First Gulf Bank - Total Quality Management System - Case Study Example

FIRST GULF BANK 1. Background First Gulf Bank (2008) states: First Gulf Bank is registered in Abu Dhabi under the UAE Federal Law 8 of 1984. It was incorporated in 1979 as a public joint stock company headquartered in Ajman Abu Dhabi, UAE. It is one of the largest equity based banks in the UAE with shareholder equity at AED 9 billion at end 2006. It provides financial services such as Corporate Banking, Treasury and Investment, and Retail Banking Services across the UAE with a wide distribution network of branches in different business and industrial areas. Fitch Ratings has affirmed the bank's ratings at Issuer Default 'A' with stable outlook, short-term 'F1', individual 'C' and support '1'. The individual ratings reflect FGB's sound capitalisation, growing franchise and good profitability and liquidity. In 2006 performance were improved with reported net income of AED1.5billion, equating to an average return on equity of 18.3%. The bank benefits from increased opportunities in the UAE to grow its loan book and fee income. First Gulf Bank (FGB) has been named the ‘Best Commercial Bank in the UAE’ by Asiamoney magazine (first’s gulf bank platinum credit card enhanced, 2008). 1.1. Vision First Gulf Bank vision is “to be a world-class organization maximizing value for all stake holders.” Their focus is to ensure that they consistently deliver world-class service to their customers, every single time. 1.2. Mission The mission of the shareholders is to establish FGB as a major player in the banking community in the UAE through: innovation, quality, customer service, team spirit and integrity. Pursuit of Innovation - First Gulf Bank continuously pursues innovation in the quest to deliver better products and services. It encourages new ideas to spur change and exceed customer expectations.  (Quality) Passion to Excel - First Gulf Bank is driven by a passion to excel in all it does with the ultimate aim of being truly a world-class organisation with an unwavering commitment to global service standards.  (Customer Service) People Focused - In line with its belief that people drive excellence and make the difference, First Gulf Bank creates opportunities to challenge its work force and empower it to grow and become world-class.  Trust and Integrity - At First Gulf Bank, trust and integrity are inherent ethics. Whether it is interaction with colleagues, customers, partners or stakeholders, the bank builds mutually beneficial and enduring relationships by adhering to these corporate principles. 1.3. Mission Statement First Gulf Bank (FGB) is taking its mission statement of 'putting the first into banking' seriously (First Strike, 2005). With a philosophy of making a difference in every sector it serves, FGB provides and optimises value to its shareholders, customers, and employees. It our belief that our employees are the driving force behind the bank’s success and growth, we give them the winning edge required to succeed in this extremely competitive Banking environment.  We, therefore, ensure that we attract, select and retain high caliber professionals, providing them with a multi-cultural work environment that values creativity and encourages them to realize their full potential and build a rewarding and satisfying career. We strives to set standards of excellence, explore new opportunities and pursue innovation.. The bank focuses on delivering products and services that address the needs of a dynamic economy, perpetuate progress and meet customer requirements. In line with its commitment to excellence it also continues to raise service standards, while simultaneously investing in technology, systems and people (First Gulf Bank, 2008). Believing in building relationships based on trust and mutual respect that prioritise customer care we endeavour to exceed client expectations by offering innovative banking solutions, converting challenges into opportunities, contributing to the community and making a difference to peoples’ lives. These had led the bank to tremendously expand its business operations over the last three years, increasing its profits and shareholders' earnings. Under a visionary leadership, expert management and a professional, committed and talented team the bank maintains a strong flexible synergy that fosters sustained growth. 2. Overview of Current TQM System The main thrust of FBG is to be recognised as a world-class organisation committed to maximising shareholder, customer and employee value. To this end, FGB offers variety of services tailored to the needs of their customers reflective to a competitive TQM. Stensgaard (2001) identified eight quality management principles observed by FGB: customer focus, leadership, people involvement, process and system approaches, continual improvement, and factual approach to decision-making and supplier relationships. Jones (2004) developed Gulf Bank’s service excellence “scorecard” to support the bank’s delivery of superior service in its market sector. The “scorecard” provides focus for a “service excellence” program, setting standards and measuring performance against customer focused objectives. The approach identified the “drivers” of customer satisfaction, related these to the Bank’s service delivery channels, set performance standards, and implemented measurement and reporting systems embracing external customer