Operational Problem of City National Bank - Case Study Example

Name Professor Course Date of submission Operational Problem of City National Bank (CNB) My Consideration is an industry with the highest rate of competition, banking. Banking involves offering financial services to the customers in a well-defined manner. With increasing level of competition, investors are looking for more than financial partners and banking services (Williams 111). It is from this background that led to the establishment of the City National Bank (CNB) to offer financial services to esteemed customers at very affordable rates. The bank offers services like opening savings and retirement accounts, mortgage services, numerous consumer loans, credit cards, and financial management. Furthermore, the bank creates a well-established business environment for the customers to ensure efficiency and enhanced customers’ confidence (Petri 97). Many duties performed by the bank are in line with organizational objectives, mission, and core values. Organizational objectives of CNB include promotion and development of banking principles, which attract the customers, initiation of advance planning for the introduction new services in the banking industry, protection of the good image of the bank for good public relations, and encouragement and training the staff to ensure provision of quality services to the customers. In order to counter the escalating rate of competition, the bank has established several unique services like mobile banking and e-statement for the customers (Keen 121). These services ensure efficiency and reduction in the time consumption while visiting the banks. Moreover, the mobile payments offer the account holders a chance to pay the utility bills through this service, hence, increasing efficiency in all its operations. Technology is a factor that which continues to shift most of the services offered by the bank. To this regard, the bank also supports clients with innovative technical programs. Investing in the latest technology ensures reduction in the cybercrime which is the biggest problem faced by the bank. It involves hacking into the bank’s system and stealing from different accounts posting problems related to ledger balancing (Lee 110). The bank’s organizational context and elements are also major contributors to the success. These elements include the size, geographical and service scope, and good public relations. The firm is smaller in comparison to other banks; however, it has consistently shown signs of improvement due to few customers involved with the business. The culture of the bank encourages inbuilt flexibility and value (Velupillai 367). Cyber crime within the bank Cybercrime is one of the major problems faced by banks globally. Many countries are implementing strategies to help protect financial institutions from this malicious act from the hackers, which is growing to become the greatest risk within the financial sector. Before 1990, the banking industry ran its activities in a simple and reliable manner; though, since the inception of technology, this industrial sector experiences a paradigm alteration in the phenomenon. It represents operational challenges of its own as it perpetrated by the criminals, terrorist organizations and state sponsored actors. Contrary to other types of robbery, cyber crimes involve stealing directly from the banks directly through the system instead of stealing from the bank’s clients (Hensden 119). According to CNB, the hackers use ‘spear phishing’ technology that involves careful designing of emails addresses with an aim of tricking the employees to open malicious software programs. Consequently, this offers them an opportunity to access the internal network of the administrator’s computers. Additionally, such accessibility offers hackers a chance to view video surveillance of the whole administration. Upon familiarity with the bank’s operation, the hackers employ this knowledge acquired from the surveillance to steal without raising any suspicion from the banks. Stealing approaches varies depending on the convenient method for the hackers. Some hackers, through their software programs, flush out money from the automatic teller machines (ATMs) at specific times when the course is clear (Debachi 21). Differently, other hackers create fake accounts in which they transfer money to after stealing. Globally, many banks are losing lots of money making cyber crime a major issue that requires faster solution. For examples, CNB lost $ 7.5 through ATM deceptions and $ 11m through online banking platform to the hackers in 2004. According to Hammer (121), there is no institution that is immune to cyber crime attacks. Hence, it is significant to monitor security procedures consistently to ensure there is no infiltration of any unrecognized logins. Furthermore, some banks also have weak security systems, which are easier for hackers to bypass and steal huge sum of money from the coffers. Even though CNB is investing, a lot of money to curb theft due to cybercrime, but questions remains the same on whether the bank is doing enough on using current technology to reduce such hacking (Hammer and Santon 90). The countries identified in which cybercrime gangs thrives are Russia, Ukraine, China, and Europe. Most of the spear phishing emails also resemble messages from trustworthy sources. While trying to open accounts such emails, the malware content get access into the employees’ computers; as a result, the gangs remotely observe the screens of the bank staff handling cash transfers. In order to ensure sustainability in the reduction of the cybercrime, there is a need for the bank to develop reliable security system. In addition, the banks should collectively aim to adopt measures that protect the whole industry from cyber threat (Holton and Tjahjono 330). The key objective of the operations is to ensure the