Business — Banking — Management — Marketing & Sales

This function, totally dedicated to customers, relies on sales representatives and the branch network. It happens to be the core activity and the source of profitability of commercial banks.

Commercial function

This function is in-between the marketing function and the branch network; it is the interface that turns the main decisions coming from marketing into commercial actions to be carried out by the network.

Missions:

— decide on objectives and means to achieve the objectives.

— Follow up on objectives

— Give help to the branches for their commercial needs

— offer commercial techniques training

— be the link between the marketing department and the branches

Decentralised organisation

Most of the time, for efficiency reasons, a commercial function is decentralised within the regional structures, together with the risk management function.

The network function

1 Missions

Develop banking business by increasing the number of clients and increasing the financial flows and the number of products sold to the existing clientele.

Success depends on the time available for commercial contacts, on the strategy and the tools devised by the Marketing function.

Keep the existing customers within the bank by giving them the best services:

clients are welcomed by an efficient reception

operations are carried out in a timely fashion

questions are answered

problems are followed up

Manage risks by being very close to customers; for a decision on a credit line, the role of the network is predominant, even if the final decision is not theirs, because they are the only ones to know the customer.

When the loan has been credited to the account of the customer, the network is in charge of the supervision of the regular reimbursement and, in case of difficulties, will help the bank recover the principal of the loan.

2 Different types of customers

Industrial and commercial companies

Professionals (traders, shop-keepers)

Private customers

The diversity of the needs and expectations of these customers require much professionalism and specialisation from people within the bank.

3 The organisation of the network

When faced with a detersive clientele, specialised branches can provide highly specialised staff.

A branch works like a small enterprise and is a profit centre by itself; it is usually organised as follows:

A branch Manager in charge of handling operations, achieving objectives, managing time for staff, risk control and Human resources; he can be helped by a deputy-manager, depending on the size of the branch.

Highly-qualified. staff, either specialists in savings or credits, or generalists in charge of developing business.

Staff in charge of customers visiting the bank office.

Back office in charge of administrative tasks; depending on the degree of decentralisation and autoimmunization. As a rule, their number is decreasing compared to commercial staff.

4 Looking for productivity and more commercial time

Thanks to technological innovations (telecommunications, micro-computers), autoimmunization and externalization productivity has improved and gives more time to commercial activity.

Autoimmunisation is the automatic processing of series of operations that were made by hand previously (cheques, bills).

Externalisation is the processing of operations outside the traditional network (cash machines, etc.). These evolutions can cut down the number of employees and create more freed time for staff, there are management problem.

This function is organised as follows:

— decision on credit line

— account is credited of the amount

— follow up on credit line

— reimbursements of credit

— if not legal action is taken

Analysis and organisation of credit

1 The analysis

The objective of this analysis is to get to a well documented decision which, if positive, will start the credit; it must be quick, but also pertinent.

Filling in a credit document follows certain rules common to all banks, with some variations for certain banks.

The final decision can be taken within the branch if the levels of delegation are sufficient or at a higher level (regional for instance) up to the General Management when the amount is very important.

Delegation criteria can be either qualitative or quantitative.

2 The credit line

This process usually done by the administrative department involves: registering, crediting the account, checking legal aspects, checking the authorisation, registering the guarantees, drawing up of statistical statements.

Management of the credit and line and follow up

1 Management

Renewing credit lines

Managing repayments

Changing interest rates, repayment amounts or schedule.

Managing special events (anticipated repayment)

Sending the necessary data to financial functions.

2 Follow up

Is usually the responsibility of the branch, this consists of the in anticipation financial problems customers and assisting them to find solutions.

The recovery of the loan

The normal ending of a credit line is its repayment to the bank, but more and more often, repayments are not made on the agreed maturity; so banks face a counterpart risk; if the boans repayment can not be renegotiated legal action will be taken.

1 Friendly solution: the branch is in charge of:

Identifying a customer’s in difficulties

working out an agreement for repayment:

Delaying the maturity of the repayment

a moratorium

Changing the maturity of the whole amount

Renegotiating the interest rate.

Writing off the loan.

2 Legal repayment: the legal department is in charge of:

Taking the precautionary measures (garnishments, seizure of real estate)

Starting legal procedures.

Getting in touch with lawyers

to calculate the level of the provisions for bad debts.