Customer based brand equity

View with images and charts

Customer based brand equity

What is Customer-based brand equity?

Customer-based brand equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. A brand is said to have positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not Thus, a brand with positive customer-based brand equity might result m consumers being more accepting of a brand extension, less sensitive to price increases and withdrawal of advertising support or more willing to seek the brand in a new distribution channel. On the other hand, a brand is said to have negative customer-based brand equity if consumers react less favorably to marketing activity for the brand compared with an unnamed or fictitiously named version of the product. There are three ingredients to this definition:

• differential effect;

• brand knowledge;

• consumer response to marketing.


Brand equity arises from differences in consumer response. If no differences

occur, and then the brand name product is essentially a commodity. Competition, most likely, would then be based on price.


These differences in response are a result of consumers’ knowledge and experience

of the brand. Thus, although strongly influenced by the marketing activity of the firm, brand equity ultimately depends on what resides in the minds of consumers.


The differential response by consumers that makes up the brand equity is reflected in

perceptions, preferences and behavior related to all aspects of the marketing.


Customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable and unique brand associations in memory. In some cases, brand awareness alone is sufficient to result in a more favorable consumer response – for example, in low-involvement decision settings where consumers are willing to base their choices merely on familiar brands.

For branding strategies to create brand equity, consumers must be convinced that there are meaningful differences between brands. The key to branding is that consumers must not think that all brands in the category are the same. Thus, establishing a high level of brand awareness and a positive brand image in consumer memory – in terms of strong, favorable and unique brand associations – produces the knowledge structures that can affect consumer response and produce different types of customer-based brand equity.

I. Brand awareness

Brand awareness consists of brand recognition and brand recall performance. Brand recognition relates to consumers’ ability to confirm exposure to the brand when given the brand as a cue. In other words, brand recognition requires that consumers can correctly discriminate the brand as having been seen or heard before. For example, when consumers go to a shop, is it the case that they will be able to recognize the brand as one to which they have been exposed? Brand recall relates to consumers’ ability to retrieve the brand from memory when given the product category, the needs fulfilled by the category or a purchase or usage situation as a cue. So, brand recall requires that consumers correctly generate the brand from memory when given a relevant cue.

If research reveals that consumer decisions are made at the point of purchase, where the brand name, logo, packaging and so on will be visible, then brand recognition will be important. If research reveals that consumer decisions are mostly made in settings away from the point of purchase, on the other hand, then brand recall wilt be more important As a cautionary note, even though brand recall itself may be viewed as less important when consumer decisions are made at the point of purchase, consumers’ brand evaluations and choices will still often depend on what else they recall about the brand given that they are able to recognize it there.

Consequences of brand awareness

Brand awareness plays an important role in consumer decision-making for three main reasons.

a. Learning advantages: The first way that brand awareness affects decision-making is by influencing the formation and strength of the brand associations that make up the brand image. A necessary condition for the creation of a brand image is that a brand node has been established in memory.

b. Consideration advantages: Second, raising brand awareness increases the likelihood that the brand will be a member of the consideration set, the handful of brands that receive serious consideration for purchase.8 Research has shown that consumers are rarely loyal to a single brand but instead have a set of brands that they would consider buying and another – possibly smaller – set of brands that they actually buy regularly.

c. Choice advantages: Third, brand awareness can affect choices between brands in the consideration set, even if there are essentially no other associations to those brands. For example, consumers have been shown to adopt a decision rule to buy only more familiar, well-established brands in some cases. Thus, in kw-invotvement decision settings, a minimum level of brand awareness may be sufficient for product choice, even in the absence of a well-formed attitude.

Establishing brand awareness

In the abstract, brand awareness is created by increasing the familiarity of a brand through repeated exposure, although this is generally more effective for brand recognition than for brand recall. That is, the more a consumer ‘experiences’ the brand by seeing it, hearing it or thinking about it, the more likely it is that the brand will become strongly registered in memory. Thus, anything that causes consumers to experience a brand name, logo, packaging or slogan can potentially increase familiarity and awareness of that brand element Examples include advertising and promotion, sponsorship and event marketing, publicity and public relations and outdoor advertising. Moreover, it is important to visually and verbally reinforce the brand name with a full complement of brand elements.

Many marketers have attempted to create brand awareness through ‘shock’ advertising with bizarre themes. In short, brand awareness is created by increasing the familiarity of the brand through repeated exposure.

