern rn banking through out Pakistan.

2.

By the the end end of of ever every y acco accoun unti ting ng yea yearr ther theree is an inc incre reas asee in dep depos osit its. s. As As the deposit rate of during 2002 was approx 52 Million and the same has been increased in 2003 by 77 Million.

3.

To cre creat atee unit unit bank bankin ing g netw networ ork k in all all the the bran branch ches es of of Bank Bank Alf Alfal alah ah,, the the end of the year. This means that all the operations of the bank, i.e. deposits to advances, imports, exports, L/C Opening, foreign currency and many more aspects under one roof, so that the customer can be facilitat facilitatee in one visit.

4.

Isl Islami amic Bank Bankiing is is one one of the the goa goalls of Ban Bank k Alf Alfalah alah tho thoug ugh h it has has bee been n initiated in the last fiscal year and it is very acceptable for general public. However, there is lot of work to do for successful implementation of the Islamic Banking Plan. In this regard the Bank is opening specific Islamic Banking Branch under the supervision of its Islamic Banking Division.

Organizational Structure












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Industry Analysis If we see the banking Industry in Pakistan, the overall industry is at the maturity stage. The whole world is passing through the economic crisis, which has affected the banking industry, the most. Many famous banks around the world got bankrupted. That’s why the overall industry is at the maturity stage.

Company Lifecycle: (See figure 3.1 in Annexure) Bank al-Falah is in Growth stage of the company life cycle. The reason behind this is that it was launched in Pakistan in 1997 and from that date onward it is progressing and achieving its aims and because of that it is in growth stage.

The overall banking industry in Pakistan is at maturity stage, because of the recent economic crisis and the current economic conditions of Pakistan.

External Environmental Analysis: Analysis: The extern external al environ environmen mentt of Bank Bank Al-Fal Al-Falah ah includ includes es their their extern external al custom customers ers and compet competito itors rs etc. etc. The countr country y forces forces affect affecting ing the enviro environme nment nt e.g. e.g. Politi Political cal forces forces,, Economic forces, Socio-cultural forces, and Technological forces are the part of the external environment.

Political Factors Political factors in any countries affect the organizations and institutions greatly. If there is a stable political environment, the organizations flourish successfully but if there is instability in political environment, then there is a bad effect on all institutions and organizations. If we look Bank Al-Falah with the aspect of political environment, there are some rules made by the government to follow. A regulatory approval is necessary












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Economic Factors As we know the economic conditions of the country at the current is not so good, and there was a huge economic crisis recently which affected many banks. Bank Al-Falah should consider short term and long term issues concerning economy of the country. It is obvious that with the current situation, Bank Al- Falah like many other banks are being affected by the challenges like inflation, unemployment and economic crisis.

Socio- Cultural Factors Every country has its own social values and cultures. Bank Al-Falah is doing good by keeping in mind the cultural values of Pakistan. As we can see from its advertisements that it reflects the true cultural and social values. And by doing this, Bank-Al Falah is attracting a great deal of customers. Because it is natural that when some organization takes care of customer’s social and cultural values, then the customers are naturally attracted towards that particular organization.

Technological Factor The technology plays a very important role in today’s successful organization. Bank AlFalah is doing good in introducing technologies as and when required by the Bank. Further it trains the employees to use those technologies.

Company Analysis Internal Environmental Analysis

Internal environment is that environment which has an effect on the functions of the bank. Internal environment of Bank of Alflah consiss of:

1.

Deposits














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1.Deposits

Depositors are the main source of profit generation for the bank. Alflah offers depositors number of incentive by virtue of which they too care make same money. Alflah relies on depositors & workers to increase their volume every year. This is evident from the fact that the growth rate increased 48.40% during 2002-03, as this growth rate is satisfactory it is a must that this environment of deposit g rowth should not decline.

