Commonwealth Bank Essay Example

in the total market and life insurance sector (About us, 2008). The State Bank was established during the 19th century by Andrew Fisher of the Labor Government. He took on the responsibility of creating a state bank for the newly founded nation. Initially known as Commonwealth Bank, it later changed its name to State Bank of Victoria (1990), before merging with Colony in 2000 to safeguard interests of the Bank of NSW. They offer an extensive array of financial services encompassing retail banking, business banking, institutional banking, funds management, superannuation services as well as investment and brokerage services (Commonwealth bank, 2008).

Commonwealth Bank, as the largest financial services network in Australia, boasts the highest number of customer access points across the country. The bank employs over 51,000 individuals, most of whom are women. To cater to their employees’ needs, they offer various flexible work arrangements like career breaks, caregiver's leave, educational leave and parental leave. Commonwealth Bank's comprehensive distribution structure features over 1,100 branches and exceeds 3,700 post agencies domestically along with more than 4,200 ATMs spread throughout the nation. Beyond this extensive network exists a support system for more than 249,000 terminals nationwide under Commonwealth Bank’s management as well as over ten call centers dealing with an annual total of more than 120 million calls.

The provision of personal banking services, enhanced by over 3700 transactions and services via Australia Post agency banking, is a major offering. They also cater to business customers providing services in more than 570 agencies across the country. With their card, customers have access to over 25 million locations globally. They boast a wide customer base with

more than 4.3 million users and witness more than 67 million active NetBank sign-ins on a monthly basis (About us, 2008). However, Commonwealth Bank face challenges and competition notably from Westpac, ANZ and NAP, who they continually strive to outperform.

Westpac underwent a significant product and service restructuring in 2007, which broadened its offerings to include online banking and more ATM facilities. This shift led to client retention problems for Commonwealth Bank. To counter this, Commonwealth Bank overhauled its product portfolio and service infrastructure in 2008. They refined their operational processes, expanded their service offerings, developed tactics to improve customer service and adopted advanced technology. A key technological advancement was the introduction of Netbank - an online portal that allows clients to effortlessly manage their accounts, including functions like fund transfers and bill payments among other features.

In 2001, the Commonwealth Bank encountered functional difficulties due to ill-advised strategies by its board, resulting in a profit decline between that year and 2002. Nevertheless, they successfully bounced back through effective strategy revision. Presently, they are acknowledged as trailblazers in Australia's retail banking sector with an exemplary dedication to exceptional customer service. Their noteworthy reputation is attributed to their efforts towards community programs such as backing sports events, participating in environmental preservation activities and making substantial donations for charitable purposes.

The financial status of the organization at the close of June 2012 revealed a lawful post-tax net gain of $7,090 million, an increase of 11% from the previous period. This represented a monetary escalation by 4%, reaching $7,113 million. An entirely franked final dividend, amounting to $1.97 per share was also disbursed, signifying a

growth rate of 5% compared to the preceding year. The cash-based allocation ratio for such dividends corresponded to about 75%. The Group's valued assets stood at $718,229 million (InvestSMART, 2012). These findings indicate that there has been a rising trend in profits for Commonwealth Bank when compared to last fiscal year, suggesting effective strategies and efficient management within the company.

The principal goal of Commonwealth Strategies is to establish itself as the leading financial entity in Australia, esteemed for its exceptional customer service. The strategic analysis indicates that the primary mission of Commonwealth Bank is to deliver superior shareholder returns via capital appreciation and heightened revenue production by effectively nurturing a positive work environment among its employees. Their strategy's foundation lies in exploiting their distinct competitive advantage that others struggle to duplicate. Experts within the sector highlight three key advantages of this tactic: state-of-the-art technology capabilities, emphasis on financial services and client relations, and a strong internal culture supported by a solid balance sheet.

The CBA is initiating a comprehensive customer loyalty program to increase its attractiveness to banking clients and boost shareholder returns. The program's objective is to enhance client satisfaction, minimize expenses, and uphold lower bad debt levels compared to their rivals. The reduction in bad debt losses provides the CBA with more flexibility in competitively pricing its services for acquiring and retaining customers without affecting profits. The group continues to be dedicated towards fortifying its competitive advantage. Leading the way in technological innovation, the CBA has invested $1.1bn in an industry-leading initiative aimed at modernizing core banking systems that are being implemented across all banks. This project facilitates same-day real-time

settlement for all depositors and borrowers.

