Summary
The problem that is reviewed within the framework of the current case study is the lack of an updated approach to appealing to cardholders that averts OCBC Bank from succeeding. Thus, it is essential to renew the business model and innovate in order to achieve higher productivity and retain consumers. The aim of the report is to resolve the key issues affecting OCBC Bank and come up with several solutions that could generate competitive advantages for both cardholders and the administration of the bank. The objectives that are achieved by means of this research paper are to:
- conduct a situational analysis,
- evaluate the bank’s functional areas,
- analyze all the available evidence, and
- share the key recommendations intended to improve the state of affairs.
The following subsections will discuss these objectives in rich detail in order for the author to provide a detailed resolution and a comprehensive, evidence-based foundation for it at the end of the report.
Situation Analysis
The situation at OCBC Bank can be described as problematic due to the existence of an outdated business model that eventually hinders the overall value of credit cards offered by the bank. In a sense, OCBC Bank cannot retain consumers for enough time to keep them engaged and ensure that the organization becomes the key service provider in Singapore. The existence of multiple card issuers in the region makes it safe to say that OCBC Bank currently loses quite a few customers to much swifter business strategies employed by other banks across Singapore. Even though it was proposed to conduct a detailed market research project, the organization’s administration did not get enough insight into the core customer needs. Even long-term strategic partnerships were deemed ineffective due to the fact that the key value propositions were not as attractive as the ones offered by OCBC Bank’s rivals.
Another serious problem that can be pointed out is the lack of marketing offers that could improve the current state of affairs at OCBC Bank. The existing promotions and merchant tie-ups do not seem to generate the expected outcomes, so the administration should alter its approach to the problem in order to drive cardholders toward loyalty and long-term partnerships. Even though there is no detailed understanding of how such improvements could be achieved, the team should be able to conduct timely research to collect feedback and turn it into valuable insights. OCBC Bank should appeal to its potential consumers by ensuring that the target segment recognizes the new approaches taken by the organization to improve and add services. This situation analysis proves that there is much room for improvement that could aid OCBC Bank in terms of how benefits are offered and customers are retained for a longer period.
Problem Statement and Analysis Plan
The problem that has to be resolved by OCBC Bank relates to the fact that the organization currently does not have a sound customer retention strategy. The team should intend to attract and hold consumers who would make the best use of the cards offered by the bank. The three major issues that will have to be resolved by the team are (a) customer prioritization, (b) offer diversification, and (c) the implementation of digital call-to-action (see Table 1 for additional details). Combined, the solutions to these three problems would improve OCBC Bank’s approaches to strategic management, finance, and marketing, respectively.
Table 1. A list of theories for the key functional areas of study
Strategic Management
Contingency theory is the best pick for this functional area because the problem of customer prioritization has to be resolved by adhering to the existing cardholders. In turn, it will provide OCBC Bank with a number of competitive advantages related to priorities and recognition. In line with Nusran (2021), contingency theory suits the proactive nature of the solutions that would have to be applied to resolve the lack of effective strategic management. For the organization, it also means that all cardholders will be prevented from leaving their cards unused for two months in a row.
Even though consistent reactivation of previously active cardholders could become even more challenging, the management should identify at-risk consumers and set up effective ways of contacting them. Currently, the organization does not employ this kind of complex approach, nor does it identify and analyze any of the data patterns in the area. The inexistence of a retention program aligns perfectly with the core values supporting the contingency theory (Nusran, 2021). Without early interventions, it can be challenging for the bank to prioritize and rank cardholders based on their incremental spending potential.
Finance
The credit creation theory presupposes that there have to be five essential stages completed by the organization when it is necessary to improve the financial state of affairs, the first stage being problem recognition. For OCBC Bank, the problem that has to be recognized is the absence of data-driven strategies required to unlock the full potential of each of the bank’s cardholders.
The second stage of the theory is information search, and OCBC Bank does not seem to be too interested in collecting all the insights that could lead to the generation of various offers. The high number of inappropriate offers makes it almost impossible to innovate the organization’s operations and retain consumers as a result (Ammar and Boughrara, 2019). Obtaining a higher wallet share would be the ultimate goal during the second stage.
The third stage of the credit creation theory presupposes that alternative products and services have to be evaluated. The OCBC Bank does not have any backup strategies at the moment, which means that there are no reward accelerators and loyalty enhancement opportunities (Nusran, 2021). Despite the bonuses that the bank provides to its most consistent cardholders, the organization struggles with deploying personalized incentives for target populations.