feedback and internal process measurements. Performance was measured against 16 key “drivers” of customer satisfaction identified independently by the local industry institute and related to the Bank’s delivery channels (branches, ATMs, telephone, Internet). Key measures were: customer satisfaction, complaints, comments and attrition, plus internal process delivery performance for critical products (consumer loans and credit card services). Reports were produced weekly and monthly with “drill downs” from bank to individual branch and/or employee levels. Reports are reviewed by management from chairman down to branch manager level. Results are incorporated in business KPIs and have become factors in employee incentive schemes. The approach adopted by the bank demonstrated that a practical, comprehensive service quality management system could be implemented and used to drive service improvement. At First Gulf Bank it’s all about ‘Minds at work creating ideas that work.’ That’s because they continuously innovate; create norms; convert challenges into possibilities; bring together world-class products and expertise to build enduring relationships based on integrity, commitment and trust; they focus on delivering products and services that perpetuate progress, responding to the needs of a dynamic economy; they take immense pride in their continued growth and commitment to excellence, and they believe that customer experience makes the brand. From providing innovative banking solutions to support economic and social activities, they aspire to: Making a Difference in the community, enriching lives.  Everyday At First Gulf Bank it’s all about you. They believe that it is you that Make a difference. (First Gulf Bank, 2008). 3. Leadership Status First Gulf Bank (2008) described, the manifested growth the bank stands today is the fruit of hardworking and visionary leaders whose aim is to make a difference in the lives of their people (First Gulf Bank 2008), FGB had a visionary leadership, expert management and a professional, committed and talented team the bank maintains a strong flexible synergy that fosters sustained growth. The ratings reflect the excellence of the financial performance, the quality of their assets and their employees and the fact that they are undertaking a clear and focused business strategy for the development of the Bank. Leaders will continue to focus on building the skills and talent of their staff to support their desire to provide the highest quality service to their clients.” Stensgaard (2004), In 2000, led by FGB's chief executive officer, Abdulhamid Saeed, the bank embarked on the first stage of a process of change, from people, systems, and policies, through to corporate identity and product and service offering. 'We are in a period of change for the better of all our target groups - our shareholders, our customers and our employees. This change is in the form of the new First Gulf Bank corporate identity,' said Saeed. Stensgaard (2004) The bank's new identity rides on the 'First' platform, using the number one in a manner that respects both Roman and Arabic numeric style, set within a diamond frame. A colour palette of burgundy, midnight blue and gold has been selected for its ability to communicate maturity and strength, while remaining contemporary, as befits the New Economic environment. The new logo and communications package, is supported by a strap line - 'Putting the First into Banking' - positioned to reinforce the Bank's adoption of a forward-thinking, innovative attitude. According to Saeed, the new look identity paves the way for a whole new approach to the bank's customer proposition : 'We have made a commitment to bring change to the world of financial services and one step in this direction is changing the way we look. 'The logo has been redesigned to take FGB forward. It gives them the individuality to position the bank 'top of the mind' among their target audience.' Saeed confirmed that the new look has been embraced across signage, marketing collateral, stationery, advertising and so on - and is designed to complement the interiors of FGB's new flagship branch in Dubai. They intend to rollout the new identity across all branches, using it to its maximum extent. The objective is to allow the visual branding to help build high profile awareness among their target group, communicating First Gulf Bank as the preferred bank in the UAE. 4. Customer Satisfaction Status At First Gulf Bank, 'Service Quality' is a key differentiator that helps build loyalty. They endeavoured to ensure customer satisfaction by delivering excellence in service to each one of their customers. They continuously seek to add value to each customer interaction and push the limits of the bank’s performance to exceed customer expectations. With this focus, they have established a dedicated Service Quality Department which aims at 'Making our Customers Winners'. In its quest to achieve this, the department's mission encompasses building a culture that fixes problems and gets quality right, the first time. The Unit plays critical role of a Change Agent and is also instrumental in maintaining the Quality Management Systems within the Bank. It also facilitates Process Improvement Initiatives and Strategic Projects which impact Reduction in Reworks and Turn around Time, Productivity Enhancement, Customer Satisfaction and Employee Satisfaction. Not