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STRATEGY EXECUTION WITH BALANCED SCORECARDGROUP PROJECTONACCESS BANK PLC BY

Table of Contents

1.0 Executive Summary2.0 Introduction 2.1 Company Profile2.2 About Access Bank2.3 Trends2.4 Operational Environment3.0 External Analysis

4.0 Recommendations and Conclusion5.0 ReferencesList of Figures1.0EXECUTIVE SUMMARYAccess Bank Plc is the third largest bank in Nigeria by market share, out of a total of 21 commercial banks. The bank was established in February 1989, but commenced business in 1990. The bank is a major player in the oil, gas, energy, fast moving consumer goods and multinationals sectors, in financial and educational institutions and in real estates. With its corporate head office in Lagos, the bank has nine offshore subsidiaries including the United Kingdom, DR Congo, Gambia, Ghana, Rwanda, Sierra Leone, Zambia and Burundi.

Access bank, over the years, has grown from a position of 65 out of 89 banks in the country to the 3rd largest bank in Nigeria. The take-over of the bank by a new management in 2002 was highly instrumental to the achievement of this feat. The management executed a number of strategies including both organic and inorganic growth strategies, manpower development, active employee participation and a reward system that only rewarded high performing individuals or teams. In addition a culture of excellence was inculcated in the minds of the employee, through ensuring that employees buy-in to the mission, vision and strategic objectives of the bank. In the execution of its growth strategy, the bank adopted a of low centralisation with an element of organic structure, where the corporate head office is responsible for policy formulation and management of strategic decision and the branches are expected to implement the decisions from the corporate head office. Branches are allowed the latitude to take decisions on their daily operations, as long as it is within the comfort of the established policies or operating procedures in the bank. Also, branches are empowered to approve credits within their limits as captured in the banks credit policy guide. Credit approvals outside the branchs limit are sent to the applicable officers for approval in line with the banks credit policy guide. 2.0 INTRODUCTION COMPANY PROFILE

Access Bank is a full service corporate-commercial bank group operating through a network of over 350 branches located in all major commercial centers / cities across Nigeria and service outlets in the UK, and eight other African countries (Gambia, Ghana, Burundi, Sierra Leone, Zambia, DR Congo, Cote dIvoire, Rwanda).

VISION Access Banks vision (see appendix) is to be the worlds most respected African Bank. Using its growing network, it aims to facilitate inter and intra African trade by working with businesses and organizations to grow them and empowering the vertical and horizontal value-chain stakeholders (the suppliers and distributors).

Through the maintenance of a quality balance sheet, it supports infrastructural development and fast becoming an active change agent in Africa across the continent and is the leading bank in Africas renaissance.

MISSIONAccess Banks mission (see appendix) is Setting standards for sustainable business practices that unleash the talents of our employees, deliver superior value to our customers and provide innovative solutions for the markets and communities we serve. Its business strategy is built on being the bank of choice for businesses across the African continent. The bank values its reputation as a financial institution, conducting its businesses within strict regulatory guidelines in a way that protects its reputation, coupled with a strong emphasis on delivering exceptional customer service.

Essentially, the bank has the following strategic roadmap for the next five years, which sets a new agenda, and one that will sustain the growth trend of the bank. SHARED (CORE) VALUESAccess Bank provides employment directly or indirectly to 8,250 employees who fondly refer to themselves as 'Access Warriors'. The employees (most important resource) are guided by the groups core values of Excellence, Innovation, Empowered employee, Professionalism, Passion for customers and Leadership. The Bank's 'best-place-to-work initiative' has created a pleasant work environment where young professionals have grown and transformed into accomplished and well-motivated professionals.Access Bank has a consistent brand promise for its customers which is built around what is largely referred to as the 3S within the bank which stands for (Speed, Service and Security). The brand promise is defined as follows:

Speed: Driving new innovations in the banking sector at record speed

Service: Providing a world class and unparalled customer experienceSecurity: Generating safe, consistent and sustainable returns for investorsStrategic Objectives: Strong growth by adopting an aggressive approach to market, tagged Access United, which involves huge employee participation as all categories of staff are involved. The focal point of the initiative is on driving deposit growth, improving cross selling and value chain banking through enhanced synergies across the Group. In line with the Access United campaign, the Bank intends to attain the following milestones by 2017:

Be a truly multi-channel bank

Rank 1st, 2nd or 3rd in each market we serve

Be the preferred African bank in Africas most attractive markets

Have a global operating model

Core capabilities to achieve market leadership in the Nigerian and African market

- Introduction of innovative cutting edge technology in the delivery of products and services.

