Table of Contents 1

Table of Contents 1. Introduction...... 2

1.2 Vision...... 2

1.3 Mission...... 2

2.1 Framework 1 - Porter 5 forces analysis...... 3

2.2 Framework 2 – Fishbone Chart...... 8

2.3 Framework 3 – SWOT Analysis...... 11

3. Propose of enterprise system...... 14

4. Challenges...... 16

5. Conclusion...... 18

6. References...... 19

7. Work Break Structure...... 23 1. Introduction Hong Leong Bank Berhad is a public listed bank in Malaysia. It is a member of the Hong Leong Group Malaysia. Today, Hong Leong Bank possesses 300 above branches in South-east Asia, and the Headquarter in Malaysia is located in Kuala Lumpur, Malaysia. The businesses of Hong Leong Bank includes personal financial services, wholesale banking, Islamic financial services and regional franchises and it also has electronic channels including Hong Leong Mobile Banking, Hong Leong Online, Hong Leong Call Centre and self-service terminals (Hong Leong Bank Berhad, 2014).

1.2 Vision

(Hong Leong annual report, 2009)’.

1.3 Mission Hong Leong Bank’s mission is to help clients to generate superior returns through the provision of top-quality service, in-depth investment insights and prudent risk management advices (Hong Leong Bank Berhad, 2014). 2.1 Framework 1 - Porter 5 forces analysis A) Threat of new entrants (Low)

Banking industry in Malaysia is regulated by the central bank of Malaysia, which is the BNM- Bank Negara Malaysia. The principal of BNM under the Central Bank of Malaysia Act 2009 is to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy (Bank Negara Malaysia, 2012). In the Law of Malaysia, Act 372- Banking and Financial Institution Act 1989 is an act that for licensing and regulation of institutions for banking, or other finance relating companies connected therewith Bank Negara Malaysia. All the banking institutions in Malaysia are required to hold a valid license granted by the Minister (Lawyerment, 2014). There are 16 sections and 131 rules and regulations for applying license under Banking and Financial Institution Acts 1989. Licensing requirement is a barrier for the new entrance to startup a banking industry in Malaysia.

Therefore, threat of new entrants for Hong Leong Bank is low.

B) Threat of substitute products or services (high)

Threats of Hong Leong Bank is not only from the competitors, but it also comes from the insurance agencies, investing and loan companies. Some insurance companies do offer insurance plans that covered illness saving plans with high interest rates. Great Eastern offers a plan that is called ‘Great Ideal Living’ which covers 36 different kinds of critical illness, Total and Permanent Disability (TPD), death and added advantages with Deferred Whole Life (DWL) as shown in Table 2.1.1.

Table 2.1.1 is the calculation of DWL from Great Eastern. (Great Eastern, 2013) Figure 2.1.1 example of Great Ideal Living Plan from Great Eastern. (Great Eastern, 2013) Therefore, the threat of substitute products or services for Hong Leong Bank is high.

C) Bargaining power of customers (high)

Customers of Hong Leong Bank are the account holders who using Hong Leong Bank services. There are 27 commercial banks in Malaysia which included foreign and local owns (Bank Negara Malaysia, 2014), whereas Hong Leong Bank is not the only option for customers to save money. Hong Leong Bank customers has large number of alternatives that offer the similar services. Spilt banking occurred when people employed two or more bankers to handle their personal financial affairs (Denton & Chan, 1991). From a customer perspective, multiple banking account enable a customer to get a wider range of financial services, also accessing to wider range of ATM. Therefore, the bargaining power of customers is high.

D) Bargaining power of suppliers (low)

Hong Leong Bank unlike those manufacturing industry need suppliers for supplying the raw materials, whereas the supplier plays an important role in the product processing. But for Hong Leong Bank as in service industry, the suppliers are the supporting facilities, such as furniture, cheque books, statement papers, ATM machine and etc. The impact of these in Hong Leong Bank is not much significant since they are not raw materials (UKESSAYS.COM, 2009).

