Strategy and Sustainability: The Expression of Organisational Values and Vision

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Introduction

The banking industry of a country is a salient reflection of the economy and its growth. Despite the several downturns the Nigerian economy faced the banking industry in Nigeria showed a certain degree of resilience due to the consolidation in 2004 (Oghojafor, 2012). Strategy and Sustainability The Diamond Bank, chosen for this assignment is an avid example of this phenomenon. The Diamond Bank Plc incorporated in 1990 with 217 branches in 2015 is the fastest growing retail bank in Nigeria that offers a variety of innovative financial solutions and services. Even though the Nigerian economy remained sluggish and domestic environment presented several other regulatory constraints the bank earned a gross profit of N187.3billion (roughly $ 595 Million) in 2016[1].

Diamond Bank- Strategic Intent and Competitive Advantage

The current market position and growing market share of Diamond Bank Plc of its clear and strong retail led strategic intent to differentiate from competitors through advanced technological solutions (Ayo et al., 2007). Strategy and Sustainability Nigeria with a population of 170 million has a small percentage (10% of its population) that access or use formal financial purpose. In 2005 after consolidation with Lion Bank it started proactively focusing on two main strategic objectives to differentiate itself from its competitors (i) increasing the physical presence and extending to the unbanked (ii) increasing the the customer service channels by leveraging the same physical footprint. Fast forward 8 years, in 2013 the customer base of the bank grew by 33% while the physical presence grew only by 10%.  While other banks specifically focused on branch network expansion Diamond Bank’s management built is core functional direction towards IT-based and mobile banking Muhammad et al, 2013). Due to weak internet infrastructure, internet banking proposition was kept on hold. Spreading its ATM network (through CR2 technologies) and easy cash access points allowed the bank to enter new segments and driving greater customer satisfaction. The bank aligned to its strategic intent is keenly adding new services i.e. remittances, payments, purchasing cinema tickets to its mobile and atm banking services. The bank strategic plan is to continue adding value added services through ATMs, mobiles and internet banking. A major strategic implication for the bank could be a lack of ownership and commitment by the external partners and vendors during the strategic implementation phase. This could lead to poor services and hence the banks run a risk of loss. Another risk the bank faces is losses due to fraudulent activities as instruments like mobile banking by design are flexible in terms of the verifications.

 

Vision/ Mission and CSR activities at Diamond Bank

Interestingly the core of the bank’s mission and vision statement is to drive customer satisfaction through superior value added products and highly professional and motivated people (i.e. employees, management and external partners).

On the hand the mission and vision state that the banks also wants to become the leading financial institution while delivering value to its shareholders. Strategy and Sustainability the vision statement is two-pronged. The bank’s core values are- Integrity, Competence, Leadership, Accountability and Passion. Furthermore In 2016, the bank’s annual report carries a strong strategic statement that highlights its CSR future direction very openly – “Not only are we leading the digitalized transformation of Nigeria’s banking industry by utilizing electronic delivery channels, we are also strengthening our customer relationships through financial inclusion and by matching new products and services that enhance lifestyle”.

Table 1 below shows a comparison of the CSR expenditures relative to their net earnings carried out by selected banks in Nigeria. It shows that compared to other banks Diamond Bank dedicates the highest percentage of its income to CSR activities.

Source: Extracts from Published Financial Statement (2011)- Extracted from Abiola (2014)

Arguably the bank is known for its bold initiatives as it provides a variety of banking products that go beyond the realms of traditional banking. With a pioneering strategic intent towards “financial inclusion, the bank has strived to bank the unbanked Nigerian population through products like Diamond Yello Account and BETA Savings (Han and Melecky, 2013). Financial inclusion for financial stability: access to bank deposits and the growth of deposits in the global financial crisis. Most of the new products launched by the bank are targeted towards particular niches in the market. For example, the BETA account is designed to meet the needs of lower income unbanked women. The account charges low fees can be opened with zero balance, minimal documentation and offers a good saving interest. The biggest appeal aspect is that it can be opened through 800 + mobile sales and services agents, 217 + branches and 700+ ATMs closer to their respective homes. The product has been able to bank over 415,000 women since its launch in 2014.

Stakeholders Perception

The bank’s strong disposition to become retail and digitalized banking leader is well known to customers and its major stakeholders. The bank has taken several initiatives and risks to provide affordable, easy and convenient financial services to the Nigerian people. Although the bank is also profiting from the digitalized extended services, and electronic banking this has also empowered the Nigerian people/ customers even more (Aduda and Kalunda, 2012). This especially true in areas where people were initially unable to access any form of formal financial services (Achua, 2008).

Strategy and Sustainability Customers no longer have to go branches to carry out their transaction as they can conveniently access all banking services through their mobiles and internet. In 2016, 83% of the bank transactions carried out by customers were made through its electronic channels. Furthermore, the bank carries out several CSR activities to enable community engagement and development. The Bank’s “Building Entrepreneurs Today- BET” initiative (in collaboration with Enterprise Development Centre) is a CSR flagship program through which the bank has provided over 200 budding micro-entrepreneurs with business and management capacity building and financial support grants. The bank’s commitment and capability to enable financial inclusion is also an active component of its CSR outlook. Such transformations Abiola (2014) suggests can have a multiplier effect on the economy. Therefore the bank’s own financial stability are of significant importance to its customers and stakeholders.

Commitment to Strategy

It is true that the bank has been committed towards its vision throughout the past decade. The bank has sought to achieve retail victory trebling in size over the past three years. The company also underwent a restructuring in past 2 years to enable its retail expansion strategy. Remodeling was thought as imperative to be more responsive towards the growing diverse customer base. As testaments towards it vision, the bank among other achievements won the best mobile banking app and youth banking products awards in 2016.

Human Resource Management- Diamond Bank

Despite economic recession and uncertainties over the past decade, there is no historical evidence of layoffs or cutbacks by the bank. With staff strength of 3555, the bank considers its human resource as an asset.  In 2015[2], the bank commenced on a transformational restructuring to enable its retail strategy. The new business model includes reducing the span of control by cluster heads to provide agility and better responsiveness to its diversified

[1] Diamond Bank Plc Annual Report 2016.  Reviewed on 20/5/2017

[2] Diamond Bank Plc Annual Report 2016.  Reviewed on 20/5/2017…..