2. Brand image

A positive brand image is created by marketing campaigns that link strong, favorable and unique associations to the brand in memory. The definition of customer- based brand equity does not distinguish between the source of brand associations and the manner in which they are formed; all that matters is the resulting favorability, strength and uniqueness of brand associations. This realization has important implications for building brand equity. Besides marketer-controlled sources of information, brand associations can also be created in a variety of other ways: by direct experience; from information communicated about the brand from the firm or other sources (e.g., magazine reviews or other media) and word of mouth; and by assumptions or inferences from the brand itself (e.g., its name or logo) or from the identification of the brand with a company, country, channel of distribution or some particular person, place or event.

Strength of brand associations

Associations will vary in the strength of their connection to the brand node. Strength is a function of both the amount, and quantity, of processing that information receives as well as the nature, or quality, of that processing. The more deeply a person thinks about product information and relates it to existing brand knowledge, the stronger the resulting brand associations. Two factors facilitating such strength of association are the relevance of the information and the consistency with which this information is presented over time. The particular associations that are recalled and salient will depend not only on the strength of association

Consumer beliefs about brand attributes and benefits can be formed in different ways. Brand attributes are those descriptive features that characterize a product or service. Brand benefits are the personal value and meaning that consumers attach to the product or service attributes.

Marketing communication campaigns attempt to create strong brand associations and recalled communication effects through a variety of means. These include using creative communications that cause consumers to elaborate on brand-related information and relate it appropriately to existing knowledge; exposing consumers to communications repeatedly over time; and ensuring that many retrieval cues are present as reminders.

Marketing communication campaigns can contribute to brand equity.The entire marketing campaign and all activities related to the brand will affect the strength of brand associations.

Uniqueness of brand associations

Brand associations may or may not be shared with competing brands. The essence of positioning is that the brand has a sustainable competitive advantage or ‘unique selling proposition’ that gives consumers a compelling reason why they should buy that particular brand. Furthermore, they may be based on product-related or non-product-related attributes or benefits. In fact, in many categories, non-product-related attributes, such as user type or usage situation, may more easily create unique associations.

The existence of strongly held, favorably evaluated associations that are unique to the brand and imply superiority over other brands is critical to a brand’s success.

In short, to create the differential response that leads to customer-based brand equity, it is important that some of the strongly held brand associations are not only favorable but also unique. Unique brand associations are not shared with competing brands. Beliefs about unique attributes and benefits for brands that consumers value more favourably than competitive brands can lead to a greater likelihood of the consumers choosing the former brands.

Not all brand associations will be deemed important and viewed favourably by consumers, nor will they be equally valued across different purchase or consumption situations. Moreover, not all brand associations will be relevant and valued in a purchase or consumption decision.

Four Steps to building a brand

According to the CBBE model, this can be thought of in terms of a sequence of steps, All the steps involve accomplishing certain objectives with customers, both existing and potential. The steps are as follows.

a. Identify the brand with customers and associate the brand in customers’ minds

with a specific product class or customer need.

b. Establish the totality of brand meaning in the minds of customers by strategically

linking a host of tangible and intangible brand associations with certain properties.

c. Elicit the proper customer responses to this brand identification and brand


d. Convert brand response to create an intense, active loyalty relationship between

customers and the brand.

These steps address fundamental questions that customers invariably ask about brands – at least implicitly if not even explicitly – as follows (with corresponding brand steps in parentheses)

i. Who are you? (Brand identity.)

ii. What are you? (Brand meaning.)

iii. What about you? What do I think or feel about you? (Brand responses.)

iv. What about you and me? What kind of association and how much of a connection

would I like to have with you? (Brand relationships.)

Brand building blocks

Performing the four steps to create the right brand identity, brand meaning, brand responses and brand relationship is a difficult process. To provide structure, it is useful to think of sequentially establishing six ‘brand building blocks’ with customers. To connote the sequencing involved, these brand building blocks can be assembled as a brand pyramid. Creating brand equity involves reaching the pinnacle of the CBBE brand pyramid and will only occur if the right building blocks are put into place. The corresponding brand steps represent different levels of the CBBE brand pyramid. This brand-building process is illustrated. Each of these steps and corresponding brand building blocks and their sub-dimensions are examined in the following sections.

1.8.5 Brand salience

Achieving the right brand identity involves creating brand salience with customers. Brand salience relates to aspects of the awareness of the brand – for example, how often and easily the brand is evoked under various situations or circumstances.

As defined previously, brand awareness refers to customers’ ability to recall and recognize the brand, as reflected by their ability to identify the brand. In other words,

Figure: Sub-dimensions of brand building blocks

3. Brand performance

Brand performance relates to the ways in which a product or service attempts to meet customers’ more functional needs. As such, it refers to the intrinsic properties of the brand in terms of inherent product or service characteristics.