Depositors is another suppliers of Hong Leong Bank. Depositors refers to the people who deposits the money into the bank. Depositor has no bargaining power whatever in reality (Ackerman, 2008). A fixed interest rate will be paid for the depositors in Hong Leong Bank. Although the more money depositor deposits into Hong Leong Bank, he/she will get paid based on the fixed interest rate for the amount of money deposited.

Therefore, the bargain power of suppliers for Hong Leong Bank is low.

E) Intensity of competitive rivalry (high)

Although is hard for new entrants to get the banking license in Malaysia, yet Hong Leong Bank still facing the challenges from another 26 commercial banks in Malaysia. Overnight Policy Rate (OPR) referring to the interest rate for housing loan from Bank Negara Malaysia for banks as references for banks in BLR adjustments, but there might differ from bank to others bank. (BLR.MY, 2011) OPR was fixed by government is 3% and the range of BLR adjustment is based on the bank themselves after the calculation based on the formula that involved the costs of the loan (Bank Negara Malaysia, 2014). The strategies to promote the services are almost the same among these banks. There is no identical service that provided by Hong Leong Bank, whereas all of them are controlled by government, the only making differences among the banks is the BLR adjustment (Refer to table 2.1.2 for the comparison table of BLR among the commercial banks in Malaysia). Therefore, the degree of intensity of competitive rivalry of Hong Leong Bank is high.

Table 2.1.2 is the table of comparison BLR that offers by Malaysia Commercial Banks (RmValues, 2011)

There are many financial companies that offer private loans with lower interest rate compared to Hong Leong Bank.

Comparing Hong Leong Bank to MBSB, that loans out the same amount of money which is RM10 000 and with the same repayment period, the interest rate of Hong Leong Bank is slightly higher compared to MBSB. Table 2.1.3 Loan Repayment Tables. (Left table is the repayment table of MBSB and right table is the repayment table of Hong Leong Bank.) 2 .2 Framework 2 – Fishbone Chart

Facilities Procedure 2 Less CDM in 3 Messy the branches Inconvenience to Bad Communication between Departments customersLess Employee service Hong Leong customers in a specific time Poor Service Affect employee working Certain Impolite staff Call Irrational Deploymentperformance Centre (Back Stage)

Staff

Facilities Equipment

Figure 2.2.1 (daryl.k, 2008)

The Cash Deposit Machine (CDM) is a problem that facing by the customer. In Figure 2.2.1, the customer complaints that there is no enough Cash Deposit Machines (CDM) in the branch of Hong Leong Bank. Occasionally, the CDM will faults or too many customers using in one CDM and this cause the customer inconvenience.

Procedure Figure 2.2.2 (Wong, 2014)

The problem of Hong Leong Bank is their messy process due to they do not have a better communication between the departments. Because of this problem, the customer feel confuse about the information procedure that giving by the employee and customer feel disappointed with their services. In the Figure 2.2.2 above, the customer has been complaint due to this problem.

Staff

Front Stage Problem

One of the problems is occurring in the front stage. When during the lunch time, the customer is waiting the front stage employee for service, but there are only few employees are working due to they cannot arrange their working time well and cannot find the people to replace their working position and this occurred in some of the Hong Leong Bank branches.

Back Stage Problem Figure 2.2.3 (Chong, 2013)

Another problem is about the back desk staff. The back stage staff is referring to the employee of Hong Leong bank call center. The problem about call center is the Hong Leong Bank cannot ensure all employees in call center are speaking friendly and politely to the customer. This attitude of employee will affect their impression to the customer and the customers will think they are not trained and not professional enough. In Figure 2.2.3 above, the customer complaints the sound of employee is unfriendly and impolite when the customer calling to the call center.

