Concept and Opportunity
The foundation of this project is on the concept of reduction of duration of serving customers to increase efficiency and productivity in the banks. The conception of this idea came from the analysis of the customer service in National Bank of Saudi Arabia. In this bank, when the customers come to the customer service representative or the bank tellers, they take between 1 to 2 minutes to give them their account numbers or to explain the reason why they have come to the bank.
Consequently, this makes the waiting periods for the following customers longer and at the same time decreases productivity of the teller or customer service representative. The business idea is to develop a system that will recognize the account number of the customer immediately and save time used for the same. This idea will involve a modification on smartcards currently in use to link with Banks’ system (Glimstedt 2001). The proposed name of the firm to provide this service is Classy firm.
When a customer visits the bank, s/he just needs to swipe his smartcard to the machine that provides the queue numbers (which can recognise and read the cards) then his account’s details will appear directly when the teller or the customer service representative calls his number. Therefore, the bank employees can see his account details and see if his card is still valid or if s/he has entered wrong digit number as soon as his turn arrives. In addition, the teller will be ready to serve him with withdrawal or deposit without wasting time to ask him about his account number.
Nonetheless, there will be the use of trade secrets in this opportunity. There is the thought, by many people of trade secrets, as some kind of protection offered by the government allowing them to look for a remedy in court whenever someone violates upon their scheme. However, different from copyrights, patents, and trademarks, trade secrets have no recognition with any government office to offer a certifiable public record of any asserts to the secret. Nevertheless, the managers of the smartcard business will declare a notary public patent lawyer in a signed and notarized disclosure. In so doing, the trade secret will belong to the firm everlastingly, or until somebody leaks it.
The items like formulas in the trade secrets will be unique and offer the firm a competitive advantage though not guarded under present kinds of idea protection. The excellent type of defence for these items is to maintain them a top secret. The finest way to protect the knowledge for a trade secret is to control the way in to the secret. This will include individuals and other banks to sign nondisclosure conformities, should they enter into a connection that will necessitate them to be acquainted with some portions of the secret.
If somebody autonomously builds up or reverse-contrives the trade secret, there is nothing the firm can do. Should somebody or another bank do disclose it; the firm can only sue for theft (English & Moate 2009). Taking this legal action, though, cannot prevent the individual or bank from applying the leaked knowledge. Therefore, although the firm might get cash from the suit, it loses the bigger latent profits it would have generated from the initiative. On the other hand, if the luck of the firm holds and its trade secrets continue undisclosed, royalty returns from it could last extensively longer than even the patent time.
Latent for intellectual possessions protection
There will be two ways to protect this business opportunity as explained below.
Copyright Protection
Copyright protection will give the National Commercial Bank of Saudi Arabia and other banks that will later take up this opportunity the exclusive authority to duplicate the work, amend it, dispense, carry out, and present the work in public. (Taube 1988). Usually, the single protection for thoughts and concepts will be via privacy agreements and/or trade secret law that offer a contractual cure for mishandling or leak of the thought.
Trademarks
CLASSY Trademarks are as brand names. They refer to any term(s) or pictogram(s) that stand for a product to categorize and differentiate it from other similar products in the market. The trademark word for the smartcards’ firm will be
and the trademark symbol will be
The ways to register the trademark is as follows:
- Through the filing of a “use” request subsequent to the use of the mark
- Through filing a “plan to use” request if the mark is yet to be used
- In particular conditions in which a foreign request exists, it can be relied upon
Trademark protections last for an indefinite period if the company maintains to employ the mark to categorize its goods and/or services. If the mark ceases application, the registration is ended.
Market Viability
The relative magnitude of the latent market will be the clients of National Commercial Bank of Saudi Arabia to begin with. The concept will utilize the existing smartcard that does the same jobs for the customers, which include withdrawing, depositing, paying bills, and the queue machine recognises transfers between accounts as well. Following rapidly growing and stable market, there is expectation of taking up of this idea by other banks in Saudi Arabia.
There will be implementation of the technology by the willing banks in conjunction with the smartcard-providing firm, which will have the rights to market the technology. Automated Teller Machines (smartcard machines), certainly, are an instituted fraction of the payments setting. Nevertheless, Automated Teller Machines (ATMs) do not characterize a disbursements form per se; to a certain extent, they are an electronic way of providing cash. They present a suitable option to other traditional dispensers, for instance, vehicle drive-via facilities and bank tellers.