Brand performance transcends the ingredients and features that make up the product or service to encompass aspects of the brand that augment these characteristics. Any of these performance dimensions can serve as a means by which the brand is differentiated. There are five important types of attributes and benefits that often underlie brand performance.

i. Primary ingredients and supplementary features. ii. Product reliability, durability and serviceability. Hi. Service effectiveness, efficiency and empathy. iv. Style and design. v. Price.

As noted earlier, customers can view the performance of products or services in a broad manner. Reliability refers to the consistency of performance over time and from purchase to purchase. Durability refers to the expected economic life of the product. Serviceability refers to the ease of servicing the product if it needs repair.

4. Brand imagery

Brand imagery deals with the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers’ psychological or social needs. Brand imagery is how people think about a brand abstractly, rather than what they think the brand actually does. Thus, imagery refers to more intangible aspects of the brand. Imagery associations can be formed directly (from a consumer’s experiences and contact with the product, brand, target market or usage situation) or indirectly. Many kinds of intangibles can be linked to a brand, but four categories can be highlighted.

^ User profiles.

S Purchase and usage situations.

^ Personality and values.

S History, heritage and experiences.

5. Brand judgments

Brand judgments focus on customers’ personal opinions and evaluations. They involve how customers put together all the different performance and imagery associations of a brand to form kinds of opinions. Customers may make all types of judgments with respect to a brand, but in terms of creating a strong brand, four types of summary brand judgments are particularly important: quality, credibility, consideration and superiority.

6. Brand feelings

Brand feelings are customers’ emotional responses and reactions with respect to a brand. They also relate to the social currency evoked by a brand. How does the brand affect customers’ feelings about themselves and their relationships with others? These feelings can be mild or intense, positive or negative. Such emotions can become so strongly associated that they are accessible during product

consumption or use. Researchers have defined transformational advertising as advertising designed to change consumers’ perceptions of the actual usage experience with the product.

7. Brand resonance

Brand resonance refers to the nature of this relationship and the extent to which customers feel they are ‘in sync’ with the brand. Resonance can be broken down into four categories.

a. Behavioral loyalty, b. Attitudinal attachment. c. Sense of community. d. Active engagement.

Before we started with a specific branch, it is very much important to know about the Mutual Trust Bank Limited (MTBL) as a whole. Because every Branch of MTBL has to maintain the rules and regulations that are generated by the MTBL (Head office). Each and every signal branch is responsible for achieving the goal or target of MTBL. So a short view of MTBL will help us to understand every tittle thing that is related to the banking regarding it branches as well.

Mutual Trust Bank-At a Glance

The economy of Bangladesh has been experiencing a rapid growth since the 90’s. Industrial and agricultural development, international trade, inflow of expatriate Bangladeshi workers’ remittance, local and foreign investments in construction, communication, power, food processing and service enterprise ushered in an era of economic activities. Urbanization and lifestyle changes concurrent with the economic development created a demand for banking products and services to support the new initiatives. A group of highly acclaimed businessmen of the county grouped together to respond to this need and established Mutual Trust Bank Ltd on 29th September 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 38.00,000,000 divided into 38,000,000 ordinary shares of Tk. 100 each. -The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24,

1999. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business

a. All types of commercial banking activities including Money Market operations.

b. Investment in Merchant Banking activities.

c. Investment in Company activities.

d. Financiers, Promoters, Capitalists etc.

e. Financial Intermediary Services.

f. Any related Financial Services.

Within a short span of time Mutual Trust Bank has established itself as one of the fast growing local private banks. It has at present a network of SObranches serving many of the leading corporate houses and is gradually moving towards retail banking. Its other significant delivery channel is the shared ATM Network. In 2003 the Bank again came to the limelight with over subscription of the Initial Public Offering of the shares of the Bank, which was a record (55 times) in our capital market’s history and its shares commands respectable premium.

MTBL is maintaining its competitiveness by leveraging on its Online Banking Software and modem IT infrastructure. It is the pioneer amongst the local banks in introducing innovative products like SMS banking, and under the ATM Network the Stellar Online Banking software enables direct linking of a client’s account without the requirement for a separate account.

MTBL has successfully established a transparent process of recruitment seeking the best talent. In its efforts towards continuous development of the human resources of the Bank, it arranges training programs throughout the year.

In the fast paced banking arena of MTBL as competition becomes more intense, it is always striving to provide better and innovative services to its client

The Company (Bank) operates through its Head Office at Dhaka and 30 branches. The Company/Bank carries out international business through a Global Network of Foreign Correspondent Banks.

The Registered Office of the Bank is:

68, Dilkusha C/A, Dhaka

Phone; 717 0138, 7170139, 7170140

Fax: 880-2-956 9762,


Telex: 632173 MTB HO BJ


Z2 Approaches of MTBL

The aim of Mutual Trust Bank Limited is to become a leading Bank by providing better service to the clients along with other quality operations in Private Banking Sector. The bank has some mission to achieve the organizational goals. These are-

> MTBL intend to provide the better service for the customer.