Irrational Deployment

The internal problem of Hong Leong bank has been affected the morale and working performance of the employee. Because of this problem, the employee would not provide a good service to the customer due to Hong Leong Bank irrational to deploy their employee without any reason. Hong Leong Bank branches are distributed throughout Malaysia. They may deploy their staff when necessary. They deploy their employee from their original work place to a distant branch. For example, the employee deploy from the branch of Kuala Lumpur to branch of Penang. 2.3 Framework 3 – SWOT Analysis

Strength:

 Top 20 public company listed in ‘Forbes Global 2000’ year 2013 According to Forbes‘s report in ‘Forbes Global 2000’, Hong Leong Bank was listed in the list and there is only 20 Malaysia companies in the list. This ranking is based on criteria namely company’s Sales, Profit, Assets and Market Value. (Forbes Global, 2013)

 The low interest rate for repaying to credit card, high balance transfer According to the comparison of ringgitplus, Hong Leong bank is the lowest cost to be paid in annual compare with other commercial bank in Malaysia. The Hong Leong Wise card is 15% interest rate, 10% cashback and free of balance transfer and annual fee. Then Hong Leong bank provide high balance transfer which is minimum balance transfer rm3000 in the maximum duration of 6 months. (ringgitplus, 2014)

 Low interest rate for housing loan According to the comparison of ringgitplus, the interest rate for housing loan that offered by Hong Leong bank is lower, which is only 4.20% per annual. And the competitors such as OCBC bank, Maybank offer the interest rate for housing loan is 4.30% and 4.50%. This comparison show that this is strength of Hong Leong bank, it will generate more profit for them. (ringgitplus, 2014)

Weakness:

 Bad credit card & banking service. According to Lowyat.net, some of people complaint that some of the credit card services are not professional enough and need consume a lot of times to finish the service. (Lowyat.net, 2012)

 High interest rate for personal loan According to the comparison of ringgitplus (2014), the interest rate for personal loan provided by Hong Leong bank is 12% in annual. Reversely the competitors such as Citibank, Maybank just only charge 7.64% and 8% in a year. So this information show that this is the weakness of Hong Leong bank, it affects less people to have loan from Hong Leong bank. (ringgitplus, 2014)

Opportunity:

 More IT Devices or Software Used. Nowadays, mobile phone is acting as payment clearing houses or hubs, with an important portion for us to perform the financial services. The mobile phones working similar as Mastercard’s PayPass technology, the monthly bill will be sent to customers from servicing operator. The scenario shows that the banks and mobile operators are reconciled to provide the seamless joint services for customers. These innovations help banks to build customer trust, managing risk and churn and encouraging retention and loyalty. (Peppers & Rogers Group, 2014)

 New entrants in local are low, low competitive level According to the Laws of Malaysia, Act 372 – Banking and Financial Institution Act 1989 is an Act to issue the new laws for the licensing and regulation of institutions carrying on banking, merchant banking, finance company, money-broking businesses and discount house, for the regulation of institutions carrying on certain other financial businesses, and for matters incidental thereto or connected therewith. The licensing of banks are controlled by Bank Negara Malaysia in Malaysia by BAFIA. After that, the Minister is the one who can grant the valid license to all the commercial bank in Malaysia. So that, the challenge of new entrants for Hong Leong Bank is low, this cause the market share is maintained.

 Multiple- use of cards The enhancement of E-Business in Malaysia has created an opportunity for bank to issue more credit or debit cards. In most of the E-Business websites, customers required making the payment with cards, and this has encouraged the consumers to apply for a card. Customers can use cards to purchase cinema tickets, concert ticket or airline ticket in online system. This creates convenience to customer and banks can gain more profit which interest charged from cards. (Peppers & Rogers Group, 2014)

Threat:

 Facing growing threat from mobile phone technology Nowadays, bank is depending on the technology very much, example ATM machine, E-banking and M-banking. To be competitive in the market, Hong Leong Bank also need to adopt all these technologies. It will increase the hardware, mobile application and maintenance cost for the Hong Leong Bank. (Okoth, 2013)

 Intensity of competitors According to the list of Bank Negara Malaysia show that, there are 27 commercial banks, 16 Islamic banks and 13 investment banks existing in Malaysia. This information shows that there are many competitors in the local include Maybank, CitiBank, CIMB Bank, OCBC Bank, HSBC Bank and so on. All of them are providing the same products and services to the customers. This would cause high competition for Hong Leong Bank. (Bank Negara Malaysia, 2014) 3. Propose of enterprise system Based on the analysis reports of Hong Leong Bank above, an Enterprise System package that able to integrate all the existing information system with Decision Support System (DSS) and Customer Relations Management features are recommended to be implemented.