- Attraction, development and retention of high performing (sales) staff.

- Customer Service Excellence (>90%) and continuous employee engagement (>90%).

The Nigerian banking sector consists of three main segments (retail, small and medium-scale enterprises (SMEs) and corporate/commercial customers) which are evenly spread across the country, though the corporate/commercial customers are found majorly in major cities and towns (see appendix 16). The major competitors of Access Bank in the Nigerian market in decreasing order of importance are Guaranty Trust Bank (GTB) Plc, Zenith Bank Plc, First Bank of Nigeria (FBN) Limited, UBA Bank Plc and Diamond Bank Plc. GTB is the market leader judging by its financial indices and customer service excellence reputation. While FBN and Diamond compete with Access Bank majorly in the retail and SME segments, Zenith, GTB and UBA compete with Access Bank in the corporate segment. The major suppliers (among other bank contractors) are institutional and non-institutional fund providers and providers of banking software, ERP and CRM systems (like Oracle, Infosys technologies, Parkway, Nucleus, Harland, etc.) - these are mainly foreign companies, are highly fragmented and operate via local agents/partners.

Deploy best-in-class technology in Africa3.0EXTERNAL ANALYSISMarket Insights Key Trends

Banks contending with a lower yield environment and pressure on fee income Attention returning to the customer as banks look to grow earnings

Customers are redefining the agenda for the first time in five years Excellent customer service has replaced financial stability as the primary reason for maintaining banking relationships in the retail and corporate segments (see appendix xx)

An increase in the number of retail banking customers that are either planning to or have recently switched banks

Prevalence of customers with multi-bank relationships (see appendix xx)

In the corporate segment, knowledge of their business is extremely important and a key driver of satisfaction (KPMG, 2014) Value chain

PRIMARY ACTIVITIES

EXTERNAL FACTORSOPERATIONSDELIVERY CHANNELSMARKETING&

SALESREVENUE STREAMS

CAPITAL STRUCTURE REGULATORY AGENCIES FEDERAL RESERVE CLEARING PARTNER ALLIANCE PARTNER

DEPOSITS SERVICES

LOAN ADMINISTRATION

TREASURY OPERATION

ITEM PROCESSING

PAYMENT PROCESSING

REGULATORY REPORTING BRANCH NETWORK

ATM NETWORK

INTERNET

CALLING OFFICER

TELEPHONE BANKING

MOBILE BANKING

BANK BY MAIL

CALL CENTER BRANDING

DEPOSIT GATHERING

CROSS SALES

FEES REVENUE GENERATION

PUBLIC RELATION

COMMUNITY RELATION

COMPETITIVE AFFAIRS

NEW ACCOUNT ACQUISITION BANKING PRODUCT

INSURANCE PRODUCT

INVESTMENT PRODUCT

BUSINESS SERVICE

TREASURY SERVICE

WEALTH MANG. SERVICE

Porters 5 Force AnalysisEven though, the industry environment is relatively dynamic, PESTEL and Porters 5-forces analyses that follow can adequately describe it and indicate how it has reached its current form as well as what kind of trends are evolving for the future. Our teams analysis of the Nigerian banking industry attractiveness using the well-known Michael Porters five-force model (shown below) and PESTEL analysis showed that the industry is relatively unattractive.

1. Buyer Power The power of the buyers in this industry is very high. This is because the buyers (bank customers) are well-informed and are aware of the fact that there are at least 24 banks (ICR, 2009) that are competing for their patronage. Customers (buyers) are in three segments retail, small and medium scale enterprises (SMEs) and corporate customers. There are general key success factors (KSFs) across all segments like customer service excellence, brand reputation, banks financial stability and customer-centric staff. However, for the corporate segment, distinguishing KSFs include sound knowledge of their business and business cycle as well as easy access to foreign currency-denominated credit lines. Differentiating KSFs for the retail segment include adequate branch network and alternative banking channels. For the SME segment, easy access to soft loans (without the need for much collateral) and fast turnaround time for credit processing are unique value differentiators. Buyers are highly concentrated (especially in major cities and capitals) and are individual in orientation (decision-making). Buyers are also price-sensitive and have low switching cost; hence, they have high bargaining leverage.

