RESOLVING THE ISSUE OF LONG QUEUES IN CENTENARY BANK USING E-COMMERCE. Edgar Ahimbe - VUU-PGDBA Virtual University of Uganda

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1 RESOLVING THE ISSUE OF LONG QUEUES IN CENTENARY BANK USING E-COMMERCE Edgar Ahimbe - VUU-PGDBA Virtual University of Uganda

2 EXECUTIVE SUMMARY Centenary Bank is a leading microfinance commercial bank in Uganda. Due to its growing clientele; that was at 1,307,757 customers as at 31 st December 2014, it is facing a persistent challenge of long queues in most of its branches. The fact that the bank intends in increase its outreach beyond the current 62 branches with 154 automatic teller machines and a mobile van, there is a clear likelihood that this will potentially increase the number of customers and the problem of queues will remain persistent if not handled in time. The electronic queue management system is an ingenious way long queues in Centenary Bank can be tremendously reduced while offering customers a pleasant banking experience in an orderly and professional manner. Kenya Commercial Bank with headquarters in Nairobi has a similar business structure and clientele like Centenary Bank and has used this method to resolve the issue of crowded banking halls and long queues. Once fully installed, the electronic queue management system will quickly organize the flow of customers in the bank. Expenses especially in advertising will be reduced since screens in the banking halls display bank product promotions. Lonsto, Ctronix and Qmatic are some of the many manufacturers, suppliers and installers of queue management systems that the bank can consult and choose from an effective system.

3 CURRENT STATE OF AFFAIRS There have been initiatives that the bank has taken to conduct business with it customers over an electronic network, focused on reducing queues in the bank. The bank runs a 24 hour mobile banking service called Centemobile that allows customers to access their accounts using mobile phones. Customers are able to make fund transfers, purchase airtime, pay utility bills, view mini statements and account balances. The bank enlisted on the Interswitch ATM platform joining other financial institutions like Crane Bank, DFCU, PostBank, Cairo Bank, Finance Trust, GTB, Imperial Bank, Orient Bank, SmartPoint and UBA; creating over 290 outlets for ATM card users to draw money from. PC Banking service; were customers are able to view their account details from their personal computers. Merchant POS service; were Point of Sale terminals are placed in convenient places like supermarkets, hospitals, petrol stations and other retail outlets to allow ATM card holders to access goods and services. The other e-commerce services the bank offers are Electronic Fund Transfer (EFT), Real Time Gross Settlement (RTGS), East African Payment systems (EAPS), SMS transactions alerts, ATMs, MTN & Airtel mobile money transfers, Ezee money services, telegraphic money transfers, bulk salary processing and primary dealership services. The bank also handles e-payments for services like USA VISA fees collection, water bills payment, Tax payments, NSSF contributions collections, electricity bills payment and Western Union. These products are assigned specific tills in all branches and this at times creates long queues on these tills

4 KEY CHALLENGE Centenary Bank faces the key challenge of losing its market share if the issue of long queues in its banking halls countrywide is not resolved. The bank has to also address the issues below that impact on the management of queues. Staff movements lead to the bank recruiting new and inexperienced staff who affect efficient service delivery. Regulatory reforms have made some of the business processes lengthy and time consuming. Microfinance institutions are not regulated by the central bank and this gives them the advantage over banks especially in offering quick loans. Technological advancements in the banking industry. Sticking with an old system doesn t allow business expansion in the required dimension. Growing competition especially from mobile money companies has affected growth of retail banking. Bank of Uganda revealed that in 2013, mobile money transfers had reached 1.6 trillion shillings with over 12 million subscribers.

5 INDUSTRY ANALYSIS Banking is a growing industry in Uganda with Bank of Uganda reporting 25 banks operating in Uganda as at August 2014 yet at the close of December 2006, only 15 commercial banks were registered. It is noted in the Bank of Uganda Supervision report, 2013; that commercial banks were affected by major challenges like rise in bad loans and a reduction of demand for new loans. Other factors that affect the performance of commercial banks include inflation, depreciation of the Uganda shilling and stringent monetary policies. It is due to this dynamic environment that Centenary bank needs a mechanism of predicting future business environment changes and PESTEL analysis is a valuable tool. PESTEL is an anagram reflecting the names of six segments of the general environment; that is Political, Economic, Social, Technological, Environmental, and Legal. This tool will enable the bank maintain its market share through improved marketing, business development assessment and decision making; as it seeks to solve the key challenge it faces.