Decision support system (DSS) is an information system designed to help users reach a decision when a decision-making situation arises. A variety of DSSs exist to help with a range of decisions. (UNCCHARLOTTE, 2014)

Customer Relationship Management (CRM) in an enterprise wide effort to acquire and retain profitable customers. It focuses on building long-term and sustainable customer relationships that add value for both the customer and the company.

New enterprise system for Hong Leong Bank

DSS feature

Statistical report will be prepared by the enterprise system to the HLB executives for making decision could be a possible solution to solve the issues occurring in the analysis.

By referring to the porter’s 5 forces and SWOT analysis above, the problems facing by Hong Leong Bank are the differences of interest rates among competitors and service offered to customers. The new enterprise system will uses of internal sources which including the sales, financial data, inventory data or cash flow data in Hong Leong Bank and external sources, which including the trends, government policies or inflation rates to help Hong Leong Bank’s executive makes decision. Enterprise System can acts like a DSS for better decision making by using the knowledge to solve the problem. With the capabilities of DSS in the Enterprise System, statistical analysis capabilities, spreadsheets, and graphics will be including in DSS, to help in extract the result for the most suitable interest rates based on the trends from the analysis reports.

CRM feature For the problems of serving customers mentioning in Fishbone chart, CRM is recommended to be in the enterprise system to solve the issues occurred. CRM is mainly concentrating in making a better relationship among customer and the company. From the analysis, some customers were dissatisfied with Hong Leong Bank services, due to the bad service provided and posted it on the internet. As a public company with high reputation, a good relationship between employees and customers is very important, a single mistake might bring down the company’s image. As the implementation of the new enterprise system with the CRM feature, it will enhance a better relationship between the customers with Hong Leong Bank. As CRM has provided a platform for the customers to submit feedbacks on their opinions and suggestions, Hong Leong Bank will be able to adjust their processes in order to serve the customer in a better or satisfactory manner. CRM can help in better serving the customer, thus, the complaint from customer can be reduced after the implementation of enterprise system.

CRM also can help Hong Leong Bank to giving a clear and faster procedure to the customers. Hong Leong Bank will be able to provide some basic information in CRM for customers to refer to. After implementing the new enterprise system, there is a CRM feature that allow the customer to track the bank loan process and many more. In this platform, employee can update the latest information process and customer can keep track of all the transactions done (information update etc.) which provides a better, clearer understanding and latest information of the updates to the customer.

Hong Leong Bank need to provide a customer database system to the employee for checking and update the information such as the employee can update the latest process information of the customer. Through this platform, the employee would get the latest information and messages of the customer. Thus, when the customers asking, the employee would giving the latest and accurate message to the customer. 4. Challenges Implementation of enterprise system would bring some advantages for the Hong Leong Bank, yet there also some limitations and challenges that would occurring after the implementation.

Garbage in garbage out (GIGO) referring to the concept that the quality of the output is only as good as the quality of the input (Shelly & Rosenblatt, 2012) . All the data from internal and external sources must be accurate to get the best decision. Result that from the fact finding might not be accurate. For example, Hong Leong Bank is doing the online survey to get 1. GIGO feedback for a particular issue, participant might not giving out the accurate information. With the irrelevant information, DSS will come out a result based on the irrelevant information which is not suitable to use and might be a threat for Hong Leong Bank.

Business procedures will be affected due to the implementation of enterprise system. New business practices may introduced to fulfill the Business standard of process in the new enterprise system. From the research report process by Mano Billi (2014) about the challenges in implementing ERP into 2. (Reengineering) enterprise, several researchers prove that best application can only meet the 70% need of the company. The modification of business process may lead to some other challenges that could affect Hong Leong Bank.