> MTBL intend to provide the good return for their respectable shareholders.

> MTBL work as medium of exchange on behatf of their potential clients.

> MTBL is much responsible in case of provide the optimum benefit of the

customers. > MTBL is always concentrated to enhance the competitive advantages by

upgrading banking technologies and information system. > MTBL believes in discipline growth strategy. > MTBL always encourages investors to boost up the share market > MTBL maintain high standard of corporate and business ethics. > MTBL intends to play more important rote in the economic development of

Bangladesh and its financial relations with the rest of the world through

international trade.

There are also other missions of MTBL which are also plays significant rote to reach the ultimate target.

2,3 Objectives of Mutual Trust Bank Limited

The main objectives of Mutual Trust Bank Limited is to maximize profit through customer satisfaction, which very much reflects the idea of any type service oriented business Mutual Trust Bank has been ensuring profit by providing best and improved service along with other corporate objectives mentioned below:

> To provide excellent customer service to its clients, so they choose MTBL

first > To carry on business deals in foreign exchange, dealing in foreign currency notes, granting and issuing letter of credit, and traveler’s cheek, circular notes and negotiating of export documents and all other matters related to the

foreign exchange.

> Ensure high return on investment and with different service products. > To play a significant role in the improvement of the economic condition of this

country. > Make profitable investment, disciplined growth strategy and growth in annual

profit margin. > To remain as the market leader through diversification of the business and

automation of the banking operations. > Create and maintain a congenial environment so that the people will be proud

and eager to work with MTBL. > To create fully integrated financial service system. > To create employment opportunity for contribution to the commodity. > To build up a strong and enduring organization which employs good business

practices and deliver better service of the highest quality.

Goal of the MTBL

To share a significant portion of the banking sector’s by utilizing available manpower and also state of the art technology for maximizing the shareholders wealth.

2.4.1 Long term goal: To maximize the wealth of the shareholders.

2.4.2 Short term goal: To earn satisfactory rate of return on investment providing wide range of banking services.

Z5 Features of Mutual Trust Bank Limited

There are so many reasons behind the better performance of Mutual Trust Bank Limited than any other newly established banks:

> Highly qualified and efficient professionals manage the bank.

> Mutual Trust Bank Limited has established a core Research & Planning Division

with efficient persons. > The bank has established correspondent relationship more than 100 of foreign banks.

> The computerized operation system in all branches of MTBL has provided the

frequent and prompt customer service. > The strict leadership along with the supervision of efficient management directs

all the branches. > The inner environment and teamwork of all branches in MTBL motivated all

experienced employees to achieve the ultimate objective of MTBL. > Mutual Trust Bank Limited has become a member of the SWIFT system to

expedite foreign trade transaction. > Mutual Trust Bank Limited has become introduced some scheme for the purpose

of saving of low income people which are not available in other like ” Ajebon

Pension Scheme”.

> The bank offers attractive saving rate than other financial institutes, > Mutual Trust Bank Limited provides loan to the customers at lower interest with

easy and flexible condition than the others do. > Mutual Trust Bank Limited charges lower commission from their customer in

comparison wit other banks. > Along with the profit generation Mutual Trust Bank Limited also maintain social

responsibilities. The bank always guided their potential customer by giving valuable advises

Origin of the Bank

Board of Directors:

Mutual Trust Bank Ltd has been launched by a group of successful entrepreneurs with recognized standing in the society. The first Board of Directors of the bank was constituted with thirteen Directors. Mr. Syed Manzur Elahi. former Advisor of Caretaker Government was the first Chairman of the Bank. Currently Mr. Samson H. Chowdhury. Chairman of Square Group, is the Chairman of Mutual Trust Bank Ltd. Complete list of directors is given follow:

The particulars of the Board are presented as under:

Name Designation
Mr. Samson H. Chowdhury Chairman
Mr. Dr. Arif Dowla Vice Chairman
Syed Manzur Elahi Director
Mr. Hedayetullah Director
Kh.Rashiduzzaman Director
AI-Haj Syed Abul Hossain Director
Mr. M.A. Rouf Director
Md. Abdul Malek Director
Mr. Rashed Ahmed Chowdhury Director
Mrs. Yasmeen Haque Director
A.F.M. Mahfuzul Hasan Director
Md. Wakil Uddin Director
Mr. Saidur Rahman Ratan Director
Mr. Mir Shahjahan Director
Ms. Monowara Haque Director

Management Team:

The MTBL Management Team comprises of a group of fifty people. Mr. Anis A. Khan is the Managing Director. Mr. Quamrul Islam Chowdhury, Mr. Md. Hashem Chowdhury and Mr. Md. Ahsan-uz Zaman are the Deputy Managing Director of the Bank. Each of them comes with a resourceful working background and is committed in leveraging their experiences to take MTBL to greater heights by ensuring top line revenues with dynamic capabilities.

