Introduction To Management For Performance Management Of Banking Essay.

Describe about the Introduction to Management for Performance Management of Banking.

National Australia Bank is an international organization which was founded in the year 1982. It offers banking and financial services to its customers over 1700 stores and other business banking centers. The organization is committed to offer quality products and services with minimum charges to their customers, so as to attain better financial performance in the banking industry.  The organization is committed to accept the governance practices and to follow the concerned policies and disciplinary values as maintained by the authoritarian standards. Generally, the issues related to the strategic management of the bank depend on the efficiency of the risk management practices incorporated by the bank (Federal Deposit Insurance Corporation (FDIC), 2015).

History of NAB and Types of Strategies Used by NAB

National Australia Bank (NAB) is one of the leading banks in Australia, which was established with a mission of providing solutions to their customers based on their requirements and thereby also maintains a long term relationship with them. The organization works on the philosophy of offering high quality services because it positively contributes towards the development of society as well as the environment as a whole. This enables the organisation to build a good working environment within an industry and thus, it also determines the significance of long term success through profitability (NAB, 2016). The vision of the company is to believe in the success and become one of the most reputed banks in Australia and New Zealand (NAB, 2015). However, the organisation focuses on achieving excellence through developing an access to the technological and digital world. These key strategies are required to be measured in order to accomplish the desired goals and objectives of the banking industry. National Australia Bank primarily offers various ranges of products and services to both individual and corporate customers (NAB, 2015).

Initially, NAB aims to have a significant impact on many consumers and shareholders in the banking sector. They create value among customers by investing in the diverse workforce who seeks to optimize maximum resources and eliminates inequality. This strategy helps them to remain in the competition within an industry and thereby, positively contributes to the success of an economy. They have set a clear objective with suitable policies and procedures to fulfill their corporate responsibility (NAB, 2016). With the changing business environment, NAB engages with the worldwide customers to improve and enrich their financial services and performance within the banking industry.  At present, their strategy is to focus on creating several opportunities for the customers’ wealth and thus, support rapid changes in the banking sector so as to enhance the customers' experience and gain success for a long period of time. The strategy of expansion in the overseas market has been observed over the last decade in order to broaden its source of income and thus increase the potential market. Through the development of this strategy, the NAB has identified the United States, Ireland, the United Kingdom and New Zealand as the preferred locations for the overseas market (Ellis, 2016).

History of NAB and Types of Strategies Used by NAB

Several large companies in Australia have collapsed in the last decade due to which, concern of the public and the government has increased regarding the lack of proper management practices and accountability towards the general public. The Forex scandal of National Australia Bank presented its negligent operating environment in the management sector, less loyalty towards risk management strategies and weak internal governance practices. In 2004, a disclosure was made by the bank which had evaluated its losses, amounted to AUD 360 million due to illegal dealing in the foreign currency options. This financial disaster was classified as operational risk, which was due to failure in the procedures of the bank and thereby, repeated the significance of the corporate governance policies for the proper functioning of the banks. Several issues against National Australia Bank were raised by the U.S. Securities and Exchange Commission resulting in the loss of AUD 4.1 billion to the bank on US Home Side loans in the year 2000. Therefore, failure in such strong risk management practices and lack of auditor independence has a negative impact on the operations of NAB. The Commission also criticized the organization from the point of view, that NAB has provided less priority to its corporate governance over a long period of time, due to which the financial performance of NAB for the period of 2001 to 2005 has affected (Thomson & Jain, 2006).

Another criticism in the context of the business practice of National Australia Bank was observed in the early 2014, when conflict of interest, inadequate implementation of suggestion and practices has been observed within the organization and due to this, resignations or suspension of financial planners and associated advisers have been received in the organization. This has led to the exposure of continual worse behavior of NAB in its financial planning and a serious violation of business operations within an industry. The financial adviser of the bank was involved in the illegal means of working including reconstructions of the file, forged signatures and irrelevant advice to clients, which in turn resulted into the increasing problem for the financial advisory industry in Australia (Ferguson & Williams, 2015).

In today's global business environment, the banking industry is rapidly increasing worldwide and thus, it has an enormous impact on the environment. However, the operations and profitability of National Australia Bank is significantly affected by internal and external factors. The influence of these factors can be determined through PESTLE and SWOT analysis. The evaluation of internal and external factors would help to analyze the challenges and issues that are faced by the banking industry and those that might appear in the recent future (Reserve Bank of Australia, 2014). 

Criticism

Political: The current instability of political issues in the country and the continuing war between the US and its followers, inappropriate attitude of North Korea and the rising illegal activities around the world have impacted the overall banking business in Australia. The changes in the international government rules and regulations also have a great influence on the banking industry.

Economic: The economic growth and development of the country around the world has a terrific impact on the bank’s profit and revenue. Australia has continued to record a phase of growth and is ranked as 5th in the global ranking of the banking industry. However, the country maintains to be a destination for attractive investment opportunity within every industry (Heritage Foundation, 2016). 

Social: The changing lifestyle of the people in Australia demands high quality of financial products and services. The banking industry has a great opportunity to capture a wide market through offering advance products and services to the customers which fulfills their needs and wants easily. Most of the people in the country are getting aware about the different products, which in turn indicate growth and expansion of the business (Goyal & Joshi, 2011).

Technological: The technological factors also play a major role in the functioning of the banking industry. It enhances the overall customer satisfaction and operating efficiency within the industry. The Australian banking industry differentiates themselves from the other organizations on the basis of its operation and funding mechanism that it provides to its customers and also on basis of the other practices of regulating and controlling the standards sustained by them. NAB develops advanced technological skills, which help to identify the risk associated with the business. The advanced technology sustains the position of the banking industry through increasing trust and security programs among the consumers (Queensland Government, 2016).