6 PESTEL ANALYSIS CENTENARY BANK q Political It became a full-fledged commercial bank in 1993 in a political regime that has not changed leadership since. Market privileges that have allowed expansion of the industry, freedom of trade combined with low crime, non-existence of civil unrest, wars and political instability; have allowed the bank to grow. q Economic Centenary Bank recorded good financial performance for the year ended 31 st December 2014 growing by 27.3% in profits after tax having closed with Shs73.8 billion. The total assets at Shs1,636.9 billion, grew by 12.8% while depositors grew by 5.5%. These positive signs is growth of market size and market growth which will attract employees and suppliers. q Social- Cultural The bank is spread across the country through its branches and in so doing has been able to reach most Ugandans of all regions while offering affordable products and services. The working hours of the bank are favorable to all customers. In the year 2014, the bank trained 390 youth in financial literacy as well as small and medium enterprises; contributed Shs167 million in raising cancer awareness, supported church activities and other community initiatives. A total of 303 activities were carried out by the bank reaching out to over 15 million people.

7 PESTEL ANALYSIS CENTENARY BANK (Continued.) q Technological Centenary Bank has plans underway to acquire a new core banking application that will better support the existing channels of service delivery. The fact that the training costs of the new project accounted for 43% of the training budget in 2014, is a clear sign of the bank s commitment to embrace technology as means to grow business. q Environmental and ethical issues The bank upholds exemplary ethical standards that include among many customer confidentiality and zero tolerance to fraud. The bank has a staff code of conduct policy that guides the staff as they perform their duties. Staff social security and pension contributions are submitted in time; and have medical insurance cover. q Legal The banking industry operates under a regulated environment. The bank has to be mindful of the financial institution guidelines, mortgage act, financial institutions act, and other acts and regulations as recommended by Bank of Uganda. Some of the acts and regulations have slowed down the processing speed especially in credit but have protected the customer and the banks.

8 FINANCIAL PERFORMANCE 2014 Annual Financial Figures Bank Number of customers Profits after tax (Billions) Assets (Trillions) Customer deposits (Trillion) Number of Employees Number of Branches Number of ATMs Stanbic 547, Centenary 1,307, Crane Not established * 40* 100* *Figures of end of year 2013 Comparison has been made with two banks that have many branches spread around the country and are likely to face a similar challenge of queues in its banking halls. As seen in the table above, the number of customers with Centenary Bank is high. The electronic queue management system should effectively serve these customers to allow growth assets and profits to catch up with the leading banks in the industry.

THE ELECTRONIC QUEUE MANAGEMENT SYSTEM Customers want to spend as little time as possible in banks since have their personal businesses to attend to. So long queues in banks are usually a turn off.

9 THE ELECTRONIC QUEUE MANAGEMENT SYSTEM Customers want to spend as little time as possible in banks since have their personal businesses to attend to. So long queues in banks are usually a turn off. The electronic queue management system is the solution. At the entrance of the bank, the customer picks a ticket from a ticket dispensing kiosk and joins a virtual queue. The banking hall is fitted with screens that display the bank products and services relevant to what the customer intends to get. There is also a queue display that shows the ticket number for the customer to be served. Upon completion of the transaction, the customer can leave feedback units at the exit. The system has a centralized reporting system that allows managers to access real time reports. This system being the first of its kind in Uganda will help the bank be the leader in exceeding customers experience and expectations.

10 SWOT analysis of the Queue Management System As seen in the table above, the SWOT analysis shows that the strengths and opportunities outweigh the weaknesses and treats; implying the acquisition of the queue management system is a viable option.

11 RISKS AND MITIGATION The electronic queue management system is a massive project that requires the attention of all bank departments. Currently the banking is working towards obtaining a new core banking system; so such project would have to wait. The cost of installation and training of staff; together with the cost of sensitization of customers through flyers and advertising requires to be appreciated by the approving powers. Approval from the regulators has to be sought before acquisition and implementation. These matters can be mitigated by running a clean bidding process that will get a genuine supplier that will carry out demonstrations that are tailor made to address the issue at hand.

12 Edgar Ahimbe - VUU-PGDBA Virtual University of Uganda

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