Introduction
Abu Dhabi Commercial Bank PJSC (ADCB) is one of the leading banking service providers in the UAE and offers several banking services. The services include property management, project finance, Islamic products, interest rate and currency derivatives, foreign exchange, corporate banking, private banking, wealth management, and retail banking (Forbes, 2021). ADCB offers services through its Property Management, Investments and Treasury, Wholesale Banking, and Consumer Banking branches. Property Management includes real estate engineering and management services; Investment and Treasury include commodity and currency derivative portfolio services, interest rate investment portfolio management, and central treasury operations; Wholesale and Banking involves infrastructure and strategic client operations, Indian operations, trade and corporate finance, cash management, and investment banking services; Consumer Banking features Islamic operations, wealth management, retail, and consumer divisions. This article takes an overview of the company and offers suggestions on the best way forward. The discussion takes a general overview of the company, its mission and vision statements, strategic goals, and key objectives. It also presents an operational plan to help the company realize its goals and a Deming wheel approach to enhance one critical process.
Mission – “To build partnerships with customers that last a lifetime, by: Treating every customer as an individual Offering innovative products and unparalleled service Never forgetting that our customer has a choice” (Abu Dhabi Commercial Bank, n.d.).
Vision – “To be the number one bank of choice in the UAE. A constantly innovating, financially successful organisation of the highest integrity, respected by our customers, by our competitors and by the community” (Abu Dhabi Commercial Bank, n.d.).
Strategic Goals and Key Objectives
Abu Dhabi Commercial Bank’s primary strategy is to create the most valuable bank in the UAE. The company’s strategy is set on five main pillars: human capital, a focus on the UAE, sustainability, and customer and employee focus (Craft, n.d.). ADCB plans to realize success through human capital, that is, attracting, developing, and retaining the best through incentives, professional development, function-specific training programs, and career advancement opportunities). The company also looks to grow via an approach that focuses on the UAE with controlled internationalization. ADCB believes in a connection between sustainable growth and company value and looks to also exploit liability growth to realize its overall objective. Customers are the company’s primary focus as their outcomes drive a brand’s value, so the company looks to increase its value by maintaining a culture of efficiency and excellence.
ADCB is driven by a set of objectives that define its future and operations. The key objectives Abu Dhabi Commercial Bank wants to realize include:
- Growing transaction volumes and assets in its desirable markets profitably.
- Improve agility and execution abilities in an accountable manner.
- Make it easier and simpler for customers to bank with them while delivering the best services (Crunchbase, n.d.).
ADCB looks to attain these objectives by:
- Maximizing its market share
- Increasing presence in remittances
- Maintaining its leadership position in working with SMEs
- Increasing its market share in Islamic banking
- Creating innovative retail and wholesale initiatives
- Generating maximum profits from its portfolio.
This is the best approach as it touches on all crucial elements the company will need to succeed.
Operational plan
Critical Process – Deming wheel
The most critical process, financial planning, will happen in the finance department and can be enhanced by applying the Deming wheel. The company needs a robust financial planning process because the attainment of its objectives is strongly tied to how well it generates, spends, and allocates its finances. Effective and efficient financial planning will facilitate optimal functioning at all company levels, ensuring it stays on the proper course to ensure the realization of both short and long-term goals and objectives. The following is the Deming wheel as applied to ADCB including the four phases of the cycle: Plan, Do, Check, Act.
Plan
As stated above, the objectives of Abu Dhabi Commercial Bank’s finance department include:
- Estimating capital requirements.
- Determining the capital structure.
- Instituting financial policies.
- Utilizing financial resources efficiently.
The department must ensure the bank has enough capital to meet regulatory requirements. In other words, among other crucial functions, the department looks to ensure the bank has an adequacy ratio that will best lead to the realization of its overall objective. The department also looks to ensure the optimal composition of capital that will put it in the best position to emerge as the most valuable bank in the United Arab Emirates. This has to do with the proportion and type of capital needed to put the company in the best position to succeed. The department also uses financial policies that dictate and direct how the company will approach and conduct borrowing, lending, cash control, and other financial processes. Finally, the department looks to ensure all financial resources are allocated and used in the best way possible. How well this is done will go a long way in determining how well the company will realize its objectives.