This Management Team is unique in being able to envision the need of the business by bringing in a mixture of advanced technology solutions know-how and revamping the organizational make-up for maximum profitability.

These people are persistent to provide unparallel service to its customers, come up with timely and innovative products and services and to enhance the capabilities of its people while emphasizing on the latest technology. This team is to drive the business to maximize the operational excellence and efficiency through acquisition of talent, developing systems, processes and people and through blending in of these to let customers revel in with fulfillment and permanency.

3.1 Organizational Profile:

3.1.1 Vision:

“To be the bank of first choice by creating exceptional value for our clients, investors and employees alike.”

3.1.2 Mission:

“We aspire to be the most admired financial institution in the country, recognized as a dynamic, innovative and client focused company, that offers overall array of products and services geared for excellence and create an impressive economic value”

3.1.3 Objective:

MTBL aims to be a leader in providing quality and value added financial services to its local and global business relationships. MTB’s belief is “Business must not only be conducted according to the highest standards of economic efficiency but the highest ethical standards as well. These standards go beyond minimum legal requirements and reflect the Bank’s long-term commitment to building a business that is successful, honest and responsible-that its entire employee can take pride in.”

Corporate Responsibility:

A successful business is defined by its relationship with its shareholders, customers, employees, business partners and the community in which it operates. MTBL aims to tap into the synergy of these relationships and create a collectively beneficial business environment. Its responsibilities are as follows:

<• Shareholders:

“To safeguard shareholders’ investment and to create and add economic value.”

*:• Customers:

To satisfy the unique needs of our customers by offering safety to their trust, provide innovation and flexibility in delivered service, that creates value for their business thereby enhancing their commercial success and, in turn, ours. To take due care and diligence in ensuring that regulatory norms are not breached in extending service to customers and other constituents.”

<• Employees:

To recognize that employees are our greatest asset and to ensure that they have a safe and conducive working environment with equitable and competitive terms and conditions of service. The Bank promotes a culture of trust, and the development and best of human talent and resource.”

*J* Business partners:

To cultivate meaningful, mutually beneficial and successful long-term relationship with our partners, suppliers and contractors based on trust and understanding.”

*> Community:

To be a responsible corporate citizen and conduct business in a manner that promotes sustainable development for both MTBL and the community it serves. This involves full compliance with local laws and regulatory authorities, and giving due consideration to cultural, social and environmental impact in all commercial decisions.”

Strategies of the Company:

MTBL supports a competitive market system. Its business decisions and territorial expansions of business are based on sound economic principles and reliable market surveys, with a view to long-term profitability and adding economic value. These are essentials as profitability is a measure of both efficiency and market confidence in MTBL’s service while the quantum of economic value-added is indicative of how far the returns create shareholder value.

Hence, MTBL is committed to staying over the competition through constant innovation of technology based products and efficiency enhancement, as well as, being responsive to the requirements of our customers and partners, in so far as our ability to adhere to industry best practices e.g. Core Risk Management principles are unimpaired.

Serrices Offered by MTBL

Liability Products:

Current Account, Savings Account, Short-Term Deposit, FOR, Different types of Foreign Currency Accounts, Brick by Brick, Millionaire Plan, Double Saver Plan, Unique Savings Plan, Education Plan etc.

Asset Products:

Term Loan, Overdraft, SOD, Project Loan, Letter of Credit, LTR, Cash Credit, Staff Loan, Local & Foreign Bills Purchase and other forms of Advances,

SME & Consumer Credit:

Small Business Loan, Auto Loans, Consumer Durables Loans, Loans for Professionals, House Finance and Credit Cards.

Special Features:

Real-time Online Banking, Any Branch Banking, Internet Banking, SMS Banking, ATM Service, Loan Syndication, Corporate Banking, Locker Facilities, Cash Management.

MTB Online Banting

The Service

Mutual Trust Bank is playing a pioneering role among its competitors in providing real time online banking facilities to its customers. Mutual Trust Bank online banking offers a customer to deposit or withdraw any sum of money from any branch anywhere. Any account holder having a checking account with the bank can avail this service.


Based on two-tier client-server architecture, the banking software works basically on central server approach providing the fastest possible access time to any client database from any branch as well as updating the transaction. The branch level server keeping the up to date transaction history of the client ensures the offline transaction ability in case of any failure in the remote communication. Using Microsoft’s enterprise version of SQL Server 2000 as data reservoir, the software ensures the highest level of security at application, network, database and operating systems level ascertaining the confidentiality and security of customer’s personal and account’s information.