Noteworthy, even theatrical, alterations are reshaping the Automated Teller Machine industry, comprising serious consolidation and a reduction in the figure of ATM systems. Hitherto, the industry stays diverse. In Saudi Arabia, the national systems have gained in significance but are working alongside several regional systems. Networks have spread out throughout the last twenty years resulting to economies of scale for the systems and greater ease for ATM clients.
Setting up of off-premise smartcard machines by the firm, as anticipated, will not merely improve customer ease, but will also create bigger business chances for nonbank Automated Teller Machine operators in addition to the smartcard systems. For potential clients, the features and benefits of the smartcard firm idea are apparent and entirely in line with the established client conduct (English & Moate 2009). Additionally, no learning is required to be conversant with using of the smartcard, as the machines will display the necessary options in a simple and language of choice after swiping in the card.
In the smartcard sector, numerous forms of teamwork are attracting increasing consideration: companies are eyeing to collaborating as an option mode of support. The design of this cooperation is to serve every party (Classy firm included) in constructing and maintaining competitive benefit, to combine their possessions and abilities, and to generate value. All together, technical changes, a violent market share subjugation, standards divergence, and battle price typify the smartcard sector.
Consequently, dealings between smartcard players, amid horizontal and vertical aspects, merge both supportive and competitive approaches (Brandenburger & Nalebuff 1996). These connections accentuate not just interactions between players with matching abilities, but also accentuate partners concerned with matching and comparable expertise and resources to build performance. These dynamics of the market demonstrate that smartcard actors’ policies should be anchored in investment judgments, which are possible to boost worth in the market and try to assign market share, price, resource, cost, as well as other finite advantages.
It will now be possible for Banks to leverage on the aspects of the Classy firm smartcard to have numerous functions on a single smartcard and confined information storage to generate customized contributions or make personal services for smartcard users. This will permit Banks to generate a classic and efficient program, track customer patterns more professionally and present favourable chances at the point-of-sale via the receipts obtained from the smartcard machines. At the same time, making use of the ability to execute off-line operations, Banks can be extra business friendly to dealers by instituting changeable floor limits to decrease operation time while still managing fraud risks.
As declared by Brandenburger and Nalebuff (1996), simultaneous cooperation and competition is an influential way of discovering fresh market opportunities and expanding a business policy. Therefore, Classy firm will exemplify this in action and demonstrate how chief players in the smartcard industry will coalesce to form tactical alliances, facilitated by the simplicity of licensing, in addition to other calculated concerns (Antonelli 1994).
Furthermore, increasing technical, monetary and market blockades moves away actors to compete with one another and to operate cooperatively as comrades to achieve their shared objectives. Subsequently, there is a twofold of all correlations concerning win-win and win lose dealings: the triumph of most smart card competitors will be dependent on the achievement of others. However, they must struggle to capture worth generated in the market and guard their own concerns.
Risk
As regards applicable laws, standards, and other forms of regulation, my proposal will meet them devoid of any changes. The utmost risk of an unsettling technological advancement will happen when the market is established and saturated. The risk posed by this business model is the potential loss of jobs for some tellers and customer care representatives. The model is likely to be ineffective with the ongoing bank automation program. Automatic vending machines are on the process of designation to make it possible for customers to deposit, withdraw, and find statements or even open accounts on the ATM. This means that very few people are likely to approach the bank counter.
As a socio-economic risk, behaviours like moral issues will deteriorate. For instance, fraud at the smartcard machines will become more extensive. Such occurrences of fraud will range from practices like shoulder surfing as well as card skimming to exceedingly advanced practices concerning software corrupting and/or hardware adjustments to redirect, or ensnare the dispensed money (Glimstedt 2001). Current Global Automated Teller Machines consumer study designates that one of the most vital matters for customers when making use of an ATM is individual protection and security. As monetary institutions employ the smartcard technology as a primary means of escalating branch efficiencies, the smartcard machine experience should be as secure and accommodating as achievable for users.
There is considerable intensification of dependence risk for banks due to cooperation and use of the Internet. For instance, the Internet permits for the speedy distribution of information meaning that any occurrence, whether fine or terrible, is common information within a short span of time. Any trouble encountered by a firm or bank in this environment might influence the business of Classy firm, as it might affect reliance in the Internet entirely. There is thus a risk that one rascal e-bank would cause considerable problems for every bank and firm offering services through the Internet. Banks and firms need to ensure adequate security provision for clients’ rights and knowledge needs.
