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United Commercial Bank

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by

Tobi Polland

on 16 October 2013

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Transcript of United Commercial Bank

United Commercial Bank
and El Banco


Strategic Service Vision:
United Commercial Bank
Identify the service winners, qualifiers, and service losers for
UCB
Identify the service winners, qualifiers, and service losers for
EB
El Banco de Nuestra Comunidad
What are the differentiating features of banks that target ethnic communities?
Are there ways to improve?
"...a service business develops a reputation for the type and quality of service it produces. The more abstract and complex the service is, the greater the need and potential for developing a reputation that will serve as a barrier to entry."
("Strategy is Different in Service Businesses").
Operating Strategy & Service Concept
San Francisco based bank that focuses on the Chinese-American community
focuses on loans to businesses owned by Chinese Americans
Service Delivery System
focus on savings accounts and CDs with highly conservative lending strategy on real estate loans.
charges much lower account fees than other banks
often refunds fees
full featured trade finance department (letters of credit for import/export businesses)
gift tea sets/ e-cards, Chinese speakers
Background
launched in 2002 as a flag bank in Atlanta, GA.
offers a range of financial services: bank accounts, check cashing, and mortgage lending.
6 branches in Atlanta
Subset of CSB (Community & Southern Banking)
Service Concept
Service Qualifiers and Losers:
UCB
UCB Service Qualifiers
• Chinese speaking representatives
• Secured and safe (Largest bank serving San Fran Asian-American community

UCB Service Loser
• Lacking in insurance and investment services

Service Qualifiers and Losers:
EB
El Banco Service Qualifiers
• Spanish speaking representatives
• Culturally enhanced atmosphere
• Western Union mimic

El Banco Service Losers
• No drive-thru service
• Income highly based on fees

UCB
Differentiating Features
Case Study:
El Banco
and
United Commercial Bank
United Commercial Bank and El Banco de Nuestra Comunidad are two examples of banks that have been successful in targeting ethnic communities within the United States.
CEO Drew Edwards, "The El Banco concept is designed to appeal to Latino customers from floor to ceiling, with bright color schemes, Spanish-language newspapers, lively Latin music, comfortable sitting areas, children's play areas, snacks, telephones, e-mail stations, and, of course, Spanish-speaking bank employees" (Fitzsimmons, 60).
Service Delivery System and Operating Strategy

• High interest rates on saving accounts and time deposits
• Lower account fees (.32 percent of assets)
• Trade Services

Service Winners:
UCB
• Home mortgage financing for illegal aliens
• Check – cashing services
Service Winners:
EB
El Banco
Differentiating Features
• Making the intangible tangible – tea caddies or tea gift sets given to customers opening a checking or savings account with a relatively high balance

• Customizing the standard product – Chinese speaking reps, high interest rates, Chinese new year e-cards, focused on loans to Chinese-American owned businesses, trade services

• Reducing Perceived Risk – customer focus and UCB focus of savings accounts and time deposits are in sync

• Convenient locations – 46 branches in California


• Making the intangible tangible – informal/cultural atmosphere, colorful interior, Spanish language newspapers, latin music, snacks, e-mail stations

• Customizing the standard product – Spanish speaking employees, home mortgage financing to undocumented individuals, check-cashing, money orders and transfers

• Convenient location – usually in strip malls, ethnically diverse communities in Atlanta

What kinds of services ("service winners") do you prefer to have at your bank?

Text this #:
22333
and before your message
type this #:
237227
http://www.polleverywhere.com/free_text_polls/4DhECysr8Kee3Gp
What do you think the service winners, losers and qualifiers are for
UCB
and
EB
?
Target Market
90% of loans are real estate (40% multifamily; 60% commercial)
10% commercial and industrial
Chinese Americans prefer to save in banks than brokerage firms therefore high proportion of savings accounts and time deposits (95th percentile among banks overall; interest expense at 71st percentile overall)
loan to value ratio: 58% (most banks is 80%)
fee income 0.32% of assets (most banks is 1.7%)
UCB is 5th percentile for non interest income for banks overall.
Target Market
Latin Americans
Specifically "Latinos who feel uncomfortable in a foreign land" (Fitzsimmons, 60).
Undocumented Individuals
Latinos supporting family members outside of the US.
focus on fee based services
informal atmosphere
no drive thru facilities
fees for check cashing start at 1.5% (1/3 of revenue)
service fees account for 50% of revenue
home mortgage financing to undocumented individuals-mortgage based applications based on Individual Taxpayer Identification Numbers
International funds transfers (emulates Western Union logo)
check cashing service gains customers earlier than traditional banks
Background
serves the Chinese American community
UCB has $6.32 billion in assets and a market capitalization of approx. $1.4 billion
46 branches in CA
representative offices in Taiwan, China and a branch in Hong Kong
What ways could both banks improve and stay competitive?
Where are they now?
New El Bancos?
Full transcript