The Deutsche Bank (DB) subsidiary is located in the Bogenhause neighborhood in Munich, Germany. Bogenhause is a residential neighborhood, located on the outskirts of Munich, Wikipedia (2020) highlights the following characteristics:
- Population of 85,971 inhabitants in 2018, of which 24% are immigrants.
- Balanced social structure with upper-middle class domain.
- A good connection to public transport through tram, subway, train and bus.
- Economic activities concentrated in Arabella Park with numerous private clinics, banks, trading entities, some 5 and 4 star hotels and very limited manufacturing activity
- The neighborhood has 3 cultural centers, 5 educational centers and 6 public institutions
More specifically, the branch is located in Regina-Ullmann-Straße, a typical street in the Bogenhause neighborhood with 3 supermarkets, 2 competing banking subsidiaries of DB, 3 bakery, 5 restaurants and other services.
As director of the subsidiary, you are aware of the number of challenges to which the bank is plunged and pay special attention to the specific aspects of the subsidiary.
DK shows poor performance, with a trend in market capitalization and declining share value for 10 years. A reduced income and in some negative years. A net profit margin (TTM) of -18% and REO (TTM) of -0.29% (Reuters, 2020). Your subsidiary is a business that does not generate debts, with a positive cash flow, but the return below the cost of money, which does not put you in a comfortable position. You want to impress the CEO with a package of measures that will improve the financial performance of your subsidiary.
The subsidiary provides the typical financial services of a universal bank, with checking accounts, savings accounts, broker accounts, but without the part of personal banking for large capital clients or corporate services.
You suggest a plan to improve the performance of the negotiation based on the following pillars:
- Marketing strategy and attracting new customers. Promotion of the branch in the neighborhood through communication in the mailboxes, personalized phone calls, promoters agents in supermarkets and nearby restaurants and online advertising in social media.
- Cost reduction. The number of clients who come to the office physically is decreasing year after year, you suggest the reduction of personnel and the existing ones should cover more services.
- New services. The purchasing power of residents in the neighborhood is growing. You believe that a more personalized service to attract customers of high purchasing power will bring more benefit to the subsidiary. In the restructuring of personnel, you minimize the number of ATMs and promote training for workers for portfolio management and personalized financial advice.