2. Supplier Power The suppliers include providers of banking software, CRM and ERP systems as well as key sources of suppliers cost, which include but are not limited to cost of money or the saving rate offered to depositors (individuals, the inter-banking lending system and Central bank of Nigeria - CBN) and employees (c/o wages through unions). There are many suppliers of banking software, CRM and ERP systems in the market and they are highly fragmented. The threat of forward integration by these suppliers is also low. Medium to long-term contracts are usually signed with them in order to lock them in. There are two major sources of funds in the Nigerian banking industry, institutional (insurance and re-insurance companies, government agencies and ministries, pension fund administrators, mutual fund managers, commercial banks, CBN, SMEs and corporate bank customers) and non-institutional fund providers (retail customers). The cost of fund (between 12 and 15% p.a) from institutional fund providers compared to their non-institutional (3% for savings account, 0% for current accounts and 6-12% for fixed deposit funds) counterparts whose funds make up about 40% of the circulating funds in the industry. Inter-banking system is quite flexible and is moderated by the CBN based on the state on the nations economy, the cost of funds from this source averages between 10 and 10.5% currently. Overall, supplier power is relatively medium to high.3. Threat of substitution: The threat of substitution is very high. This is because buyers switching cost is low as there are many banks offering similar products and services in the market. Other substitutes to banking services include investing in real estate, mutual funds, T-bills and government securities, as well as borrowing from private lenders and non-bank financial companies (NBFCs) like Credit and Thrift Investment societies. The returns on investing funds with these substitutes are higher and riskier (except for T-bills and government securities) compared to banking products, though their lending rates are much higher with stiffer penalties in case of loan default. However, with customer service excellence, ease of banking, easy access to credits, ease of international trade and good branch network, the major competitive weapons in this industry, etc., a player can distinguish himself in such a way to command a high patronage through value-added services, thereby decreasing the threat of substitution4. Threat of new entry: The threat of new entry is medium especially for overseas banks due to the fact that local banks are well capitalized and are able to customize their offerings to meet local demands in a way that will be difficult for overseas banks to replicate. Apart from the required N25 Billion capital base by CBN, low product differentiation and other regulatory requirements, cultural norms and sentiments endear locals to the local banks compared to their foreign counterparts which have found it very difficult to make it to the list of the top 10 banks in the Nigeria over the years. Though the capital requirement to start is small, the value of important networks in this industry cannot be over-emphasized as it makes a company grow ahead of the learning curve. Economies of scale is only achieved with an increase in the scope of the business and customers patronage.5. Strength of competitive rivalry: This is very high because we have key strong players with almost equal capabilities and low product differentiation. The top four banks (GTB, First Bank, Zenith and Access Bank) control about 35% of the market share, while exhibiting a cut-throat rivalry due to the maturing state of the nearly perfect competitive market (Asogwa, 2002). The exit barriers are also very high due to the huge investment in assets, except in the case of bank liquidation which is quite rare. Zero sum competition, which exists in the market, also makes the industry rivalry very strong. Key competitive weapons include customer service excellence, product and service innovation, customer relations (especially for institutional fund providers) and other KSFs discussed under Buyer Power. Macro Trends PESTELPOLITICAL1. High Rate of Corruption: Corruption is endemic, with Nigeria scoring just 2.5 in Transparency Internationals Corruption Perceptions Index, which places it 130th out of 180 countries worldwide. This may discourage potential foreign investors in the industry as it may increase their level of apprehension.2. Political Stability: The political environment has been stable since 1999 but there is political uncertainty as an election year (2015) approaches. This has the potential impact of slowing down the attraction of foreign direct investments into the market due to the uncertainty in the likelihood shift in power and political alignment since the CBN governor is a political appointee of the sitting President.

3. Ongoing political problems that keep oil production below its full potential. Except this is assuaged, it may increase buyer power tremendously especially for the non-institutional investors since oil production is the mainstay of the economy.

Tightening of monetary policy

Repeal of universal banking model

Crime and Insecurity

ECONOMIC

1. Industrial Growth: Nigerias perceived dependence on oil makes it more vulnerable. A severe blow below the belt to the oil industry (e.g. a very sharp drop in the international price of crude oil) may have ripple effects on other industries in the economy. However, huge infrastructural development and reforms in power, Gas, Oil and Agriculture industry show positive signs for the future growth of the industry.2. Banking reforms: Ongoing banking sector reforms have the potential to create a consolidated and much more efficient financial infrastructure (Premium Times, 2013). This has caused a shift in the main key success factor in the industry from being financial stability and reputation to customer service excellence since we have fewer but stronger banks compared to previous years. It has also increased the industrys competitive rivalry, further decreased likelihood of financial strength being an advantage on the part of foreign-owned banks and boosted the focus on the customer satisfaction.