provision of quality services that meets the requirements of the clients. This is significant as it determines the number of number customers opening the accounts with the bank and those seeking financial help from the bank as well. Most businesses lose customers due to poor quality services offered. Even though the numbers of subscribers have increased over time since the inception of mobile banking, however, the bank still has a role to play in terms of ensuring that it retains those subscribers (Colliner and Evans 151). Furthermore, with the escalating levels of cybercrimes associated with mobile phones, most of the subscribers fear the loss and account hacking scenarios. In 2011, CNB had 211,262 subscribers while in the latest survey conducted the bank had 300,721 subscribers. This reflects an increment of 42%. An improvement in the processes taking place in this bank will ensure efficiency and reliability of the business operations. Opportunities like reduced cost of operations, enhanced customers, and improved productivity are likely to be realized when there is improvement in the operations of the bank (Wells 151). Most of the cybercrime activities attack the department responsible for effecting financial transaction. Irrespective of the much investment in bridging the security gap and increased supervision of all transactions taking place, the bank continues to make losses due to cybercrime. Increasing use of internet and other technologies are the major factors contributing to the growth of cybercrime globally. The development of technology is crucial to the success of the banking industry. However, it has continued to pose many problems in this sector. Some of the associated incidents are phishing, computer viruses and computer hacking problems (Kahane 131). Hacking system through cybercrime ensures infiltration of the malware into the computers at the initial stage. These malware reduces the efficiency and the performance of the computers, hence, a loop for the hacking process. This crime is web based; as a result, the malware spreads across all the computers after attacking the server from which all computers’ internet connection originates. Cybercrime affects many banking operations; it results in reduced profitability and loss of jobs to those employed in the banking industry (Pahl and Richer 136). Below are structures on how the cybercrime gangs employ the use of the computer malware, Trojan, to access the security of the banking surveillance system. Investing in efficient surveillance system requires many resources ranging from workforce to technological resources. All these funds may have a negative implication on the bank as such investments increase the cost of production, thus, reducing the profitability of the bank. The workforce involves the installation, monitoring, and maintenance of the security gadgets (Mosley and Desinger 438). Even with increasing technology, still human effort is a major requirement for most production process. The human resources bring on board the intellectual capabilities needed to improve the value of the employees Figure 1: Cybercrime hacking process Figure 2: diagram indicating problems associated with cybercrime Operation management of CNB Operation management mainly focuses on careful management of the business in order to provide services efficiently to the customers. In addition, it integrates management skills, processes, and proper designing of the services offered. It is a practice, which monitors all the production processes from acquisition, development, and proper utilization of the resources as required by the customers. Operation management in the City National Bank ranges from planning activities to tactical and operational stages (Salaiz 97). Strategic planning activities involve size and location of the firm determination, communication networks, and development of the technology supply chains. For the success of the operation performance, it is important to ensure integration of the management all services offered by the bank. The performance objectives are dependability, flexibility, speed, quality, and cost quality. Quality All the business entities aspire to grow economically and in a very sustainable manner. In most cases, the growth is achievable through offering the customers quality banking services that encourage them to deal with the bank. In CBN, it believes in growth and development through conforming to the standard of requirements by the consumers. It is also imperative to ruminate both the internal and external factors, which affects the operation of the banking services. Whenever external factors occur, the customers have less or no complaint about the services offered by the bank, thus, relating to a positive outcomes or satisfaction with the services. External factors which may consist of good qualities create more revenue for the bank. Management of the internal activities within the bank also ensures efficiency. Higher conformity to the required quality of services ensures saving of the productivity cost. While correcting the mistakes initially made by the bank, it becomes difficult since external factors involve other elements of objectives Wells 143). Cybercrime affects the quality of services offered by the banks since it reduces the amount of money available for borrowing. To improve the quality of the operation management, it is important for the bank to create an open environment that allows the clients to contribute to the management processes of the bank. this improvement increases communication among the various department of the banks. Speed When customers request for a service from the bank, it takes some duration before they receive those services. This duration is known as the speed of response and is dependable on both the internal and external factors. Externally, the importance of speed arises especially since there is a