10:38 am - Wednesday June 28, 2017

Profit maximization through deployment of assets

It was way back in the early 1980s.

I was working for a leading Indian commercial bank in Central, Hong Kong.

During my stay, the branch moved from a couple of decades old premises to swanky new premises.

I was calculating at the back of an envelope the difference between the rent for the old premises and the rent for the new premises (do I need to state obviously the new rent was many times more than the old rent?) and explored how much more additional money we need to make to retain the earlier profit levels.

Of course, even before such rough working, I knew, it would be impossible to reach the previous profit levels in the immediate future.

Given this background, I was imagining, how additional dollars could be generated without disturbing present banking business through unconventional approaches.

An idea struck me – almost instantaneously – why not let out the new branch premises for non banking, marketing efforts to our clients in Hong Kong and elsewhere?

Our branch was located, as I mentioned earlier, in a premium posh locality of commercial district of Hong Kong – The Central.

Naturally, the rents for premises were extremely high.

Hence no one could afford such kind of rent for marketing efforts. Of course, the location assured good number of quality visitors, who could be converted into potential prospects and finally customers!

This was a typical dilemma for any start ups – investing in high rents and costs first to get a decent number of new customers – but the unfortunate part, the start ups did not have much money to invest up front.

I started thinking, how to make this possible and affordable to our customers domestic and foreign.

I even shared this thought with my seniors in the bank in a proper forum – but they not only laughed at my idea but even ridiculed.

My seniors in the bank reminded me that our business was banking and only banking and not in ‘space selling!’

I felt my innovation, my idea was punctured in the beginning itself.

And all my enthusiasm evaporated / vanished with that criticism.

Rest was history.

The idea did not take off.

After a couple of years, my posting in Hong Kong reached its maturity. I was repatriated.

After my return from Hong Kong, I served the bank a few years more before opting to venture out!

And during my stay after my return from Hong Kong, I learnt that the branch was making all efforts to maintain its ‘pre-shift’ profit levels.

I was reminded today this incident involving innovation in branch banking, while going through the write-up on “From Dust to Dollars Creating Value from Underutilized Assets” by Rosabeth Moss Kanter appeared in the Harvard Business Org.

The author focused attention on numerous resources going to waste that could be turned into cost savings, revenue streams and profitable businesses. The author mentioned on the possibility of airports recognizing the areas between the gates as retail sales opportunities – The Pittsburgh airport example, being the first destination shopping mall. The author also urged branch banks to give floor space to neighborhood merchants for displays and demonstrations, building community value and bringing traffic to the branch.

I am happy – that my thought / idea took almost 25 years to reach wider debate levels leading to possible acceptance. Of course, I regret, I was a bit ‘ahead of my times’.

I only wish my seniors who ridiculed my ideas to go through this write up. But that will not help me now. I could have been benefited had my idea accepted and implemented. I could have become the most modern banker during my heydays.

It is not fair on my part to cry over these now.

I agree.

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