3. Recent GDP rebasing of the country to $510billion, with a new base year of 2010, as opposed to 1990, when the last rebasing exercise was done. This propelled the Nigerian economy to number one spot in Africa, and 26th in the world making the country a destination haven for investments (see Appendix x). This also reduces the unemployment rate in the country4. Increasing FDI: Foreign direct investment has brought overseas players into Nigeria, which should help with the spread of international business norms. This has continuously increased the competitive rivalry in the industry, a situation best described as the survival of the fittest. A relatively stable exchange rate has however reduced the worries of incurring losses. SOCIO-CULTURAL1. Increase in Banked population: A large and growing population means an abundant supply of cheap, albeit unskilled, labor and a growing consumer market. This makes the industry very attractive to potential (foreign) investors, thereby increasing the industry competitive rivalry and threat of new entries into the market.2. Shifting customer demography: Young population ratio is on the higher side. 50% of population is in this category. This partly explains the acceptance of the improved technology by the customers. Younger customers (under-30) are particularly more sophisticated and less loyal, they are twice more likely to change banks compared to customers above 60 years. This has increased the level of buyer power since they are more informed, more demanding, highly educated and are multi-banked.TECHNOLOGICAL1. Popularity of Mobile banking: Increasing popularity of mobile banking technologies and modern banking tools (appendices 2, 3, 4 and 6) in order to appeal strongly and get a good patronage from the growing population of young urban professionals who form a large chunk of banks customer base. Mobile money platforms also open up means to cheaply and effectively reach the unbanked and to tap into enormous payment/transaction revenue opportunities2. Adaptation to improved technology: Use of modern Automated Teller Machines (ATMs) that accept cash deposits. This is a recent product innovation in terms of alternative banking channels that is fast endearing customers to banks that provide such services (especially young urban professionals) who do not need to queue up in banks in order to deposit, receive or transfer cash.

ENVIRONMENTAL 1. Taxation policies: Taxation is relatively low; with VAT just 5%, corporate tax 30% and individual income tax rising progressively to a top rate of 25%. This makes the industry very attractive to potential (foreign) investors, thereby increasing the industry competitive rivalry and threat of new entries into the market.2. Regulatory and surveillance framework: Increased regulatory activities by the Central Bank of Nigeria (CBN). This has the effect of boosting potential foreign investors confidence in the industry, with the resultant effect of increasing the power of buyers and suppliers (fund providers), as well as threat of new entries and increased industry rivalry.LEGAL1. Uncertainty over the outcome of the suspension of the CBN governor by the countrys President, the former having gone to court to seek redress. This has a tendency of sending the wrong signals to local institutional fund providers (suppliers) and potential foreign investors as he is widely perceived to be the stabilizing factor of the industry.

2. Unresolved court cases involving sacked bank chiefs indicted for corruption and poor corporate governance practices. This may also increase the level of apprehension of local institutional fund providers (suppliers) and potential foreign investors, and thereby slow down the attraction of foreign direct investments into the industry.

Key Success Factors (KSFs)

The key success factors for the Nigerian banking industry differ among the customer segment types (retail, commercial/corporate and SMEs) as explained under Buyer Power in PESTEL analysis above also see appendix xx.

How PESTEL analysis relates to Porters 5-forces model, future projections and strategic recommendations based on the identified KSFs

Buyer Power

Increased customer convenience in conducting transactions due to more sophisticated technologies

Customers have become more demanding better quality (smoother and simplified processes) at lower costs and improved security of online services

Young professionals (with distinct priorities and preferences) of today are fast becoming a significant revenue driver for the retail segment in the future due to shifting demographics in their favor

Shift of focus from price as competitive weapon to customer service excellence (appendix 10)

Banks e-payment capabilities and product suitability are now of critical importance to corporate/commercial segment of the market.

Supplier Power

CBNs cashless policy continues to shape the payments landscape. Relatively stable monetary policy of the CBN may continue to reduce the power of fund providers with time.

Competitive Rivalry Innovation with online and e-payment solutions fast becoming the differentiating factor among competing banks.

Value co-creation with bank customers for product development process is fast becoming a popular trend among the key players in the market, especially in the retail and SME segments. This will shape the future of banking landscape and competitive rivalry in the industry.

Threat of new entrants

Increased government regulations has boosted potential investors interest in the industry with the possibility of increasing the threat of new entrants.

There is the increased tendency of foreign-owned banks to customize their product/service offerings to appeal to the cultural and religious sentiments of the citizens in order to satisfy local customer demands.

Threat of substitutes Improved confidence in the banking industry, coupled with a relatively stable monetary policy, may continue to reduce the likely threat of substitutes identified previously under PESTEL analysis.

With the falling prices of real estate, inhibitory interest rates and increasing incidences of default with non-bank financial institutions, the banking industry will continue to gain more patronage from the investing public (businesses) and depositors. This has the potential impact of reducing the threat of substitutes.

