Poor Customer Service: A Bank's Bane - Essay Sample

Introduction

The banking industry is one of the essential backbones of the economy in any country. These financial institutions enable the transfer of capital and value from one point to the other, as well as its conversion from one form to another, thus enabling market operations in the economy. As such, banking activities are some of the most critical forms of economic activity in both the local and international markets globally. Beginning from the earliest forms of civilizations known to man, the banking business has undergone a massive change as it evolved to what we know today. The earliest forms of banking in recorded history thought to have appeared long before 8000 BC, began as a means of keeping records of the trading activities that took place in the community. These were mostly carried out in informal settings, with money lending and changing being the main activities. Around 2000 BC, grain exchanging and loaning appeared in Assyrian and Summerian societies, spreading to Greece and the Roman empire before disappearing following its collapse. The modern form of banking, however, is thought to have began in Italy between 12 and 13th centuries before spreading to other European nations, including Germany, England, and France, where the revolution continued further.

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Today, banks are found all over the world, with the evolution continuing more rapidly than ever before. The modern banking system, among the primary liquidity and intermediation functions, are designed to expand through varying functions cutting across national and even international frontiers. Securitization and financial risk management, for instance, are a few of these activities that have diversified the banking systems to what we know today. This diversification has been caused by among other things, the evolution of financial methods and instruments, as well as technological advances that have occurred over time.

A country with a well-galvanized banking system would as well be on its way to economic prosperity. It is, therefore, not uncommon to see multinational banks squaring it out with local banking institutions for its market share, with each of them coming with multiple incentives to attract potential customers to its services. The result, of course, is a heightened competition level within the financial sector, leading to the cropping up of unlimited innovative techniques and showcasing to get ahead of the competition for market share. Keeping that in mind, it is thus crucial for any bank wishing to progress to adopt strategies to match the dynamism of the industry, especially in the wake of the 21st century and the technological advances that have come along with it.

That being said, the Oman sultanate is not immune to these changing market trends. Currently, it is one of the leading financial institutions in the entire Arabian peninsula. There are 17 local and foreign commercial banks in Oman (Salim and Al Ani, 2015, p.76). Bank Muscat is the largest Bank in the sultanate. It has been operational since 1982 and offers a wide range of banking solutions through its over 130 branches and over 380 automated teller machines

(Babicci and Wongsurawat, 2018, p.46). Due to stiff competition, Bank Muscat has to provide customer-centered services to grow its customer base (Kaura, Durga Prasad, and Sharma, 2015, p.412). This report will focus on how best the Bank can improve its customer relations to remainsustainable within a competitive environment. In the study, the researcher sought to understand the problems affecting the bank, mainly focusing on customer satisfaction. The research paper employed the use of both the secondary and primary sources to gather information about the topic of interest. Secondary sources included books, journals, and peer-reviewed articles relating to the Bank Muscat and other financial institutions and the problems encountered in the institution as well as possible solutions. Primary sources, on the other hand, included surveys and observations made by the researcher in the course of collecting data for the study. The analysis was done on the collected data using qualitative techniques and interpretations made based on the results observed. Conclusions and recommendations were then made for the bank based on the analysis.

Objectives and Research Questions

Objectives

Along with assessing the functioning of the Bank Muskat in the Oman Sultanate market, the main objectives for carrying out this research exercise include the following;

• To identify the various customer behaviors, particularly those associated with demanding customers.
• To determine the reasons for lousy customer attitudes.
• To recommend the best approach for customer relationships at Bank Muscat.

Research Ques3tions

Keeping in mind the objectives of the research exercise, the researcher sought to answer the critical questions regarding the functioning of the Bank Muscat including;

• What are the various customer behaviors, especially those about demanding customers of the Bank Muscat?
• What causes these bad customer attitudes?
• What are some of the best approaches that could be used to build a better customer relationship at Bank Muscat?

