66 suggested that companies can gain competitive advantage through reducing the costs incurred by the customers in accessing a product or service.
Automatic Statements - Internet banking, SMS banking and Mobile Moola have helped in reducing the requests for hard copies of bank statements especially for individual customers. However, several corporate customers still request hard copies or electronic statements. To manage this, it was suggested that FBC adopt automatic statements. This type of facility sends statements to customers after the running of the day end from the core banking system. Banks such as Stanbic are offering this type of facility.
Customer Relationship Management System (CRMS) and Document Management Systems (DMS) - FBC currently does not have a customer relationship management system (CRMs) and a document management system (DMS). This may help in assisting FBC to retain customers and identify areas that may need attention so as to improve customer relationships (O’Brien and Marakas, 2009).
4.5.3 STRATEGIC ALLIANCES
Strategic alliances between FBC and Telecel on mobile moola and FBC, MasterCard and ACCA, FBC and Net One on m-wallet were applauded by senior management respondents. The results show that MasterCard and mobile moola are not popular amongst employees. It is therefore necessary for FBC to aggressively market the e-commerce products to promote customer use, which may ultimately increase profitability.
67 profitability may be low until the cost is recouped (Kim and Davidson, 2004). A
segment of the respondents (11.1%) were not sure of the impact of e-commerce on the profitability of FBC. The major reason being that once
new technology is introduced through innovation, other competitors will copy the innovation through creative imitation.
4.6.1 FBC PRODUCTS CONTRIBUTION TO PROFIT
Most of the respondents (45%) suggested that business loans have contributed to a greater extent towards the profitability of FBC followed by personal loans (28%). Some of the respondents (17%) agreed that mortgages had averagely contributed towards the profitability of FBC whilst e-commerce products were thought to have made a lesser contribution towards the profitability of FBC. Insurance services had the least contribution towards the profitability of FBC. Table 4.3 summarises the descriptive statistics.
Table 4.3 E-COMMERCE PRODUCT CONTRIBUTION TO PROFIT
Descriptive Statistics
N Mean Std. Deviation Variance Skewness Statistic Statistic Statistic Statistic Statistic Std. Error
Business Loans 66 4.1818 1.06568 1.136 -1.398 .295
Personal loans 66 4.1667 1.0012 1.003 -1.010 .295
E-commerce products 66 2.5758 1.06786 1.140 .383 .295
Mortgages 66 3.5152 1.16675 1.361 -.577 .295
Insurance Services 66 2.3333 1.23205 1.518 .652 .295
Valid N (listwise) 66
Business loans were thought to have made the biggest contribution to profit as shown by a mean of 4.1818 on a ranking scale from 1 to 5, with 1 representing the least contribution to profit, 3 representing moderate contribution and 5 representing the highest contribution to profit. E-commerce products were ranked 2.5758 after mortgages, with a standard deviation of 1.06786 and a variance of 1.140. Insurance services were thought to have the least contribution to profit as indicated by a meant of 2.333, with a skewness of 0.652.
68 Business loans and personal loans can be in the form of large amounts of millions of dollars, hence the higher contributions. Similarly mortgages made significant contributions towards the profitability of FBC given the large amounts of money involved. The lowest cost of a single unit of a house costs about US$80,000.00 depending on the size. On e-commerce products, the profit comes from pushing large volumes of transactions given that the lowest charge is $0.05 cents for staff ATM transactions whilst the lowest charge for point of sale transactions is $0.50 per transactions. Income for insurance services is mainly earned during the renewal periods.
4.6.2 FBC E-COMMERCE PRODUCTS CONTRIBUTION TO PROFIT
The research findings shown in table 4.4 indicate that ATMS have contributed greatly towards the profitability of FBC Holdings Limited. The mean of 1.5152 indicate that the respondents agreed and strongly agreed that ATMs contributed towards profitability on a likert scale from 1 (strongly agree) to 5 (strongly disagree). The variance of 0.254 show that the responses had less dispersion from the mean. The kurtosis was -0.2060 as shown in Table 4.4.
FBC has more than 30 on and offsite ATMs throughout Zimbabwe. The various responses are as shown in table 4.4.
Table 4.4 FBC E-COMMERCE PRODUCTS CONTRIBUTION TO PROFITABILIY
Automated teller machines
(ATMs) contributed towards the profitability of FBC Holdings
Limited.
Point of sale (POS) contributed towards the profitability
of FBC Holdings
Limited.
Internet banking contributed towards the profitability
of FBC Holdings Limited?
Mobile banking
(sms) contributed towards the profitability of FBC Holdings
Limited.
MasterCar d contributed towards the profitability
of FBC Holdings
Limited.
E-mail &
SMS alerts contributed towards the profitability
of FBC Holdings
Limited.
