A strategic management study of the Bank of the Philippine Islands Retail Auto Division

• Main Author: Tenorio, Dennis Teodoro R.
• Format: text
• Language: English
• Published: Animo Repository 1997
• Subjects: Automobile industry and trade > Finance > Philippines; Banks and banking > Philippines; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2305
• Institution: De La Salle University

October 1996 saw the dawn of a new age in the retail auto lending business. The Bank of the Philippine Islands forged a union with Citytrust Banking Corporation, bringing together two of the top players in the banking industry. The idea was to blend the latter's vigor and innovativeness with the former's leadership in electronic banking and unparalleled distribution network. It was expected that with the merger, a formidable force will emerge in the banking sector, the synergy created by the union would result to a combines market share that could not be equated by a simple 1 + 1 = 2 equation. Rather, it is expected that the combined market share would be more than the combined output previously turned in by the two organizations. However, the bank must be able to accomplish all these in the light of growing competition. The banking industry has been opened up to foreign banks and with the steadily thinning spreads on corporate accounts, these new players along with the local banks have been forced to turn their focus on consumer banking- retail auto in particular. Furthermore, the challnege posed by the slowing down of the economy leading to a slump in the auto business has made tha market extremely competitive. BPI saw a decrease of 45.31% in the number of cars it has booked for the first six months of this year compared to the last year's, indicating an erosion of its market share. The bank has to address this issue swiftly if it aims to fulfill its mission to be the leading private financial institution and preserve the goals of the merger. To be able to preserve its status in the industry and sustain its growth, it should embark on the following strategies. First, the bank must ne able to deliver a faster turn around time in its loan processing. Subsequently, the bank should be able to deliver the credit results as soon as possible to the auto delaership where the account originated. In this line of business, the one who gets ahead of competition is the bank that could provide the fastest approval. However, the bank should not sacrifice the quality of the loan portfolio. This means that the bank should be able to get the best possible applications, avoid marginal accounts so as not to over load back room processing and book only quality accounts. Streaming the credit processing would also help the bank achieve its objective of a faster customer feedback. The second issue that the bank should address is to give to the dealers what they need most, the faster release of checks whenever the account eventually gets booked. This could be done by lessening the hand-offs from marketing assistants to processing clerk to check release clerk. Empowerment should be considered in this aspect, since there seems to be no need for three different persons to check the same things just to have a check signed for release by a bank officer. If the bank would be able to address these two key issues, the bank would be able to get the best possible applications and be able to arrest the erosion of its market share and be able to ride the storm that the industry is experiencing.