The fourth stage of the theory also shown by Ammar and Boughrara (2022) will revolve around the purchase decision, motivating the team to develop additional merchant category offers. There are numerous customers who do not spend resources and exert little to no effort when interacting with OCBC Bank. Thus, cardholders do not possess enough buying power and do not want to acquire it at the moment (Ammar and Boughrara, 2019). There is no testing plan employed by the organization, so the team also misses out on various promotional offers that could appeal to the relatively passive cardholders.
The last stage of the credit creation theory is the post-purchase evaluation, described in the article by Ansah et al. (2022). Currently, the strategy of OCBC Bank can be described as a one-size-fits-all approach, but it does not seem to generate positive organizational outcomes and thorough marketing output. The majority of insights achieved by the management are not optimized for improved performance and a greater understanding of what has to be done in order to advance.
Marketing
The ultimate problem that OCBC Bank has to deal with relates to the absence of call-to-action measures that could increase the effectiveness of strategies implemented by the organization. The number of risks continues to increase on a daily basis because media channels of communication continue to grow and affect the commercial side of the banking business (Pousttchi and Dehnert, 2018). The idea is that the number of credit-worthy prospects continues to decline, making it even harder to deploy proper call-to-actions that would generate new opportunities for both consumers and OCBC Bank. According to Trevisan et al. (2020), digital call-to-action could become the biggest advantage due to instant decision-making and a thorough appeal created by the organization. Thus, the administration does not have a thorough understanding of how to retain cardholders with the aid of digital instruments.
Literature Review
Ansah, M. O. et al. describe the effects of income diversification on the bank’s risk status and argues for the benefit of the eclectic approach within the credit creation theory (2022). This article discusses the multifunctionality of a financial company as a key to its success and preservation of activities. Diversification is one of the main conceptual principles of modern CRM (Customer-Related Management), which seems logical given the need to adapt and anticipate the needs of the client. The bank’s management does not segment customers at the moment. It creates a scenario where differentiation does not work as expected, and the team has to pay closer attention to transactional data instead of planning in advance (Ansah et al., 2022). Thus, contingency theory will be utilized to quantify the insights and ensure that cardholder activity insights can be translated into successful customer retention.
Nduta and Wanjira (2019) describe in their paper the contingency theory and following problem solution built on five successive steps. The first stage is problem recognition when the team is required to ensure that all team members possess the knowledge regarding the biggest obstacles on the way to organizational success (Nduta and Wanjira, 2019). In other words, the inherent potential should be the key variable despite its instability. As follows from adhering to the contingency theoretic strategy, the bank leading team should focus on retaining the most prominent prospects while researching the market continuously (Nduta and Wanjira, 2019).
The article by Khalilzadeh, Katoueizadeh, and Zavadskas underlines that finding risks in terms of Consumer Decision-Making Theory is one of the most effective ways to maintain and update the internal and external structure of a business organization. The authors argue that theory of prioritization and the search for risks are necessary for the long-term increase or at least the preservation of financial influence (Khalilzadeh, Katoueizadeh, and Zavadskas, 2022). This theory proves relevant to research as modern analytical matrices like SWOT are aimed at precisely the most ergonomic and practical way to analyze large entrepreneurship.
Analysis and Findings
Limitations
The limitation of this research is the small amount of literature on the hypothetical aspect that would apply the theories described above to the bank case itself. The absence of this literature on the subject can be overcome through more careful consideration of similar cases and a more daring application of theoretical concepts in thought experiments. The empiricism of many studies can be overcome by more open access to banking information and the ability to manipulate more data on the organization of the domestic budget.
Internal Strengths and Weaknesses, and External Environment
What is speaking in favor of the positive external environment surrounding the company, consumers have access to multiple alternatives. However, people still tend to choose OCBC Bank occasionally, which means that the team’s efficiency is still somewhat high, and this can be attributed to the company’s internal strengths. Every marketing incentive has to be evaluated based on the volume of income that has been generated after the launch (Thomas, 2019). Therefore, OCBC Bank only has to worry about card profitability and consumer experience when deploying its new solutions.
The important weakness that can be pointed out after investigating the available evidence is that the administration of OCBC Bank does not link its marketing to underwriting efforts. The unpredictability of the bank’s consumer groups makes it almost improbable to manage risks and ensure that a stable income is going to be generated on the basis of credit card offers. The disconnect between employee units across the organization makes it significantly harder to achieve a higher level of effectiveness (Ammar and Boughrara, 2019). In turn, it leads to conservative decision-making that does not live up to the expectations of contemporary cardholders. Therefore, OCBC Bank is exposed to the risk of attracting the wrong customers with its current operational strategy.