There has already been investigation and putting in writing of the business plan for Classy firm in an attempt to avoid planning risks and an investigation to comprehend fully the characteristic and nature of its target market completed as well. There is anticipation that a great percentage of latent clients will buy from Classy firm (Taube 1988). In terms of Classy firm delivering the service, processes, and controls required will not be delivered excellently devoid of a considerable research and development endeavour. Hitherto, the Automated Teller Machines have been the most commonly spread claim of electronic banking. There are different kinds of errors that can crop up because of mechanical fault at the machine, giving rise to the following setbacks:-
- Dispensing less money to the client but debiting the account correctly
- Debiting the customers’ accounts twice but dispensing the cash only once
- Debiting the clients’ account but failing to dispense the cash
Generally, errors can happen at any time. They can even happen when the machine acknowledges cheque and cash deposits. In addition, there have been instances of ghost withdrawals and the smartcard holder denying responsibility for the cash withdrawals, even though the computer showed that a real transaction had occurred. For instance, there was 570 pounds incorrectly withdrawn from John Allan’s account in the Bank of Scotland. Eight cash withdrawals took place, three of which he was gone with his smartcard in Andorra. He complained to the Bank to no avail (Taube 1988). Afterwards, Mr Allan sued the Bank of Scotland. The eve of the case, the bank proposed a payment out of court with him. This case scores a step forward since the bank agreed that money could be debited from an account devoid of the use of the smartcard and the Personal Identification Number (PIN).
The money to commercialize Classy firm will be raised from personal savings, borrowing from friends and family, and loans from financial institutions. The liquidity risk likely to affect Classy firm is inadequate cash reserve. Lastly, the personal risk that could possibly affect the venture are working long hours, potential strain from my finances, family, social life and emotions due to inability to settle debts.
Business Model
As earlier stated, the capital to start the business will be from personal savings, borrowing from friends and family, and loans from financial institutions, which will enable the business to get a good starting ground. Before the start of the business, there will be advertisements of Classy firm using posters, signposts and through mass media by stating clearly the specific location, when it will start, its operation, and the convenient business hours together with the services it will offer. However, shall the business venture do well as is expected, improvement will be done to expand to other banks through retained profits (Westermann, & Lancaster, 2011, pp. 199-210). Some aims of marketing research comprise:
- Conversing with customers to comprehend the business goals
- Designing study questionnaires and moderator directs
- Database Advancement
- Gathering and analysing complaints
In pricing, the business will employ competition oriented pricing method. The selling price will depend on the prices offered by competitors of the same product. This kind of pricing is termed as matching the competition pricing system (John, & Martin, 1984, pp. 174-183). Flourishing marketing of Classy firm necessitates innovative advertising and considerable publicity. Some marketing strategies that the business will undertake include presenting packages of the business to design schools (Lincoln, & Frontczak, 2008, pp. 52-62).
Other marketing strategies may include offering free training to all customers who may need some direction in using the machine. This will not only attract dedicated clients but will also draw clients intrigued by the services of Classy firm. These clients will fear changing businesses because of a lack of acquaintance. Customers are ever on the look for efficiency. The implementation of this technology will lead to increase in efficiency with the consequential reduction in labour cost. In addition, the technology will readily be in demand.
The gap between what I have available and what I need to commercialise my idea calls for no further physical resources. Since productive staffs contribute directly to delivering service, a number of factors need taking into consideration when recruiting employees for the management posts. These include qualifications, experience, competence, and age that will guarantee technical expertise.
There will be advertisement of the available vacancies by use of posters, newspapers, television, and radio. Displaying of posters in public is necessary so that anybody interested will apply for any vacant posts. Short listed candidates will go through an interview and successful ones selected (Moran, & Gossieaux, 2010, pp. 232-239). As operation improves and business expands, there will be sponsoring of the staff for short courses in suitable institutions. Apart from the things already mentioned, ccommercializing my idea will demand very little help and support.
Sales Forecast
Suppose one teller serves 120 customers per day and one customer care representative serves 60 customers per day. If the customer uses the modified smartcard, the time saved per day will be 120 * 2 = 240 minutes for the teller and 60 * 2 = 120 minutes per day for the customer care representative.
In typical bank in Saudi Arabia, there are 10 tellers and 3 customer care representatives. If all are present, the time saved for the tellers by the machine will be 10 * 240 = 2400 minutes whereas the time saved for customer care representatives will be 3 * 120 = 360 minutes.