Legal: The banking industry has to comply with all the legal rules and regulations imposed by the government. NAB operates in the international market and thereby it has to ensure that all the legal and ethical requirements pertaining to the operations of the banking business are fully satisfied. The organization has to function under the Banking Act 1959 and thus, has to embrace the financial services of Australian government within Corporations Act 2001.

Environmental: The environmental factor indicates various risks and issues associated with the institution while lending its financial products and services.  The policies and standards developed by the industry examine the investment and lending decisions. However, the economy of banking sector in Australia is expanding and developing to a large extent.

Environmental Analysis

Strength: National Australia Bank has a strong financial position and brand name among all the banking organizations in Australia. It provides wide range of products and services to its customers by generating good revenue and income.

Weakness: The recent fall in the management practices of NAB leads to decline in its growth and development. The performance of the organization does not get recognized in the global market.

Opportunities: With the diversified portfolio of customers, products and services, NAB has a great opportunity to expand its business in other leading countries across the world (MBA Skool, 2016).

Threats: The rigid competition in the banking industry is one of the major threats for National Australia Bank. Moreover, the financial crisis, competitors (namely, Commonwealth Bank of Australia and Westpac Banking Corporation) and reforming rules and regulations of the government is also posing some critical challenges for the organization.

The organisational culture of National Australia Bank determines the degree of uncertainty and assessment of its effectiveness on the alteration or modification of certain variables in the organization within the banking industry. The culture of National Australia Bank is derived by its major values including, passion for serving customers, believe in achieving success, fulfilling the needs of the customer by offering high quality of financial product and services (NAB, 2016). The attention of NAB emphasizes on attaining profit and success for a long term. The working of an organization is done in such a way that it is committed to gain sustainability in their performance and carries its value without conciliating their trusted reputation within the industry (NAB, 2016).

The culture of NAB outlines the principles of responsibilities and the ethical code of conduct which states that each customer and employee of the organization should be equally treated with pride and respect so as to maintain a good and long term relationship with them. This results into the cultivation of appropriate behavior of the organization across the industry. The performance of National Australia Bank is quite good and it matches with the stated standard and thus, it is able to supervise its resources effectively and efficiently so as to carry out its functions in a much better way. The bank gains the advantage from the well-built structure of the administration and the regulatory principles that are originated in the market (NAB, 2016).

Conclusion

National Australia Bank is one of the central banks in Australia with having its presence all around the world. NAB specializes in its banking operations perform efficiently in the international market. Since a decade, it has made a notable stride. Owing to its operations, the bank has faced many issues and challenges, which are not only decisive in nature for the financial organization but also for the nation as well. These issues have a significant impact on the banking operations. However, the organizational culture of NAB is approaching towards the balanced and effective operations that may offer   the finest practices to their customers and thereby, it also manages to emerge out as   the most reputed and respected banking institution in Australia.

References

Ellis, D., 2016. NAB is Australia's biggest business bank, with significant operations in New Zealand. [Online] Available at: https://analysisreport.morningstar.com/stock/research/c-report?t=XASX:NAB&region=aus&culture=en-US&productcode=MLE&cur= [Accessed 1 September 2016].

Federal Deposit Insurance Corporation (FDIC), 2015. National Australia Bank Ltd. (“NAB Ltd.”). Federal Deposit Insurance Corporation.

Goyal, K.A. & Joshi, V., 2011. A Study of Social and Ethical Issues in Banking Industry. International Journal of Economics and Research, 2(5), pp.49-57. [Accessed 2016].

Heritage Foundation, 2016. Australia. [Online] Available at: https://www.heritage.org/index/country/australia [Accessed 1 September 2016].

MBA Skool, 2016. National Australia Bank SWOT Analysis, USP & Competitors. [Online] Available at: https://www.mbaskool.com/brandguide/banking-and-financial-services/623-national-australia-bank.html [Accessed 1 September 2016].

NAB, 2015. Our Strategy. [Online] Available at: https://www.nab.com.au/content/dam/nabrwd/About-Us/shareholder%20centre/documents/annual-review-interactive.pdf [Accessed 1 September 2016].

NAB, 2016. Corporate Governance. [Online] Available at: https://www.nab.com.au/about-us/corporate-governance [Accessed 1 September 2016].

NAB, 2016. Culture and Community. [Online] Available at: https://www.nab.com.au/about-us/careers/working-at-nab/culture-and-community [Accessed 1 September 2016].

NAB, 2016. National Australia Bank Ltd Code of Conduct. [Online] Available at: https://www.nab.com.au/about-us/corporate-governance/national-australia-bank-limited-code-of-conduct [Accessed 1 September 2016].

NAB, 2016. Our corporate responsibility approach. [Online] Available at: https://www.nab.com.au/about-us/corporate-responsibility/responsibility-management-of-our-business/our-corporate-responsibility-approach [Accessed 1 September 2016].

NAB, 2016. We’re NAB. [Online] Available at: https://www.nab.com.au/about-us [Accessed 1 September 2016].

Queensland Government, 2016. PEST analysis. [Online] Available at: https://www.business.qld.gov.au/business/running/winning-new-business/understanding-the-buyer/researching-government-buyers/pest-analysis [Accessed 1 September 2016].

Reserve Bank of Australia, 2014. The Australian Financial System. Financial Stability Review, September. pp.17-34. Available at: https://www.rba.gov.au/publications/fsr/2014/sep/pdf/aus-fin-sys.pdf.

Thomson, D. & Jain, A., 2006. Corporate Governance Failure And Its Impact On National Australia Bank‟s Performance. Journal of Business Case Studies, 2(1), pp.41-56.