3. Storage Implementation of enterprise system would lead to storage environment challenges and issues. There is a research of Dell enterprise system from Ana Volpi and maintenance Doug Chandler from IDC Research Company, for ‘How Dell addresses enterprise storage challenge’, there are 7 issues that are commonly faced by enterprise system were listed out in this research paper. The same challenges will be faced by Hong Leong Bank.

Challenges of storage (Ana Volpi and Doug Chandler, 2002):  Business continuity and disaster recovery strategies  Designing for high availability  Opportunity to consolidate storage  Opportunity to consolidate server  TCO and ROI  The challenge of the heterogeneous storage area network (SAN)  Post implementation support Training for the new system has to be provided to the employee with the Enterprise right job position. Employee has to be trained before using the enterprise System literacy system but employees get very attached to their way of doing things, and 4. versus Resistant when technologies change, they invariable come up with resistant to that to change change (Martin Emerson Low, 2013). As Hong Leong Bank employees need to attend the training for the new enterprise system, and some may resists it because of the changes of work processes. Duplication of Information duplication might happen after the integration in the existing data of information systems. If the same information is inserted twice in the 5. Information different information system, and this issue will occur in the new enterprise systems system when updating the particular information. 5. Conclusion Based on the analysis reports of three frameworks, Porter five forces, SWOT analysis and Fishbone Chart, we encounter that the main issues of Hong Leong Bank are the customer-relationship, the threats from competitors which offering better services and lower interest rate for loan and also the isolation of information system. To solve these issues, an Enterprise System with integrate all the information systems, CRM and DSS built-in to supports the business in better customer serving and better decision- making is recommended to underpin their business future strategy. Yet, there are some challenges after the implementation of Enterprise System. If Hong Leong Bank able to deal with the challenges, the implementation of Enterprise System will helps in support the daily business, growth of business in future and increase the competitive advantages. 6. References Ackerman, J., 2008. The Banking Industry Problems and Competition. [Online] Available at: http://searchwarp.com/swa292998.htm [Accessed 28 May 2014].

Ana Volpi and Doug Chandler, 2002. How Dell Addresses Today's Enterprise Storage Challenges, Framingham: IDC. [Accessed 28 May 2014]

Bank Negara Malaysia, 2012. BANK NEGARA MALAYSIA, Kuala Lumpur: Bank Negara Malaysia. [Accessed 28 May 2014]

Bank Negara Malaysia, 2013. Commercial Banks. [Online] Available at: http://www.bnm.gov.my/index.php? ch=li&cat=banking&type=CB&fund=0&cu=0 [Accessed 21 May 2014].

Bank Negara Malaysia, 2014. List of Licensed Banking Institutions in Malaysia. [Online] Available at: http://www.bnm.gov.my/index.php? ch=li&cat=banking&type=CB&fund=0&cu=0 [Accessed 29 may 2014].

Bank Negara Malaysia, 2014. Monetary Policy Statement. [Online] Available at: http://www.bnm.gov.my/index.php? ch=en_press&pg=en_press_all&ac=3004&lang=en [Accessed 22 May 2014].

BLR.MY, 2011. New Reference Rate Framework, s.l.: BLR.

Chong, J., 2013. Hong Leong Bank. [Online] Available at: https://www.facebook.com/HongLeongBank?fref=ts [Accessed 15 April 2014]. daryl.k, 2008. Which Bank the lousiest Service. [Online] Available at: https://forum.lowyat.net/index.php? showtopic=856509&st=60&p=21858681&#entry21858681 [Accessed 15 April 2014]. Forbes Global, 2013. 2013 Forbes Global 2000 & Ranking for Malaysian Companies. [Online] Available at: http://1-million-dollar-blog.com/2013-forbes-global-2000-ranking-for- malaysian-companies/ [Accessed 28 may 2014].

