Faculty of Commerce, Law and Management

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The Delivery of Retail Banking Products to the Unbanked
(2011-10-20) Urquhart, Robert
The banking sector in South Africa is grappling with an imperative to transform of which one of the most significant issues is that of providing banking products and services to a market segment that has historically been excluded and neglected from access to financial products and services. The initiatives of the Financial Sector Charter have sought to address these imbalances, and signatories to the Charter have committed to providing the unbanked market segment with appropriate financial products and services. The purpose of this research has been to explore the requirements for providing banking products and services to the unbanked market segment and the challenges that the banks face in this regard. The research was qualitative and exploratory in nature. In-depth interviews were conducted with a sample of twenty representatives from retail banking institutions and institutions that provide research or consulting support in the banking industry. Respondents were selected through a combination of purposive and snowball sampling, based on their expertise. Content analysis was conducted on the outcomes of the interviews, and results compared to the literature. Based on the data collected, a sustainable value proposition for the banks‟ involvement in the unbanked market segment was identified as a prerequisite. This must be accompanied by an appropriate design of product and service features that reflects a segmented understanding of customers needs, an affordable price offering, a high level of customer interaction, and the accessible provision of such services. Such provision must be underpinned by the right mix of competencies, capabilities and skills, and must be supported by flexible and innovative operational models. These findings were integrated to provide a holistic model of the key factors required for the successful delivery of banking products and services to the unbanked market segment
CONSUMER ACCEPTANCE OF ELECTRONIC PURSES AS A PAYMENT FOR LOW VALUE TRANSACTIONS
(2011-10-20) van der Leij, Sybren
The purpose of this research was to determine whether electronic purse (e-purse) schemes could be positioned as alternatives to existing payment methods for low value transactions. The focus was on low value transactions since it was widely believed that this was the area for which e-purse schemes were best suited. The existing payment methods considered in this research included:  Credit Cards  Debit Cards  Cheques  Cash Conjoint analysis was used to analyse the contribution made by various attributes associated with payment methods towards the overall perception of the payment methods by consumers. It was determined that the cost of a transaction and the security the payment method offered against theft, were by far the most important requirements for the likely adoption of a payment method. This implied that PIN protected e-purse schemes were well suited for the low value transaction market.
CONSUMER BEHAVIOUR IN PRIVATE BANKING
(2011-10-20) van der Merwe, Carol-Ann
Appropriately segmented target markets guide effective business strategies. Most South African private banks use wealth to segment clients, for example, into high net worth and high income markets. This ignores the differences in and similarities of clients‟ motivations, expected benefits, attitudes, perceptions and product usage. The purpose of this research was to investigate any differences in the consumer behaviour of high net worth and high income individuals. Factor analysis was used to reduce 28 variables into four factors reflecting consumer behaviour patterns in private banking: Involved Decision Making, Traditional Private Banking, Valued Bank Relationships and Personal Interaction Trade-off. T-testing was done to determine any significant differences. The findings revealed that no significant difference existed between high net worth and high income individuals. The implication is that in addition to using wealth as a segmentation criterion, private banks will have to incorporate consumer behaviour criteria to improve their market segmentation models
ACTIVITY-BASED COST MANAGEMENT IN THE BANKING SECTOR
(2011-10-20) van der Walt, Petrus Stefanus
The South African banking sector is characterised as being highly competitive and has adopted several management accounting techniques to assist in setting the direction for the sector. As a consequence, activity-based costing (ABC) is one of the techniques employed. The research evaluated the appropriateness of ABC in the banking sector. Champions and users of ABC in the four major banks of South Africa were interviewed together with implementation consultants. The research found that ABC has particular value in the application of internal transfer pricing. The internal focus of transfer pricing raise some concern on the external value added by ABC. Differing views exist on further application of ABC. As far as implementation goes, all banks have implemented ABC with varying degrees of success. One of the major considerations that surfaced is the level of ownership by the business and continuous maintenance of the ABC system.