2.Advances

Advances are basically what Alflah give to people asking for money. If there shall be more people depositing money. There will be more asking for advances as well. Banks tend to make profit by giving advances at a rate higher than what they owe to the depositors. The difference is the banks profit. If the environment is healthy then more & more people will be asking for advances for business and other options. It is also evident from the fact that during the year 2002-03 2 002-03 the advances growth rate is 71.12%.

3.Competitors












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Competitive Advantage Bank Al-Falah has some competitive advantage over its competitors, like •

Superior services: Bank Al-Falah provides superior and quality services to its customers by taking care of their needs. Bank al- Falah works hard to maintain its customer loyalty. Bank al- Falah targets every type of customer in the society.

•

Turn around time of 48 hours: This means that the when the customer complains for any problem, to the bank, The Bank Al-Falah tries to fix tries at problem within 48 hours. This is another competitive advantage for Bank al-Falah.

•

No annual fee for the credit cards: Bank Al- Falah don’t charge any annual fee for the credit cards . Where as other banks charge this fee.

•

Number one portfolio in Pakistan: This means that Bank Al- Falah offers a wide variety of products and services as compared to other banks.

•

280 branches Nationwide, with 8 to 9 branches worldwide: Bank Al- Falah is currently operating in 8 to 9 countries.

Products and Services Comprehensive and diversified product portfolio












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 Credit Cards  ATMs  Home Financing  Islamic Banking  Corporate and Structured Financing

Car Financing

Car Financing is one of the major renowned product of Bank Alfalah and can be utilized in terms of Financing of Used Vehicles, Loan against Car, Balance Transfer Facility, Refinancing Facility (only for Alfalah Customers) and it is characterized in terms of:  Lowest Mark up  Lower Insurance  Quick Processing  Lower Down Payment












 Equity Participation

:

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30% Borrower / 70% Bank

Rupee Travelers Cheques

Rupee Travelers Cheques are as good as cash and are accepted at the major shops, travel agents, hotels business establishments and all over the country and abroad. This service is being offered to facilitate instant fund availability to travelers and business people who used to carry a large sum of money with them. Credits Cards

Bank Alfalah Visa Card is everywhere and globally acce pted and welcomed at locations displaying the VISA logo. It is accepted at nearly 30 million merchants and 870,000 ATMs in more than 150 countries around the globe and over 10,000 establishments in Pakistan. Alfalah VISA pays for shopping, travel, entertainment, meals and much more.

Debit Cards

Bank Alfalah Limited presents Alfalah HilalCard, the first Visa Electron International Debit Card which gives an unlimited access to current / savings account with a simple swipe, at millions of retail shops and ATMs, worldwide. The Alfalah Hilal Card comes with a host of conveniences and benefits combined with the wide reach of Visa Network












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Automated Teller Machine (ATM)

The bank offers 24 hours self service banking facilities to it customers on country wide basis through deployment of Automated Teller Machine. This system allows the banking facili faciliti ties es such such as cash cash withdr withdrawl awls, s, cash cash deposit deposits, s, funds funds transf transfer, er, balance balance inquir inquiries ies,, account statements. Electronic cash dispensing facilities are available available in major cities of Pakistan. All ATMs are linked through a state-of-the-art Satellite Based Communication System which offers 24 hours real time service. Islamic Banking

A separate division is a recently initiated, which operates as separate branch. It offers Shariah Compliant products through a network of five branches, which will increase to 50 by the the year year 2007. 2007. Isla Islami micc Bank Bankin ing g has has launc launche hed d foll follow owin ing g prod product uctss with with the the perception that these are in accordance with the Sharia Principles.

a.

Alfalah Masharaka Homes

b.

Murabaha Finance

c.

Aflalah Car Ijarah

Corporate and Structured Financing














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SWOT Analysis Strengths

Since, inception of Bank Alfalah, it has moved rapidly in expanding branch network and deposit base, along with making profitable advances and increasing the range of products and servic services es bank bank have made a breakbreak-thr through ough in provid providing ing premier premier servic services es at an affordable cost to our customers. Bank Alfalah has been awarded an AA- (double A minus) and an A1+ (A one plus) in the long and short term respectively by the PACRA. These rating denote very high credit quality and very low expectation of credit risk. The The main main sour source ce of a fina financ ncia iall inst instit itut utio ion n is publ public ic savi saving ngss in this this rega regard rd publi publicc confidence plays a vital role. So, the confidence of customers are the main strength of Bank Alfalah.