Valid 66 66 66 66 66 66
Missing 0 0 0 0 0 0
Mean 1.5152 1.8939 2.0606 2.2273 2.0455 2.4848
Std. Deviation .50360 .50012 .78208 .83750 .73237 .88130
Variance .254 .250 .612 .701 .536 .777
Kurtosis -2.060 4.866 1.034 .967 .822 .739
Std. Error of Kurtosis .582 .582 .582 .582 .582 .582
69 The results presented in table 4.4 show that point of sale machines rank second in terms of contribution to FBC profitability as indicated by a mean of 1.8939. FBC has over 250 merchant and in-branch POS terminals. Individual customers who come to withdraw cash from the branches make use of the branch-installed point of sale machines. Some customers who purchase products in supermarkets such as TM, Pick “n” Pay and Spars make use of the merchant point of sale. SMS banking, mobile moola and MasterCard were lowly ranked in terms of their contribution towards fees and income whilst sms and e-mail alerts was the least ranked product in terms of the contribution towards the profitability of FBC.
4.6.3 FBC HOLDINGS FINANCIAL PERFORMANCE
Since adopting an e-commerce driven strategy in 2009, FBC upgraded its core banking system and implemented the MasterCard project in 2011 (FBC Holdings Annual Reports, 2011 and 2012). The Group introduced more e-commerce channels and products such as Mobile Moola and MasterCard in 2012. These initiatives have contributed towards the profitability of FBC although the contribution is still low in extent. Table 4.5 shows the financial highlights of FBC Holdings from 2009 to 2012.
TABLE 4.5: FBC HOLDINGS LIMITED FINANCIAL HIGHLIGHTS
2009 2010 2011 2012
Financial Ratios
Contribution of E-commerce products to Retail Fees &
Commissions 17% 12% 8% 29%
Contribution of E-commerce products to Net Fees &
Commissions 12% 11% 6% 22%
Financial Variables
Revenue from e-commerce
products and channels 841,140 1,151,836 1,168,346 4,455,322 Retail Service Fees 4,810,789 9,853,610 14,406,934 15,403,897 Net Fee & Commission 7,131,165 10,735,900 20,410,413 20,577,830 Computer equipment and
expenses 43,961 1,078,964 1,348,108 1,634,589
From Table 4.5 the total income of FBC has increased from US$30.5 million in 2009 to US$74.22 in 2012. This increase was attributed to several factors
70 including improved economic conditions, improving customer confidence, alignment of resources to company structure and the adoption of e-business strategies (FBC Annual reports, 2010, 2011 and 2012). Net fees and commission have increased from US$7,161,135 (2009) to US$20,577,830 (2012). The number of transactional business has increased since 2009 from an average of 530 transactions per day on e-commerce channels to about 1,860 transactions per day on e-commerce channels in 2012. The increase in adoption of e-commerce levels is expected to result in the increase of the number of daily transactions in FBC, which would ultimately result in an increase in the fees and commission income for FBC.
The operating costs increased from US$23,114, 877 in 2009 to US$44,894,036 in 2012. Although the implementation of the e-commerce strategy was to reduce the cost structure in FBC Holdings Limited, it was found that the operating costs were actually on an increasing trend. The increase in costs was attributed to the retrenchment exercise carried out by the Group in 2010 at a cost of about US$3.5 million resulting in the reduction of total staff by 22.7% from 1,185 to 916 people. Other factors include the increase in salaries and wages from 2009 to date in line with the improvements in the economy. The increases in cost would however been higher had the Group not decided to retrench and implement e-commerce driven technology. This is because staff costs are a function of the number of employees among other variables such as level of qualifications and position.
Transaction related costs reduced due to implementation of electronic commerce whilst transactional fees and income increased.
The Group bought computer equipment and software worth US$1,634,589 in 2012 and US$1,348,108 in 2011 in line with the e-commerce driven strategy, (FBC Holdings Annual Reports, 2011 and 2012). Fees and commissions from e-channels and products such as ATMs, point of sale, MasterCards, telegraphic transfers, mobile moola, internet banking, SMS banking, RTGS transfers and internal transfers contributed 29% (8% in 2011) towards the retail fees and commission and 22% (6% in 2011) towards the net fees and commission income for the year ended 31 December 2012.
Figure 4.5 shows FBC Holdings Limited performance ratios but of partic interest are ratios for e-
income.
Figure 4.5 FBC Holdings Limited performance ratios
Adopted from FBC Holdings Limited Annual reports (2010, 2011 and 2012).
The contribution of e- reasonable at 29% of retail
However, the full impact of the contribution will probably be felt after FBC has totally adopted e-commerce and recouped the funds invested into the project Most of the revenue (fees and income), was derived from electronic transactions on corporate customers rather than on individual customers.
This was consistent with a study by offered to individuals and customers in N