In order to ensure the safety and accessibility of mission critical data, the Central Data Center of Mutual Trust Bank is equipped with the state of the art Servers. The recently procured Dell 6600 Server, powered by 4 Xeon processors (RAIDS volume fault tolerance implemented) has been employed as the primary data reservoir of the bank. As a disaster recovery preparation, MTB have deployed Dell 4300 series Server as Backup server, powered by 2 Xeon processors, which ensures quick fail over of the primary server and Smooth Operation of online transactions.

The Wireless Network

In order to provide data communication to ensure seamless operation of online banking system, all the branches of the Mutual Trust Bank (except two rural branches) are connected with the central server at its Head Office through Radio Link of 3.5 Frame Relay network and Fiber Optics provided by the country’s leading data communication service provider X-Net Limited, a joint venture company with

Grameen Phone. The Bank has recently adopted V-SAT communication system to bring its rural branches under the online branch banking facilities. Square Informatics Ltd is providing the V-SAT connectivity.

35 MTB Consumer Product & Services

a. Brick by Brick

b. Monthly Benefit plan

c. Save everyday plan

d. Children education plan

e. MTB Double saver plan

f. MTB Triple saver plan

g. MTB Millionaire plan

h. Unique saver plan

i. Consumer Loan Scheme

j. Small Business loan scheme

k. House loan Scheme

I. Home repair/ renovation loan scheme

m. Auto loan scheme

n. Visa electron debit card

3.6 MTB Decision mating & Risk management

Risk is inherent in all the core business areas of a bank. Managing risks properly is one of the main pillars of banking business. To ensure sustainable growth and performance, proper and sound risk management practice is vital importance, as a commercial band Mutual Trust Bank Ltd (MTBL) attaches fill importance to manage the risk involved in its business. The risk management of the bank covers a wide spectrum of risk issue but the five core areas of Banking are—Credit risk, Foreign Exchange risk, Internal control and Compliance risk, Laundering risk and asset liability management. The principle objective of risk management is to safeguard the bank’s capital, financial resources, profitability and market reputation. To this effect, the bank took the following steps under guidelines of Bangladesh bank:

1. Credit Risk Management-Credit risk is the possibility that borrower or counter party will fail to meet its obligations in accordance with agrees terms. The failure may result from unwillingness of the counter party or decline in his/ her financial condition. Credit risk, therefore, arises from the bank’s dealing with or lending to corporate, individuals, other banks or financials institutions. A separate credit division has been formed at head office since the inspection of the bank, which is assigned with the duties of marketing and assessment of credit products, maintaining effective relationship with the customer and exploring new business opportunities. The credit risk management includes borrower risk analysis, financial statement analysis, industrial analysis, and historical performance of the customer, security of the proposed credit facility and market reputation of the borrower. MTB takes its lending decision based on the credit risk assessment report by appraisal team.

2. Foreign Exchange Risk

Foreign exchange risk is defined as the potential change in earning arising due to change in market prices. The market directly affects each country bond, equities, private property, manufacturing and all assets that are available to foreign investors. Foreign exchange rates also play a major role in determining who finance government deficits, who buys equities in companies and literally affects and influences the economic scenario. Due to high risk market the role of treasury operations is crucial. As per Bangladesh Bank guidelines the bank has segregated the front and back office for treasury operations. Front office independently conducts the transactions and the Back Office is responsible for verification of the deals and passing of their entries in books of accounts. All nostro accounts are reconciled on monthly basis and all foreign exchange transactions are revalued at Market-to-Market rate as determined by Bangladesh Bank

3. Internal Control and Compliance Risk Management

Internal control and compliance (ICC) is a critical component of bank management and foundation of the safe and sound operation of banking organization. A system of strong internal control and compliance can help to ensure that the goals and objectives of a banking organization will be met, that the bank will achieve long term profitability targets, and maintain reliable financial and managerial reporting. Operational loss may arise from error and fraud due to lack of strong internal control and compliance culture. Effective internal control and compliance can help to ensure that the bank will comply with laws and regulation as well policies, plans, internal rules and procedures, and decreases the risk of unexpected losses or damage to the bank’s reputation. To this effect, the bank an tCC Division headed by senior executives. The ICC Division has been segregated to three departments, which are Audit& Inspection Dept, Compliance Dept and Monitoring Dept. The bank has also developed an internal control and compliance policy duty approved by the board of directors. The Audit & Inspection team undertakes periodic and special audit. The audit committee of Board of Directors plays an effective roie in providing between the board and management. The committee reviews the financial reporting prices, the system of internal control, the audit process and the bank’s process for compliance with laws, regulations and code of conduct.