Internal Analysis

Appraising Resources and Capabilities (R&C): The Case of Access Bank Plc

ResourcesDefinitionRelative Strength / ImportanceCapabilitiesDefinitionRelative Strength / Importance

R1. Customer experienceStaff members with ability to create a positive consumer experience at all point of sale and provide post-sale service7/10C1. Marketing and SalesManagement process through which goods and services move from concept to the customer7/9

R2. Branch Spread and ambienceGeographical spread Ambience, Accessibility, Availability of parking space7/10C2. Product DevelopmentCapability for improving an existing product or developing new kinds of products5/7

R3. Secure and modern IT systemsAvailability of alternative banking channels and less incidence of online fraud9/10C3. Financial ManagementEfficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization8/9

R4. Innovative and Industry-best StaffTop of the range and well-trained staff in line with consumer changing needs and modern banking trends5/7C4. Corporate Social ResponsibilityCorporate initiatives to assess and take responsibility for the company's effects on the environment and impact on social welfare5/6

R5. Financial ResourcesA stable and constantly improving mix of assets (55%) and liability (45%) 6/8C5. Customer RelationsModel for managing companys interactions with current and future customers. It involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support5/6

R6. Brand Reputation (Brand Equity)The commercial value of the bank that derives from consumer perception of the brand name

5/7C6. Credit Risk Management FrameworkEssential supporting structure for the identification, measurement, monitoring and control of risk arising from the possibility of default in loan repayments6/7

R7. Network InfrastructureArchitecture of the banks ICT systems, in terms of equipment and connections8/9C7. Operational efficiencyCapability to deliver products or services to its customers in the most cost-effective manner possible while still ensuring the high quality of its products, service and support.6/8

C8. Employee training and engagementCapability to train and harness organization members' selves to their work roles in such a way that staff members can employ and express themselves physically, cognitively, and emotionally during role performances7/9

Recommendation from the R & C Analysis

Strategy Map and Balance Scorecard at Access BankThe strategic importance of strategy map and balance scorecard in commercial banks have been extensively discussed in literature by many authors (Dave and Dave, 2012; Al-Najjar and Kalaf, 2012; Zhang and Li, 2009), including the accompanying challenges. Strategy Map and balance Scorecard help to evaluate the strategic performance of an organization by analyzing the cause-effect relationships between the non-financial and the financial dimensions and how to turn strategic vision into potential performance.

By integrating the banks vision, mission and values with the inferences from our external/industry analysis (PESTEL and Porters 5-forces model) and internal company analysis (as described under R&C matrix above), our group developed the Balanced Scorecard and the Strategy Map for the bank.

STRATEGY MAP OF ACCESS BANK PLC

REFERENCES

Access Bank (2014) About Us. Available at: https://www.accessbankplc.com/aboutus. {Accessed: 12 October 2014} Du Plooy, J, & Roodt, G (2010), 'WORK ENGAGEMENT, BURNOUT AND RELATED CONSTRUCTS AS PREDICTORS OF TURNOVER INTENTIONS', SAJIP: South African Journal Of Industrial Psychology, 36, 1, pp. 1-13, Academic Search Premier, EBSCOhost, viewed 19 October 2014

Henry, A (2012), 'EFFECTS OF MONETARY POLICY ON BANKS ASSET PORTFOLIO BEHAVIOUR; EVIDENCE FROM NIGERIAN ECONOMY (1980 - 2009)', International Journal Of Academic Research, 4, 5, pp. 103-117, Academic Search Premier, EBSCOhost, viewed 19 October 2014

NOSSITER, A (2014), 'Nigerians Ask Why Oil Funds Are Missing', New York Times, 10 March, Academic Search Premier, EBSCOhost, viewed 19 October 2014

Ramoo, V, Abdullah, K, & Piaw, C (2013), 'The relationship between job satisfaction and intention to leave current employment among registered nurses in a teaching hospital', Journal Of Clinical Nursing, 22, 21/22, pp. 3141-3152, Academic Search Premier, EBSCOhost, viewed 19 October 2014

Uzoechi, N (2011), 'Rethinking Labour Turnover: Prospecting For Shared Leadership', Petroleum - Gas University Of Ploiesti Bulletin, Technical Series, 63, 4, pp. 1-10, Academic Search Premier, EBSCOhost, viewed 19 October

Wheary, J (2009), 'One Step Forward, Two Steps Back', World Policy Journal, 26, 4, pp. 80-81, Academic Search Premier, EBSCOhost, viewed 19 October 2014.

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PRIMARY ACTIVITIES

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