Background of the Organization

Bank Muscat was created in the year 1982. The H.Q. of the Bank is situated in Muscat. The Bank is also the largest in the Sultanate of Oman (Al-Muharrami, 2016, p. 7). The Bank is the largest financial services provider and dominates the Oman market. The Bank is three times large than the second largest bank in Oman, with a total asset of 35.17% ('Investor Presentation,' 2017, p.5). The Bank has 167 domestic branches spread across the country. The Bank also has two international branches and three representative offices. In the six Gulf Cooperation Council (GCC) nations, Bank Muscat has established either direct or Indirect presence, and its representative office is located in Singapore. The representative office's majors on trade businesses and financial institutions.

Aside from being one of the largest in the Arabian peninsula, the institution has also achieved a couple of impressive firsts in terms of fits. In the Middle East, Bank Muscat was the first Bank to adopt the 2007 Equator principles. Hence, it was profiled part of Bank Track's Equator Principles Track and Chase Project. This was achieved due to the stable political Organization in Oman, and outstanding its diplomacy in the region. This impressive fit is an example of how the bank is pushing innovations in the Oman Sultanate as well as in the Arabian peninsula at large.

The Bank offers a wealth of diversified services, including; Islamic banking, private banking, corporate banking, investment banking, treasury, retail banking, and asset management. According to Bank Muscat Investor Presentation (2018, p4), the active customer base of the bank amount to 2 million. The research also showed that the Bank has a workforce of more than 3,700 people. According to the investor presentation, the Bank realized over 95% operating income in the Oman Sultanate alone.

In addition to these achievements, the Bank Muscat is also listed in the Muscat Securities Market. As of March 2019, the bank was listed as having a market cap of $3,231 million. The list, however, does not end there. The Bank Muscat also enjoy recognition from the London Stock Exchange and Bahrain Stock Exchange due to its highly diversified nature of trade, making it one of the largest international financial entity in the Oman Sultanate. The Bank Muscat's total assets were recently estimated at 35.1% in the Sultanate. Its strong financial metrics are characterized by robust growth of income over the years as well as a stable cost-income ratio, even as the infrastructure continues to expand. Between the years 2014 and 2018, the bank was estimated to be operating on an average of 3.9% profit, with the net profit being as high as 2.4%.

Among the highest owning entities of the bank is the Royal Court Affairs, with an estimated 24% stoke shares. Direct and indirect government entities also form part of the stakeholders of the bank, which could explain how the bank was able to consolidate the market with such zeal over the years. A prudential regulatory environment has also enabled the bank soar above its peers in the neighboring countries, boosted by the stable political environment and growing local demand as well as favorable fiscal policies in the Sultanate of Oman.

Figure 3.1: Bank Muscat Financial Overview

Mission and Vision

The Bank Muscat operates under a designed mission and vision that drives the everyday operations as it aims for its goals. These include:

Vision

Bank Muscat 2020 vision 'focuses on diversification, privatization, and industrialization to reduce the reliance on the economy's oil revenues and hydrocarbon contribution to the GDP.

The vision aims to promote the growth and development of the Bank by establishing a self-reliant

Mission

The Bank's mission is to create value for every individual in the nation. This aims to ;'Creating long-term benefits to the community, and the nation, to impact positively on the society in field including; SMEs, youth development, sports, education, health, and alternative energy.' The bank supports these activities through funding in terms of loans and grants, as well as sponsorship events.

Background of Industry (Banking Industry)

The Oman Banking sector comprises of two Islamic banks, seven conventional Omani Banks, nine foreign banks, and two specialized banks. According to the Central Bank of Oman, local banks dominate the Oman markets. Based on the Central Bank of Oman, the Islamic Bank's assets increased to 21% in 2018, an increase from OMR 3.299 billion to OMR 3.991 billion. The deposits also realized a 32.4% increase from OMR 2.385 billion to OMR 3.158 billion. The assets of commercial banks increased from RO27.5 billion in July 2017 to RO28.8 billion in July 2018. This was a 4.8 percent increase. The credit of commercial banks also realized a 4.1% Increase, while the deposits increased by 1.8% from the preceding year. The total banking sector deposits g...