one to rest on its laurels, the bank continues in its quality initiatives to deliver excellence in service to each one of its customer Management and staff strive to behave with fairness and respect towards their customers. They listen closely to their customers and they attempt to respond genuinely to their feedback. Research commissioned by FGB in 2006 showed a marked improvement in the level of customer satisfaction of their complaints handling procedures (First Gulf Bank, 2008). Their customer-facing staff receives extensive training in addressing customer needs and in offering and explaining the most appropriate services and products. In 2006, FGB outperformed regional banking industry norms in the key customer satisfaction measures of staff friendliness and knowledgeability (First Gulf Bank, 2008). First Gulf Bank (2008), to answer the needs of every customer, First Gulf Bank offers a range of financial services across the United Arab Emirates (UAE). It specializes in corporate banking, retail banking and treasury and investment services. For corporate customers the bank provides a range of services, including financing for the contractor, real estate and trade; financing the needs of the manufacturing and services sectors; extending loans against shares; and financing participation in IPOs to individuals and corporate clients. The real estate department provides real estate management, leasing services, advisory services and also sells properties. The company offers the standard range of retail banking services to its customers, including savings, current and fixed-deposit accounts, call deposits, personal and agricultural loans and ATMS. First Gulf Bank also provides its own credit card. According to Javed Afzal, Head of Retail Islamic Business of FGB, many of their customers, going to Makkah is a lifelong dream. This product, “Makkah Credit Card” offers every customer a chance to go to Makkah through its unique rewards programme, and two winners can have an unforgettable experience during the last 10 days of Ramadan, while staying in an apartment overlooking the Kaaba.' (Hassan, 2008) This opportunity is open to customers who apply for a Makkah Credit Card for the duration of Ramadan. Two lucky winners will get the chance to go on an Omrah trip for two in the last 10 days of Ramadan, with all expenses paid for, including accommodation at the Zam Zam Towers with spectacular view of the Kaaba (Hassan, 2008). ‘You can measure customer satisfaction and stakeholder value in a number of ways, and we recognize that today's customer needs even more than world-class products and services,' Mr. Afzal added. 'Not only do we strive to develop products that positively impact our customers' daily lives, we also strive to provide opportunities that will benefit our customers long-term. We are offering life-changing experiences to the people of the UAE.' (Hassan, 2008). Providing customers with a viable alternative to traditional interest laden products, the Makkah Credit Card offers convenient Shariah-compliant payment methods, and rewards cardholders with the opportunity to earn 'Steps' to travel to the Holy City of Makkah. For every Dhs1.00 spent on the card, customers earn one step. Additionally, in the Islamic spirit of community, the card provides protection against sudden tragedy (Hassan, 2008). The 'Takaful Income Plan' compensates the cardholder in unforeseen eventualities, such as accidental loss of life or permanent total disability as a result of an accident. Cardholders receive the protection at no extra charge and are automatically enrolled when they apply for the card. 'The Makkah Credit Card was, and continues to be, a unique product,' concluded Mr. Afzal. 'It has been an overwhelming success ever since its launch in April 2007 - the market response exceeded expectations in line with the exponential global demand for Shariah-compliant products. We will continue to offer our customers world-class products that allow them to keep pace with modern life, without compromising their beliefs.' (Hassan, 2008). 5. Other Relevant Information First Gulf Bank has the distinction of being the first bank in the UAE to have all Departments fully ISO 9001: 2000 certified.  The Bank also received the Dubai Quality Award in 2001 for Banking and Finance and the Shaikh Khalifa Excellence Award in 2002 for the Finance Sector. First Gulf Bank supports numerous causes for a brighter tomorrow – from supporting the development of the physically and mentally challenged, encouraging the spirit of sportsmanship, to motivating protection of the environment or promoting the value of education, the bank lends a hand.  