DETERMINANTS OF CUSTOMER SWITCHING BEHAVIOUR IN RETAIL BANKING
(2011-07-14) Munsamy, Herman
There are many studies that highlight the significant benefits of building long-term relationships with customers (Reichheld & Sasser, 1990; Dick & Basu, 1994 and Clayton-Smith, 1996). Hence, understanding the reasons why customers switch service providers becomes an important business imperative in ensuring profitability. The objective of the study was to establish the factors which influence customer-switching behaviour in retail banking, identify if any differences exist based on the service relationship customers had with their retail banks, and then determine the influence of loyalty programmes on these factors. The research indicates that Keaveney‟s (1995) exploratory model into switching incidents in service industry found support in the current study. Seven of the eight incidents postulated by Keaveney (1995) were highlighted as factors influencing customer-switching behaviour in retail banking. Further analysis on the relationship these customers had with their banks indicated that certain factors impacted more strongly on some groups than others. The respondent perceptions of seven of the eight factors did not differ across whether they subscribed to a loyalty programme or not. Only competitive attractiveness, illustrated that there was a significant difference in the response of the respondents. By understanding these relationships or corroboration, retail banks would be able to better understand the reasons for customer defection and institute strategies, which would curb a customer‟s tendency to switch
AN EVALUATION OF THE INFORMATION TECHNOLOGY-ASSISTED HUMAN RESOURCE TRANSFORMATION IN A RETAIL BANK
(2011-07-14) Meyburgh, Marcelle
The objective of this research was to investigate the IT-assisted HR transformation at a Retail Bank. The research firstly sought to determine the strategic imperatives driving the need to change and reposition the HR function in the Bank. Secondly, the research aimed to understand what form the HR function would assume in light of this change as well as in response to new HR administration and transaction processes and structures as a result of the SAP HR IT system implementation and the set up of the new HR shared services centre. The approach taken by the Bank to implement this change in the HR function was compared to that proposed by David Ulrich. The data for analysis were collected via a qualitative method using a personal interview questionnaire as well as a quantitative method, using a survey designed and tested by David Ulrich and Jill Connor. Following the interpretation of results, the researcher made recommendations to management general regarding the approach for implementing this change
DETERMINANTS AND EFFECTS OF FOREIGN MERCHANT BANK ENTRY INTO SOUTH AFRICA
(2011-07-14) McNaughton, Mary -Jane
The expansion of foreign-owned banks into South Africa portrays similar characteristics to those of foreign bank entry into other emerging economies of the world. The literature on the determinants of entry and implications of foreign bank presence has focused on developed markets in Europe and the United States, while literature devoted to emerging economies has predominantly examined Asia, Eastern Europe and South America. Drawing on the international studies of foreign bank entry, this report attempts to critically analyse the reasons behind the expansion of foreign banks into the South African market. The report also examines the impact that foreign banks have on the South African banking industry, and identifies apparent comparative advantages that international foreign banks have over their South African counterparts. Lastly, the paper includes a survey of what the Investment Banking landscape in South Africa may look like for Global Investment Banks in five years time. The research elicited some interesting findings. Foreign banks are entering the South African economy to capitalise on various new market opportunities offered by a sophisticated and interesting financial market and well-developed infrastructure. They also, however, are nurturing their customer relationships by following global companies abroad in order to serve their investment and commercial banking needs in these markets. Global banks are in a strong position to offer services to multinationals due to their global brand, international location and global network. Many foreign banks have identified Africa as an untapped market with attractive business opportunities. Since South Africa is the ‗listening post‘ into Africa, foreign banks have an added advantage in holding a presence in South Africa. Foreign banks operating in South Africa hold comparative advantages in that they exist as global financial networks. They can, for instance, draw on their parent bank‘s capital base and the group‘s global knowledge base. Lastly, foreign banks have introduced healthy competition and efficiencies into the local banking market, and have contributed to South Africa‘s competitiveness in the global financial market arena.
THE RELATIVE IMPORTANCE OF BRANDING TO
(2011-06-24) Warnick, Tracy
The recent rise in the numbers of high net worth and high net income individuals and deregulation, globalisation and information access has driven the rapid growth in private banking in South Africa. Competition is fierce and differentiation on the basis of innovation and price only deliver short term advantages. It is envisaged that brands will play an increasingly important role in distinguishing private banks as customers become more discriminating and demanding. This study aims to better understand the importance of branding from a potential and existing client perspective and develop a series of recommendations for business and brand managers in private banks to successfully build their brands. A qualitative study was undertaken and in-depth interviews were employed to uncover client’s perceptions of private banking and understand the importance of the brand relative to other key attributes. The overall finding is that brand is as important as attributes such as the product offering, the additional benefits and access to information. Clients want to associate with a private bank and want to be treated as individuals. They want to feel special and recognised and they want private banks to be more proactive in terms of addressing their needs. Private Bank employees have considerable influence on the perception of the brand. It appears that Private Banks have a way to go when it comes to branding.
Distressed debt recovery methods
(2011-06-23) van der Walt, Jan Vorster
The way banks recover distressed debt has become an important subject locally as well as on international level. Dedicated conferences are held annually on the benefit derived by using methods other than liquidation to recover distressed debt and many forums advocate that alternative methods could yield better returns than liquidation. Many first world countries around the world have adopted legislation (such as the well known chapter 11 in the United States) to provide the necessary protection and time for a business rescue plan to be developed and implemented as an alternative to liquidation. Legislation to this end in South Africa is contained in the Companies Act and is known as judicial management. However, as set out in this research report, judicial management proved to be unsuccessful as a distressed debt recovery method and, historically, banks used liquidation as their only alternative to recover distressed debt. Lately, however, in the wake of international developments in the area, banks in South Africa have become very innovative in the way they recover distressed debt. Banks realise that liquidation as the sole distressed debt recovery method does not yield acceptable returns and have been exploring other alternatives to yield better results. To this end, this research report identifies the various distressed debt recovery methods that are available to and used by South African banks, as well as the impact of key factors on the selection of one method above another to recover distressed debt. As such, this research report developed a framework that can be used by South African banks to identify the most appropriate distressed debt recovery method given the impact of these key factors
COST AND PROFIT EFFICIENCY OF SOUTH
(2011-06-15) Siyaka, Nokuthula
The purpose of this study is to analyse the cost and profit efficiency of banks in South Africa. The cost-to-income ratio has always been used in the South African banking sector in measuring efficiency. However this approach is very simplistic and does not provide enough insight on real profit efficiency. This research uses a stochastic frontier model to determine both cost and profit efficiency of four large and four small, South African-based banks. The results of the study show that South African banks have significantly improved their cost efficiencies between 2000 and 2005. However efficiency gains on profitability, over the same time period, have not been significant. No bank was found to be superior to another in terms of achieving efficiency gains in cost reduction and profitability. A weak positive correlation was found to exist between the cost and profit efficiencies, with the most cost efficient banks also being most profit efficient. With regard to bank size, cost efficiency declined with increasing bank size

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