Great Eastern, 2013. LIFE + HEALTH PROTECTION. [Online] Available at: http://www.greateasternlife.com/my/en/insurance/products/products_lifehealth.htm#d [Accessed 29 May 2014].

Hong Leong annual report, 2009. Hong Leong annual report. [Online] Available at: https://www.hlb.com.my/data/ar20091.pdf [Accessed 29 may 2014].

Hong Leong Bank Berhad, 2014. Hong Leong story. [Online] Available at: https://www.hlb.com.my/ahlb/corpstry.jsp?flag=corpstry [Accessed 29 may 2014].

Hong Leong Bank Berhad, 2014. Treasury Services. [Online] Available at: https://www.hlb.com.my/sg/hlsghmps.jsp?flag=hlsghmps [Accessed 29 may 2014]. http://www.personal-loan.my/, 2013. Personal Loan Malaysia | Pinjaman Peribadi. [Online] Available at: http://www.personal-loan.my/mbsb-personal-loan/193/ [Accessed 12 May 2014].

Joseph, L. (2013). Hong Leong Bank Sea Park - Service SUCKS. [video] Available at: http://www.youtube.com/watch?v=gjsHRgqT22I [Accessed 28 May. 2014].

Lawyerment, 2014. Lawyermant.com.my. [Online] Available at: http://www.lawyerment.com.my/financial/banking2.shtml

Low, M. E., 2013. The Importance of Effective Employee Training in Enterprise Systems. [Online] Available at: http://thewebandi.com/the-importance-of-effective-employee-training- in-enterprise-systems/ [Accessed 22 May 2014].

Lowyat.net, 2012. Credit Card & Online Banking Service SUCKS. [Online] Available at: https://forum.lowyat.net/topic/2469964/all [Accessed 28 may 2014].

Okoth, J., 2013. Commercial Banks face growing threat from mobile phone technology. [Online] Available at: http://www.standardmedia.co.ke/mobile/? articleID=2000093428&story_title=banks-face-threat-from-mobile-phone [Accessed 28 may 2014].

Peppers & Rogers Group, 2014. How can commercial banks generate new income opportunities, especially during this global financial crisis. [Online] Available at: http://www.peppersandrogersgroup.com/view.aspx?docId=31446 [Accessed 28 may 2014]. ringgitplus, 2014. Best Credit Cards in Malaysia. [Online] Available at: https://ringgitplus.com/en/credit-card/ [Accessed 29 may 2014]. ringgitplus, 2014. Best Personal Loans in Malaysia. [Online] Available at: https://ringgitplus.com/en/personal-loan/ [Accessed 29 may 2014].

RmValues, 2011. Basic Lendinng Rate. [Online] Available at: http://www.rmvalues.com/bank/b_blr.html [Accessed 2014 May 21].

Shelly & Rosenblatt, 2012. Systems Analysis and Design. United State: Course Technology, Cengage Learning.

UKESSAYS.COM, 2009. Why Porters 5 Model. Unregistered Trade Marks Of Hong Leong Bank Bhd Marketing, Volume 1, p. 4. [Accessed 28 May 2014] UNCCHARLOTTE, 2014. TYPES OF INFORMATION SYSTEMS. [Online] Available at: http://bisom.uncc.edu/courses/info2130/Topics/istypes.htm [Accessed 28 May 2014]

WebVideo, N. (2013). Rintihan pekerja Hong Leong Bank Kuantan. [video] Available at: http://www.youtube.com/watch?v=jx-uVUcSGBA [Accessed 28 May. 2014].

Wong, K., 2014. Hong Leong Bank. [Online] Available at: https://www.facebook.com/HongLeongBank?fref=ts [Accessed 15 April 2014]. 7. Work Break Structure Group Members: 1) Chong Yong Dee (TP025657) 2) Joseph Loh Shin Yu (TP031119) 3) Chen Jian Yong (TP026096)

No. Task / Description / Responsibility Name & Signature

1 Porter 5 forces Propose of enterprise System Challenges Conclusion

2 Introduction

SWOT analysis

3 Fishbone analysis

Propose of Enterprise System