The project was finalized proficiently and CBA set itself apart as one of the large banks to extend these traits to their entire customer base, providing them with an advantage that could take years for competitors to reproduce. The project was initiated by CBA in 2008. The bank's acquisition strategy strictly involves acquiring entities only when it leads to greater shareholder value, compared to what the shareholders could generate independently (InvestSMART, 2012). Commonwealth Bank made strategic alterations from the previous organizational structure (2001-2002) and established a vertically integrated system that caters for service delivery and development to the customers.

Four distinct business divisions are concentrated on specific customer groups: * Retail Banking Services, designed to cater to the financial requirements of individual clients and small businesses demanding affordable and easily accessible banking – this is under the stewardship of John Mulcahy. * Premium Financial Services, focusing on consolidating the bank's wealth management services, specializing in customizing products for clientele with intricate financial demands – headed by Michael Katz. * Lastly, the Investment Services and Insurance division amalgamates the primary pension fund, insurance, and fund management entities.

The included entities will be Colonial First State Asset Management and Insurance, Commonwealth Insurance of the Commonwealth, and colonial assistance for third-party brokers, agents, and financial advisors under the ongoing brand (Peter Polson). * Institutional and business facilities are available to accommodate the requirements of cooperative and institute organization (Michael Ullmer). The Present Organizational Structure (2012) has five fresh business divisions as compared to the former one: Retail Banking Services (Matt Comyn)

Retail banking services aim to

offer convenient, cost-effective and proficient banking solutions for personal clients and small businesses. The accomplishment of this objective majorly relies on productive marketing techniques and the usage of digital technology. Likewise, under the stewardship of Ian Narev, Business and Private Banking oversees dealings with small-to-medium enterprises (SMEs) while furnishing an array of services. It also caters to online trading needs and offers both consultative services as well as investment opportunities to individual clients in addition to institutional ones. This is made possible through custom programs by Commonwealth specifically crafted for premium customers.

Ian Saines' Institutional Banking and Markets offer institutional clients of the Group a range of equity, debt, and banking services, including payment systems. By taking a Total Capital Solutions approach, this group caters to its clients’ needs through industry specializations and expert skills that cover the breadth of the capital spectrum. Under the leadership of Annabel Spring, Wealth Management combines the funds management manufacture and distribution strength of the Commonwealth Bank with its domestic insurance and financial advice business support sectors.

The divisions consist of well-known companies such as Colonial First State Global Asset Management, Colonial First State and Commissure. Overseas monetary services, under the headship of Simon Blair, are provided by the Commonwealth bank to International Financial Services Asia (IFS Asia), numerous retail businesses throughout Asia as well as the Small and Medium-sized Enterprises (SME) Bank operating in Indonesia, China, Vietnam and India. These services comprise of investment banking and retail services in China and Vietnam, along with life insurance and insurance operations in Indonesia led from the Chinese capital. However, they do not encompass business banking, personal banking and

institutional banking or market dealings, or the business of Colonial First State Global Asset Management in Asia.

The Commonwealth Bank, recognized for its centralized structure, concentrates its decision-making procedures at the highest management level, avoiding the delegation to middle or lower tiers. This strategy is common in retail businesses because it simplifies control and administration. The top executives solely make decisions related to product offerings, services, and operations. Moreover, the bank employs formalization as a method to boost rationality.

Moreover, formalisation aims to regulate employee behavior, making it more consistent and manageable through standardization. Standard methods for production and quality control checklist are predetermined and will be dispatched before sending a prototype of the product. Formalisation can clarify the link between visible factors and the organisation itself. It can objectively differentiate status levels among organization members beyond personal perceptions. The Commonwealth Bank utilises a formalisation structure, mandating all its employers and employees to adhere to the organisation's rules and policies.

Having a solid framework provides the benefit of facilitating a uniform and orderly changeover procedure, resulting in smooth personnel changes causing least disturbance to the company's functions. Such standardization is influenced by both corporate customs and technology, which is often seen as an inert component of operations. Enterprises that consistently employ advanced technology usually outperform their counterparts with less tech-savviness. Similarly, Commonwealth Bank's Financial Services Support Division equips its clients with expert advice on financial management and strategic business planning.