4. Money Laundering prevent/on

Money laundering has been identified as a major thereat to the financial services community, it is important that the management of banks and other financial instructions view prevention of money laundering as part of their risk management strategies and not simply as a stand alone requirement that is being imposed by the legislation. The management of MTB is fully aware that the financial system shall not be and cannot be used as channel for criminal activities. Therefore, co-ordination and co-operation between concerned parties are essential for its success. The bank has designated Chief Anti Money Laundering Compliance Officer (CAMLCO) at head office and compliance officers at braches to review the transactions of the accounts to identify suspicious transaction profile (TP) has been incorporated in the Account Opening Form (AOF) along with other KYC related issues.

5. Asset Management

Asset/liability management has become al almost universally accepted approach to risk management. Since capital and profitability are intimately linked, Mutual Trust Bank Ltd. Is managing its asset/liability in order to ensure sustained profitability so that the bank can maintain and augment its capital resources. The assets/liability management committee (ALCO) usually makes decisions, which is reasonable for the financial direction of the bank. The ALCO’s goal is to manage the sources and uses of funds, identify balance sheet management issues like balance sheet gaps, interest rate gap. ALCO also reviews liquidity contingency plan and implements liability pricing strategy for the bank.

3.7 MTB Human Resources

MTB sincerely recognize the importance of skilled human resources for overall growth of the bank. The bank believes that a congenial working environment and people related policies generate team sprit and promotes a high level of integrity, loyalty, commitment and devotion among the employees. In order to maintain transparency, the bank engaged reputed and independent institution to conduct competitive written tests for recruitment of direct officers for the bank. The experienced officers are recruited through a selection committee upholding justice to the deserving candidates. The bank particularly stresses the need of training to the employees for their professional improvement MTB Training institute conduct foundation course, workshop and seminar.


The gap model of service quality brings customer focus and service excellence together in a structural practical way. The model focuses on strategies and processes that firms can employ to drive service excellence while maintaining a focus on customers.

There are basically two gaps:

a) The Customer Gap: The central focus of the gap model is the Customer gap, the difference between customer expectations and perceptions.

b) The Provider Gaps: The provider gaps are the underlying causes behind the customer gap:

Gap 1- Not knowing what customers expect.

Gap 2- Not selecting the right service designs and standards.

Gap 3- Not delivering to service standards

Gap 4- Not matching performance to promises.

Fig-1: Gaps Model of Service Quality

4.2 Explanation of key Terms:

4.2.1 SURVQUAL Survey:

One of the first measures to be developed specially to measure service quality is the SERVQUAL survey. The SERVQUAL scale involves a survey containing 22 service attributes, group into the five service quality dimensions of reliability, responsiveness, assurance, empathy, and tangibles. The survey often asks customers to provide two different rating on each attribute – one reflecting the level of service they would expect from excellent companies in a sector and the other reflection their perception of the service delivered by a specific company within that sector. The difference between the expectation and perception ratings constitutes a quantified measure of service quality.

Customer Expectation:

Customer expectations are beliefs about service delivery that functions as standards or reference points against which performance is judged. Because customers compare their perceptions of performance with these reference points when evaluating service quality, through Knowledge about customer expectations is critical to services marketers.

Customer Perception:

Customer perceptions are subjective assessments of actual service experience. It means how customers perceive services, how they assess whether they have experienced quality service, and whether they are satisfied. Perceptions are always considered relative to expectations.

Customer Satisfaction:

Satisfaction is the customer’s fulfillment response. It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfillment It is the customers’ evaluation of a product or service in terms of whether that product or service has met their needs and expectations.

Service Quality Dimensions:

Research suggests that customers do not perceive quality in a unidimensional way, but rather judge quality based on multiple factors relevant to the context. Specific dimensions of service quality have been identified through the pioneering research of Parasuraman, Zeithaml, and Berry. Their research identified five dimensions of service quality that apply across a variety of service context. The dimensions are Reliability, Responsiveness, Assurance, Empathy, and Tangibles.

* Reliability:

Reliability is defined as the ability to perform the promised service dependably and accurately, tn its broadest sense, reliability means that the company delivers on its promises – promises about delivery, service provision, problem resolution, and pricing. Customers want to do business with companies that keep their promises, particularly their promises about ttie service outcomes and core service attributes.

*> Responsiveness:

Responsiveness is the willingness to help customers and to provide prompt service. This dimension emphasizes attentiveness and promptness in dealing with customer requests, questions, complaints, and problems. Responsiveness is communicated to customers by the tength of time they have to wait for assistance, answers to questions, or attention to problems. Responsiveness also captures the notion of flexibility and ability to customize the service to customer needs.