Profitability
Time saved for 10 tellers in a day = 2400/60 = 40 hours
Time saved for 3 customer care representatives in a day = 360/60 = 6 hours
In normal circumstances, the number of working hours for a teller is 9 hours. The implementation of the smartcard will save the teller 4 hours and will instead work for only 5 hours per day. This means that the bank would cut on its labour cost. In normal circumstances, the teller working for 9 hours and serving 120 customers a day spends 9*60/120 = 4.5 minutes.
If ten tellers serve same numbers of customers, it means the bank serves 1200 customers a day and spends 4.5 * 1200 = 5400 minutes. With the implementation of the smartcard technology, the time taken to serve one customer will reduce to 4.5 – 2 = 2.5 minutes. This means that the bank will require only 2.5 * 1200 = 3000 minutes or 50 hours to serve customers instead of the usual 90 hours. The bank can then opt to pay the tellers based on hours worked or lay off some tellers.
For the case of customer care representatives, the profitability is as follows.
The number of customers served per day is about 180 by three people. Time taken on every customer is 9 * 3 * 60/180 = 9 minutes. Time spent by customer care representatives is 9 * 180/60 = 27 hours. With the implementation of the smartcard technique, the time will reduce to 7 * 180/60 = 21 hours. This means that the bank will save six hours if it will opt to pay based on number of hours worked.
Cost structure
To implement the smart technology, the bank will spend 9000 dollars for installation and thereafter there will be a monthly maintenance cost of 1000 dollars. If the bank pays 10 dollars per hour, it will save 46 * 10 = 460 dollars per day and 10120 dollars per month. The contributing margin will be [10120 – 1000]/10120 * 100 = 90%
The breakeven point = fixed cost/contributing margin = 1000/90% = 1111 dollars.
Thus, the cost structure for commercialising my idea is likely to have a modest contribution margin. Operating cash flow from commercializing my idea is likely to become positive within the first year.
Commercial feasibility
Widespread smartcard machines insurance cover is obtainable to Banks for losses pertaining to smartcard use; it is significant to note that they differ considerably. By employing careful smartcard machines analysis and the finest avoidance and reduction ways, suitable levels of risks could be sustained. One of the advantages that both the banks and Classy firm will experience while applying smartcard is increased client satisfaction.
This is because the customers might access their accounts at any time, from wherever, and they get concerned more, thus creating affiliations with banks. Due to this, Banks will be forced to offer their clients with convenience, suitable offering service via provision of additional smartcard machines distribution channels and have more transactions available online. Other benefits to commercial feasibility are extended product contributions and extensive geographic reach.
This signifies that banks in Saudi Arabia will present a wider variety and newer services through smartcard machines to even more clients than achievable before. The benefit that will drive the majority of the banks toward using the services of Classy firm is the cutback of all costs (Antonelli1994). With smartcards, banks can decrease their general costs in two methods: minimization of the cost of processing dealings and the branches needed to give service to a corresponding number of clients. Considering all these advantages banks can acquire triumph on the monetary market. To sum it up, this will likewise benefit the transactions of Classy firm.
Reference List
Antonelli, C 1994, ‘Localized technological change and the evolution of standards As economic institutions’, Information Economics and Policy, vol. 6 no.4, pp. 195-216.
Brandenburger, A & Nalebuff, B 1996, Co-opetition, HarperCollins, New York.
English J & Moate, B 2009, Discovering New Business Opportunities, Allen & Unwin, Sydney.
Glimstedt, H 2001, ‘Competitive dynamics of technological standardization: the case of third generation cellular communications’, Industry & Innovation, vol. 8 no. 1, pp. 49-78.
John, G & Martin, J 1984, ‘Effects of Organizational Structure of Marketing Planning on Credibility and Utilization of Plan Output’, Journal of Marketing Research (JMR), vol. 21 no. 2, pp. 174-183.
Lincoln, D & Frontczak, N 2008, ‘A Practical, and Effective Marketing Plan Assignment for Principles of Marketing Students’, Journal for Advancement of Marketing Education, vol. 1 no. 12, pp. 52-62.
Moran, E & Gossieaux, F 2010, ‘Marketing in a Hyper-Social World’, Journal of Advertising Research, vol. 50 no. 3, pp. 232-239.
Taube, P 1988, ‘The influence of selected factors on the frequency of ATM Usage’, Journal of Retail Banking, vol. 10 no.1, pp. 47-52.
Westermann, D & Lancaster, J 2011, ‘Improved pricing, and integration with revenue management – The next step toward improved revenues’, Journal of Revenue & Pricing Management, vol. 10 no. 3, pp. 199-210.