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Opportunities

The life cycle of an organization is comprised of threats as well as opportunities. If we say, today the rates of challenges are too high but simultaneously the rate of opportunities is also high. It is mandatory to try to make progress with consistency as well as to adapt changes with the needs of time, in order to cope up with both conditions. In the prevailing scenario, Bank Alfalah could penetrate further and could capture various corporate customers in addition to the retail customers by expa nding their network. In addition to the excellent routine banking, it has earned a good name by offering special products products like car financing, financing, home financing financing and credit credit card. So, the penetration penetration of these products could enhance the market share. In the rapidly growing industry of Pakistan, launching of another SBU, Alwarid Mobile will be an excellent addition towards the credibility as well as enhancement of Bank Alfalah’s market share.












a.

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In Car Financing MCB & UBL are threats however, the expected car financing of ABN Amro could also be a threat for Bank Alfalah.

b.

Financing Unio In Home Financing Union n Bank Bank or to some exte extent nt NBP NBP are are

threats. c.

In credit cards, Bank Alfalah captured the market share of Citi Bank and Standard Chartered Bank. Till yet the bank has no prominent threat. But, the launch of Askari Bank Master Card and Union Bank Card might be threat after some time.

Competitive Analysis Porter 5 Forces Model

(See figure 3.2 in Annexure) The sole purpose of competitive analysis is to determine the organization’s or company’s












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Customers are influenced by the brand name Bank al-Falah “The Caring Bank” The bank sets its own prices, not influenced by the customer, due to the low bargaining power, Bank Al- Falah gets high profit and has positive effect on the company. Bargaining power of supplier

Bargaining power of supplier for bank Al-Falah is low. The suppliers for any particular bank are their customers, investors and stake holders. Bank Al-Falah has many customers and stake holders. Because its parent company is Abu Dhabi Company. Threat of substitute

The threat in which customers move from your organization to another organization bearing switching cost is called threat of substitute. The threat of substitute for Bank AlFalah is high and it creates negative effect on the company because the switching cost for the customers is very low. Because it doesn’t cost much to open an account in another branch. And now a days an individual person has many bank accounts. Due to which there is a great threat of substitute for Bank Al- Falah.












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Problem Identification Identification Customer Problems It seems that the priority is given to the corporate customers in Bank Al Falah as the

individuals from middle class have to remind the management of certain branch to do the needful for them. Employees Problems 1

Insufficient Employees To compet competee in the banking banking indust industry ry Bank Bank Al Falah should should have enough

employees to facilitate the customers. 2

Working Hours

Bank Al Falah although providing the customer service in better way but there is a lot of work to do in a routine banking to the employees due to which they














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Management should give relaxation to the employees by hiring new professionals and reduce the working hours.

Conclusion The bank Alfalah is leading bank in Pakistan and it is playing a vital role in the economy of the Pakistan. There are different departments like trade finance and corporate finance. The bank Alfalah it self is a nice bank but some problem are still here which I have discussed in my SWOT analysis. The management of the bank must should over come such type of deficiencies. And the expansion of the bank with a pace indicates that it will












Bibliography

http://www.linkedin.com/companies/bank-alfalah-limited

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=BAFL

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References

Mr. Mohammad Mudassar Aqil General Manager Human Resources & Quality Assurance Bank Al-Falah Limited

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SME Financing & Home Loans Executive Incharge New Products & Service Quality Division

Executive Incharge Cards Division

Hierarchy 2.1 President (CEO)

Senior Executive Vice President














Figure 3.1

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Evidence

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Bank Alfalah Limited project, business plan

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