SWOT
The main strength that can be pointed out regarding OCBC Bank and its operations is the fact that the organization comes up with specific offers from time to time. Even though the organization does not spend that much resources on marketing and its digital call-to-actions, it still has the ability to appeal to some consumers. Therefore, the organization does not turn down any of its consumers, and it makes OCBC Bank significantly more responsible than some of its competitors.
Discussing the company’s internal weaknesses, it can be suggested that OCBC Bank does not focus on separate consumer needs at the moment. The problem is that the organization does not make any distinctions between credit card offers, and it ultimately contributes to minimal attention from potential consumers. Card profitability is also low because marketing strategies are not flexible enough to allow for reasonable changes. The main difficulty with this finding is that disparate needs have to be complemented by adequate rewards (Nduta and Wanjira, 2019). At this point, the interest rates for the bank’s cards are low because consumers do not recognize the value that OCBC Bank offers through the interface of its initiatives.
There are also particular opportunities that have to be mentioned when discussing the bank’s advantages and its potential for change. The main advantage that has to be discussed is the existence of room for an adjustment that pushes the marketing team toward reasonable strategy alterations. It is noted by Kaur (2021) that similar approaches to the banking sector could be rather risky. The first reason why it is important is the ability to attain a much bigger consumer segment without exposing the organization to customer-specific risks (Chatzitheodorou et al., 2021). The second reason is the increasing level of creditworthiness that can be utilized by the administration as a strong marketing channel.
The biggest threat that was identified as a result of the current analysis stemmed from the lack of appeal to cardholders who preferred debit cards in the past. The main reason why this became a reality was the fact that the majority of OCBC Bank consumers tended to believe in the numerous benefits of debit cards. According to Ansah et al. (2022), many customers often pick debit cards over their credit counterparts because the former is believed to be much better protected from fraud. Another important factor is that common cardholders are afraid of overspending, which brings to the front another set of risks that avert OCBC Bank from appealing to more consumers.
Proposed Solution
Available Options
There are three particular recommendations that can be made to help the organization attract more consumers and ensure that more cardholders are going to remain loyal over time. They will be placed in increasing order of importance. The first solution would be to introduce potential consumers to the value of self-service and digital instruments that could become a competitive advantage absent in rival banking organizations. Younger consumers would definitely prefer less humanized contact in order to be able to complete all the required operations themselves and avoid relying on others (Shams et al., 2020). An increasing level of digitalization of banking operations would also bring forward the need to develop various unique online services. The OCBC Bank would benefit from translating at least some of its operations into the online environment, as Internet-based services and customer needs are omnipresent. Ultimately, cardholders will be motivated to keep their relationship with the bank in order to attain even more personalized benefits.
The second recommendation that can be made on the basis of the existing findings is that the organization does not process a lot of the data that it collects when interacting with current and potential cardholders. Thus, automation and digital deployments based on Big Data could be helpful when altering the customer experience platform developed by OCBC Bank. The rationale behind this move is that the active marketing strategy does not appeal to consumers in terms of digital services. It means that call-to-actions are not included in the communication process, and it creates obstacles to targeting specific consumers and ensuring they will receive the services they need. Consistent with Badour and Presta (2018), internal IT-related updates might become a significant contributor to the number of active cardholders if customers have access to personalized products. Nevertheless, the team will have to be rather careful in order not to develop a strategy that would become too expensive to deploy.
The best solution for OCBC Bank would be to rely on the mix of consumer decision-making theory and contingency theory and ensure that customer outreach can be improved. This marketing strategy will appeal to all categories of consumers, as the team will quickly learn about the existing needs in terms of assistance, awareness, and instruction. The existing and potential cardholders will gain additional insight into why OCBC Bank is the best service provider. A thorough focus on customer loyalty and their genuine interest in the bank’s products can help the organization drive sales and formulate a completely different financial strategy (Khalilzadeh, Katoueizadeh and Zavadskas, 2020). Marketing campaigns launched by other banks would not affect OCBC Bank as it would have access to a variety of target customer groups and their differentiated budgets and interests. Improved security and an increased number of digital solutions would help achieve a higher level of consumer trust and multiply the bank’s income.
Study Limitations
A particular limitation that affects the outcomes of the current study is the lack of background information regarding employees’ skills and attitudes toward the existing strategies. It would be rather important to collect feedback regarding the effectiveness of proposed solutions and see how the bank’s operations could be made more relatable and accurate. The lack of insight into cardholders’ preferences also affected the current report. This challenge can be overcome by contacting existing and potential cardholders and asking them about the operations of OCBC Bank they believe to be the most effective and appealing.
Reference List
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