First Gulf Bank believes it has a responsibility to the community in which it operates and undertakes active initiatives to make it a better place for everyone. Support of these activities reaffirms the bank’s commitment to making a difference in the lives of people… one that holds out the promise of a brighter future for all. In a move that underscores its commitment to the community, First Gulf Bank, one of the UAE's leading financial institutions, has signed an agreement with the Scholarship Coordination Office to provide scholarships to ten UAE Nationals under the Distinguished Student Scholarship (DSS) scheme. (Hassan, 2008). The bank’s strategy to venture into the real estate sector in 2005 has been phenomenal over the last couple of years. These two business segments have changed the overall trajectory of the bank. In our view, the aggressive strategy and management’s focus to venture into high yielding segments is likely to ensure robust earnings growth for the foreseeable future (Marfatia & Ali, 2008) First Gulf Bank (FGB) Board of Directors decided to initiate the Share Buyback program for up to 10% of the Bank's shares issued and traded in the market (Ammari, 2008) First Gulf Bank’s Platinum, Ladies, Gold and Standard Credit Cards offer unparalleled privileges and benefits that not only enhance your comfort and convenience, but also double your joy of having a credit card. The Card also entitles members to avail cash advances from more than 800,000 ATMs around the world. You can pay for almost everything from grocery bills to international travel on your First Gulf Bank Credit Card, and get rewarded through the very exclusive First Rewards, the special rewards programme that gives you more (Product Overview, 2006) Islamic Banking is the fastest growing segment of the Banking Industry in the Middle East. First Gulf Bank (FGB) recognizes and respects the desire of a growing number of its valued customers to conduct their banking and financial transactions in accordance with Islamic Sharia, and has launched Siraj the new era in Islamic Banking providing sharia-compliant products & services. Siraj offers financing for corporate entities, consumer finance (home/property finance for approved projects), and plans to offer investment services, shortly (Siraj-Islamic Banking, 2006) 6. Recommendations and Overcoming Obstacles (Include action plan and timeline) The Way Forward - Building on Strength First Gulf Bank has grown steadily over a number of years and it is their ultimate wish and strategy that this continues into the future. Their strategy is very clear, achieving planned consistent growth; it is also evolutionary, i.e. they will build on First Gulf Bank’s strength and address areas where further improvement is considered both desirable and attainable. Their strategy is integrated with their values and they aim to achieve long-term, ethical client relationships; high productivity through teamwork; a confident and ambitious sense of excellence; being international in outlook and character; prudence; creativity and innovation with customer specific marketing. They will continue to stay focused to their vision to be a world class financial institution with continued commitment towards all stakeholders. They will endeavour to build core businesses by expanding their portfolio, diversifying their financial activities, and by innovating products and services that address the needs of the economies they operate in. They will concentrate on growing earnings over the long term at a rate which will place them favourably when compared with their peer group. They will also focus on investing in delivery platforms, technology, people and their brand to support the future value of First Gulf Bank as reflected in their comparative stock market rating and total shareholder return (‘TSR’). Values, conduct and policies should be aligned with the needs and interests of the society and with those of the people who rely on them: their customers, staff and shareholders. They should build strategic decision to focus its initiatives on an area of greatest need for the development of their country’s skills base and human resources. through their own training and development programs and their support of important community and educational initiatives will be determined as part in helping future generations achieve their full potential. Andre Sayegh, CEO said: “Our most valuable assets are our people. We will continue to invest in their development, recognize and reward their efforts.” Commenting on the impressive results, Abdulhamid Saeed, FGB Managing Director said: “It is important that we continue to drive forward our business, ensuring that we incessantly raise the bar within our prospective markets. FGB is a leader in its field and we will continue to maintain and capitalise on this prominent positioning.” First Gulf Bank is a solid financial institution poised for continued growth in the market today. References: Ammari, S.S. “First Gulf Bank Initiates Share Buyback”. AME Info. November 19, 2008. 01 December 2008 < http://www.ameinfo.com/176300.html> First Gulf Bank. CBR.2008. 29 November 2008. First Gulf Bank. Focus Technology Co., Ltd. 2008. 27 November 2008 Hassan, E. “First Gulf Bank offers distinguished student scholarships to ten UAE nationals”. AME Info. June 28, 2008. 30 November 2008 Hassan, E. “First Gulf Bank’s Makkah Credit Card presents the opportunity of a lifetime”. AME Info. July 13, 2008. 30 November 2008 Jones, C.R. A “scorecard” for service excellence. Measuring Business Excellence. Vol. 8 (4), pp. 45-54. Emerald Group Publishing Ltd. 2004. Marfatia, M.J. and Ali, B. (27 July 2008). “First Gulf Bank: Growth across business lines”. The National Investor. July 27, 2008. 25 November 2008 “Product overview”. First Gulf Bank. 2006. 01 December 2008 Stensgaard, A.B. “First Gulf Bank – first UAE bank to be fully ISO 9001:2000 Certified”. AME Info. October 22, 2001 30 November 2008 “Siraj – Islamic Banking”. First Gulf Bank. June 28, 2008. 01 December 2008 Stensgaard, A.B. “First Gulf Bank launches new corporate identity”. AME Info. September 13, 200. 30 November 2008 Read More