The guidance given encompasses areas such as finance, investment relations, safety, common procurement, auditing, treasury, and real estate. The Risk Management team is entrusted with the duty of devising suitable strategies

and risk structures that enable the business to make deliberate decisions regarding market, operational, compliance and insurance hazards within various departments. In order to attain the perfect balance between risk and return and obtain an excellent result for the company, this is carried out by identifying, studying, evaluating and documenting risks as well as appraising the effects of amendments in laws, regulations and industry codes. Enterprise Services

The Commonwealth Bank Technology Banking unit, a services organization, furnishes cutting-edge technology and service operations across the board. This unit is not only a springboard for inventive products but also supplies the critical tools required for our business functions, thereby boosting the application of technology during various processes. Its role is instrumental in delivering services that are prompt, efficient, and effective, which is a crucial aspect of customer value. One of the many pioneering projects under the purview of the services organization is the introduction of customer-focused banking platforms, signalling significant modernization in the banking system.

The Human Resources division provides extensive support to all business departments via Employee compensation, healthcare benefits, hiring, employee relationship management, security provisions, project development, and leadership training. On a similar note, Group Corporate Affairs handles the consistent and harmonized management of both internal and external affairs along with the Group's legal matters, communication needs, sustainability concerns and governance requirements. Its functions also cover organizational communication, sustainable development initiatives, community service implementation, legal affairs handling and acting as the corporate secretary for government and industry matters.

The Commonwealth Bank is advised to continue enhancing and safeguarding its customer service approach, a key element that has established them as frontrunners in

Australia's retail banking sector. Periodic market research should be conducted on both their customers and rivals. Simultaneously, they need to cultivate strong bonds with internal clients by providing financial and non-financial benefits like bonuses, vacations, recognitions for exceptional work, fostering a positive work environment etc. These incentives can encourage employees to meet or surpass their objectives thus upholding high performance standards. It’s critical to consistently evaluate operational tactics through audits in order to identify any problems or improvement areas over time. Concentrating on public relations and marketing will contribute towards constructing a positive image for the corporation. However, caution must be exercised regarding centralization due to potential disadvantages such as potentially demotivating experienced personnel or restricting their participation in essential decision-making procedures.

The depiction relates to a manager knowledgeable in the customer's workspace requirements. In some areas, managers might not have enough decision-making power, which could dampen their zest and morale. Thus, at the administrative level, measures need to be implemented to tackle this issue for efficient business functioning. Given that many sectors share similar structures, clients may find this uniformity favorable as it enables them to predict future events.

Maintaining consistency in all departmental policies within a company is crucial for enhancing control and standardizing procedures, thereby streamlining decision-making processes without requiring consultation with every department or subsidiary. The Commonwealth Bank of Australia (CBA), the largest retail bank in the country and one of the 'Big Four' banks, offers a wide range of financial services that include retail banking and finance organizations, pension funds, insurance, investment, and brokerage services. In 2001, CBA underwent structural modifications aimed at elevating service quality and customer

satisfaction while innovatively creating products and delivering services to meet unique customer group needs.

The structure of retail banking, premium financial services, investment products, insurance and business capabilities has been enhanced through the integration of four new divisions. In 2008, the management team at Commonwealth Bank decided to restructure their product portfolio to better cater to customer needs and improve their operational efficiency. This was accomplished by refining their operational procedures, broadening their service offerings, implementing a more effective approach towards customer service, and adopting advanced technology such as Netbank. Netbank offers users the convenience of handling their accounts online with features like fund transfers and bill payments.

The Commonwealth Bank greatly benefits from a robust centralized leadership system, which serves as a sturdy pillar during challenging moments. This bank does not entrust decision-making to middle or lower managerial positions. Typically, retailers adopt a centralized structure for the ease in governing and controlling their entities. All decisions regarding the variety of goods, services, and store operations are made at the topmost level of the organizational chain. Centralization ensures effective resource utilization, reduced overhead expenses, and strict control over finances.

The company utilized a well-ordered system to guarantee compliance with corporate policies and procedures. The centralization approach, although flexible, may sometimes result in inappropriate choices at the local level, potentially causing delays in decision-making. Implementing a one-size-fits-all solution is challenging. As the organization expands, sustaining centralization gradually becomes more complicated.

The creation of a universally applicable policy becomes challenging due to varying situations. Larger organizations tend to operate on a decentralized model. Commonwealth Bank holds a strong standing currently, as it leads

the retail banking sector in Australia by offering the highest level of customer service. They have further established a reputable image by contributing financially to public causes, sponsoring sports events, and participating in programs that aim to conserve the environment.