* Assurance;

Assurance is defined as employees’ knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence. This dimension is likely to be particularly important for services that the customer perceives as involving high risk and/or about which they feel uncertain about their ability to evaluate outcomes – for example banking, insurance, brokerage, medical, and legal service.

<• Empathy:

Empathy is defined as the caring, individualized attention the firm provides its customers. The essence of empathy is conveying, through personalized or customized service, that customers are unique and special. Customers want to feel understood by and important to firms that provide service to them. Personnel at small service firms often know customers by name and build relationships that reflect their personal knowledge of customer requirements and preferences. When such a small firm competes with larger firms, the ability to be empathetic may give the small firm a clear advantage.

*:* Tangibles:

Tangibles are defined as the appearance of physical facilities, equipment, personnel, and communication materials. Alt of these provide physical representations or images of the service that customers, particularly new customers, will use to evaluate quality. Service industries that emphasize tangibles in their strategies include hospitality services where the customer visits the establishment to receive the service, such as restaurants and hotels, retail stores, and entertainment companies.

SERVQUAL Methodology

As a way of trying to measure service quality, researchers have developed a methodology known as SERVQUAL – a perceived service quality questionnaire survey methodology. SERVQUAL examines five dimensions of service quality:

o Reliability

o Responsiveness

o Assurance

o Empathy

o Tangibility

For each dimension of service quality above. SERVQUAL measures both the expectation and perception of the service on a scale of 1 to 7, 22 questions in total. Then, each of the five dimensions is weighted according to customer importance, and the score for each dimension multiplied by the weighting. Following this, the Gap Score for each dimension is calculated by subtracting the expectation score fro the perception score. A negative Gap score indicates that the actual service was less than what was expected.

The Gap score is a reliable indication of each to the five dimensions of service quality. Using SERVQUAL, service providers can obtain an indication of the level of quality of their sen/ice provision, and highlight areas requiring improvement.


Information used to prepare this report has been collected from the primary survey.

We used SERVQUAL methodology in our survey. A sample of the questions used in the questionnaire. In this sample, Mutual Trust Bank is surveyed however; any service organization can be surveyed using this questionnaire. We have gone through the following steps under SERVQUAL methodology to measure the service quality of Mutual Trust Bank Ltd.

1. We have selected Mutual Trust Bank to measure its service quality. Using the questionnaire, obtain the score for each of the 22 Expectation statements, then obtain the score for each of the 22 Perception statements. Calculate the Gap Score for each of the statements where

Gap Score = Perception – Expectation.

2. Obtain an average Gap Score for each dimension of service quality by assessing the Gap Score for each of the Statements that constitute the dimension and dividing the sum by the number of statements making up the dimension.

3. Sum the averages calculated in step 2 above and divide by 5 to obtain an average SERVQUAL score. This score is the unweighted measure of service quality for the area being measured.

4. To have a weighted score, we calculate the importance weights for each of the five dimensions of service quality constituting the SERVQUAL scale. The sum of the weights adds up to 100.

5. Calculate the weighted average SERVQUAL score for each of the five dimension of service quality multiplying the averages calculated in step 2 above by the weighted scores calculate in step 4 above.

Sum the scores calculated in step 5 above to obtain the weighted SERVQUAL score of service quality for the area being measured.


The analysis is segmented in three parts.


In Table-1 we input data (primary) which were collected from 50 customers through a questionnaire (44 questions).

There are five dimensions in the ServQual methodology and we calculated the average of each dimension individually and group wise.

From our analysis we found that the five dimension of ServQual got the Weights stated below:

-1.229 -1.18 -1.245 -1.025 -1.116 -1.168

Table-1 a

From these raw data we make another table which emphasizes customer’s expectations. From this we found average below information.

6.34 6.5 6.45 6.58 6.48

Table-1 b

On the basis of this unweighted average we found that customer give more preference to Assurance (6.58). Then reliability, responsiveness and empathy got almost same preferences (The fractional differences are negligible)


We converted the data of Table-1 b into percentage and got the weight for table-2

19 20 20 21 20


In Table 3 we multiplied the value of table 1a with the value of table 2. Thus we got 50 values for 50 customers and at the end we calculated the average value.

-23.351 -23.6 -24.9 -21.525 -22.32

From Table 3 we got total average Weighted score of total data is -23.14

-23.351 -23.6 -24.9 -21.525 -22.32 -23.14

5.1 Findings

For measuring the service quality of Mutual Trust Bank we work with ServQual methodology which consist five dimensions assurance reliability responsiveness tangibles and empathy.

Here five dimension are given according to customer preference i. Assurance

ii. Reliability / Responsiveness / Empathy Hi. Tangibles


The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.