The department needs to institute several crucial processes to realize its objectives. The most important process the company needs to ensure is optimal financial planning. The best way to go about this is by using the latest methodologies and approaches to estimating all of the company’s financial needs. For instance, the department should also use constant monitoring to ensure it always has adequate reserves to comply with legal requirements, as a good track record will contribute a lot to increasing its value. Determining the proper composition of capital will require using a process that looks to minimize the weighted average cost of capital (WACC) and maximize the company’s value. All the activities included in this cycle are to be carried out by the head of the department with the help of members he will choose. The team should start the cycle at the beginning of every quarter and follow up on it as the period progresses, and report on the same at the end.
Do
Executing the plan will involve assembling the required resources and allocating them as needed. The most notable resource will be software technologies to help in making predictions and estimations and allocating resources. Another important element to execute is hiring top talent in the field and using their knowledge to formulate the best financial plan for the company. These moves and actions make for investments, and indeed ADCB needs to make various investments if it is to realize its goal. The company should make investments in making additions, modifications, and improvements. Therefore, the company will need to invest in marketing, quality maintenance, branding, and market research. This is where resource allocation becomes important, as the management will need to figure out how to best allocate (where and how much) investment resources. As shown, ADCB management’s efforts will need to touch on multiple elements and facets of the organization, whose costs need to be put under control by a robust financial planning process.
Check
The results should be analyzed at the end of the quarter and compared against the desired outcomes. This step will include determining the degree to which the realized results differ from the desired ones. The results to look out for include brand valuation, customer engagement, market share, and profit margin. These are the most important because they are tied directly to the company’s value. The improvement or growth of these metrics will indicate progress towards goal realization. A regression in these metrics will mean the company is failing in its efforts, and changes need to be made. When assessing brand valuation, the management will need to look at how much the company’s stock is trading or valued. This is also the best way to see how well the company is on track to achieving its goal or if it has been achieved.
Assessing customer engagement will include looking at the number of new and repeat customers, the volume of transactions, and the proportion of high-net-worth individuals and institutions banking with the company. These metrics should grow or improve, and doing otherwise will mean failure. The market share should also increase, and this will be best determined by analyzing industry and market results at the end of the quarter. The same is true with the profit margin, which should stay the same or improve. More engagement with highly valuable institutions and individuals will indicate an increase in the company’s value as these stakeholders usually prefer to bank with valuable and secure banks.
Act
Corrective actions will depend on how far off the results are from the goals. A deviation of more than 10% will need immediate updates to objectives and processes. A deviation of less than 10% will mean that the department should keep doing things like it is. The measures taken will depend on how well the company has performed in each metric. For instance, a metric that performs exceptionally well and way above expectations will receive more allocation, time, and fine-tuning. On the other hand, metrics that perform way below expectations will be modified, changed, or reinforced. The company seeks to achieve the minimum weighted average cost of capital (WACC), an exemplary debt-to-risk ratio, and have capital reserves that meet regulatory requirements. A suboptimal WACC will necessitate the modification of the strategy and accompanying processes, while great performance will mean the company should focus on how to further the excellent performance and allocate resources towards the same. The same will happen to the debt-to-risk ratio and the capital reserve.
Conclusion
Abu Dhabi Commercial Bank PJSC (ADCB) is one of the leading players in the UAE financial sector and looks to be the most valuable bank in the region. This overall objective can be best achieved by the financial department as it is responsible for the key activities and processes that will bolster the company’s financial position. The most crucial process in the department is financial planning, and the discussion above has shown how the company should maneuver the same. ADCB is in an excellent position to realize its aim, which will necessitate careful and correct functioning in the finance department. Financial planning is the most crucial process because it gives the company the best chances of succeeding. Brand valuation has a lot to do with finance and financial planning. Optimal resource allocations are key to ADCB’s success, so management has to ensure it runs this aspect in the best way possible. This article has laid out the path the company needs to follow and offered insight into how to check and adapt to quarterly results.
References
Abu Dhabi Commercial Bank. (n.d.). ADCB at a glance | ADCB. Www.adcb.com. Web.
Craft. (n.d.). Abu Dhabi commercial bank. Craft.co. Web.
Crunchbase. (n.d.). Abu Dhabi commercial bank – Crunchbase Company Profile & Funding. Crunchbase. Web.
Forbes. (2021). Abu Dhabi commercial bank. Forbes. Web.