quicker response to the customers. The customers always view external speed positively since it enables them to create their own jobs (Waldman and Jauda 140). In CNB, it ensures that the loans offered to the account holders attract higher rates only when the customers require such services within a short duration of time. Differently, internal factors encourage cost reduction. Cybercrimes disorient the plans and activities of the bank. The gang may hack and steal the amount set aside for the operation of the bank activities or lending activities leading to paralysis of business activities. Improvement of the speed is an important factor that the bank has a responsibility of achieving this. Reduction in the material movement is crucial especially the process required to get a service from the bank. Dependability In this case, the bank ensures the success of its operations through delivering the services required by the customers on time. Dependability might seem simple in definition but very difficult to measure. Customers regard external dependability as a good thing. CNB encourages deliverance of their services to customers at the required time. This is a factor that account holders and business entities compare while opening accounts. Furthermore, those customers involved in other businesses require a banking partner that they can depend on entirely for the services they require as this assists them in saving time. Internally dependability influences mainly the cost (Well 182). It save time, money and help the businesses acquires stability and efficiency improvement. Cybercrime reduces dependability rob the bank. for efficient running of the businesses, the clients require a financial partner that they can depend on whenever they require financial assistance. Flexibility With the changing working places, the legal requirement, and technology, it is important that the business within the banking industry encourage flexibility within their operations. CBN embraces several aspects of flexibility to ensure continuous satisfaction of the customers like service flexibility, delivery flexibility, and mix flexibility. Delivery flexibility focuses on the ability of the bank to offer services at the required time and the convenience of the customers while services flexibility encourages offering services besides financial support to the business. CNB offers clients a wide range of services including financial advice and mobile account management. Externally, mixed flexibility allows CNB to provide a wide variety of services to its clients. Additionally, it helps in incorporating new ideas into the business, which attracts many customers. Internally, flexibility helps in speeding up the response from the bank to the clients besides saving time and maintaining dependability (Colliner and Evans 204). Cybercrimes reduce the amount available for the bank to put into various uses thus affecting the flexibility. In order to draw customers, it is important for the bank to improve the services it offers. Encouraging mobile banking is important, as this will enable the clients conduct any financial transaction at their convenience. Cost objective Different banks portray variability in their cost structure. The other elements of objectives aim at reducing the cost internally. All businesses aim at reducing the cost of offering services to the client. In order to realize the reduced cost of offering the services, the CNB ensures that all its operations are monitored to avoid any form of mismanagement or misappropriation of the funds. In order to curb cases resulting from cybercrime, the CNB requires more funds to invest in the security system; hence, prompting an increase in the cost of production. In order to ensure improvement in the operational management, the CNB must ensure proper budgeting procedure and implementing cost-monitoring models to curb the risks associated with cybercrime. This will also result in the continuous accountability within the bank. Operational improvement alone cannot promise the sustainability of the operational management. It is from this background that CNB ensures executions of its plans different from those of their competitors, but rather investing huge amount in operational innovation (Cheesema 102). These technologies also help reduce threats associated with cybercrime and increases accountability. Another method of reducing the threats involves redesigning the security system that is very difficult to hack. In addition, it is important that the security system involve a tracking system incorporated into the database of the relevant local authority. With this in place, hacking activities triggers an automatic alert to the police while directing the through the area in which cybercrime activity is happening (Argarwal 220). The bank requires to adapts it own supply chain to the clients. Clients’ requirements are changing over time; hence, there is a need for the bank to adjust to the current requirements of the businesses. Supply chain adoption may be difficult but in the end, it is likely to result in sustainable advantage when there is an alignment with the interest of the customers. Moreover, supply chain management enables the bank to focus on competencies making it become more flexible in its operations. It also improves trust and collaboration between the partners, hence, creating an inventory atmosphere for the technicians. Works Cited Agarwal, H. S. Principles of economics. Cranbrook, Kent: Global Professional Pub, 2013. Print. Collier, D., and J. Evans. Operations management: Integrating manufacturing and services. 5th ed. New York: McGraw-Hill, 2010. Print. Cheesema, H. R. Business law: Legal environment, online commerce, business ethics, and international issues. 8th ed. Upper Saddle River, NJ: Prentice-Hall, 2013. Print. Dibachi, F., and R. L. Dibachi. 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