Business proposal essay



XYZInternational Bank Limited


To: Anthony Jackson, Human Resource Department.

From: John Evans, Head, Information Technology Department.

Thursday, May 5, 2016

Purchase of a new system for the Bank proposal

Therehas been consistent system breakdown of the current system in use bythe bank. When the breakdown occurs, it brings to a halt theoperations of the various branch and Automated Teller Machineservices for a good number of bank branches across the XYZ network.During the breakdown, the bank loses a lot of revenue from thetransactions which would have been taking place at the branch and ATMnetwork (Laeven Etal. 2010). Also, some money is lost since somecustomers are in a position to withdraw money during the offlineperiod at the ATM, which the system fails to register bringing lossesfor the bank. The Information Technology professionals and systemadministrators are usually called on duty to work overtime hoursduring such times, and the bank policy states, they have to becompensated for the overtime work draining the banks resourcesunnecessarily. Again, a significant amount of the revenue is beingdrained as we carry out the repairs on the system because we have toinvolve the services of external experts in Information Technology.All these costs are eating up the profits of the bank which wouldhave been incorporated in other aspects to generate more income forthe bank.

Aswe all understand, the system in use by a bank is the backbone of theorganization (Laeven Et al. 2010). It is, therefore, imperative forthe bank to come up with a modern system with no frequent andunwarranted breakdown. Such a system will bring the cost of repairsdown. Equally, the money paid in the form of overtime to theinformation technology and system administrators working for the bankwill come to the lowest level because the technicians will only beneeded during the stipulated working hours. The number of thetechnicians on call will reduce dramatically because the new systemwill hardly experience a breakdown or switch to offline mode. It is,therefore, my proposal that the bank commits a certain amount of theprofits towards the purchase of a new system for the whole bank andreduce on these unnecessary costs incurred during the systembreakdown.

Thechallenge of system breakdown

Thecost of repairing and rectifying the system failure for the bank willeat more profits of the bank in the long-run than the cost ofpurchase of the new system for the bank. For instance, during the endmonth period and start of a new month, the bank usually receives anoverwhelming number of clients. Because of the challenge with thecurrent system in use, the system gets overwhelmed by a large numberof transactions resulting in the breakdown of the system. Thistranslates to a stop of the operations both in the banking hall andat the ATM networks.

Whensuch a breakdown occurs, a large number of clients get strandedbecause they are unable to make any transactions. The currentgeneration always runs to the social media to express their outragetowards the bank. These scandals scare away a new customer who wouldhave loved to bank with us thus losing potential profits and revenuefor the bank. Again, most of these clients become dramatic, which isexpected, with threats of leaving the bank to a much friendlier bankwhere they can transact at any point without any inconveniences. Atthe end of it all, we are likely to lose loyal customers who wouldhave transacted with the bank and raise the revenues because the bankdoes not want to spend a significant amount of the funds in thepurchase of a new system.

Thebreakdown and offline mode of the current system have been affectingthe bank for the last three months, more specifically at the end ofthe month and the beginning of a new month. Some people,unfortunately, some being employees, have noted that sometransactions go unnoticed by the system and look forward to thebreakdown of the system so that they can make withdrawals of largesums with the hope that the system will not detect them. It isunfortunate that some of these transactions go unnoticed because thesystem is overwhelmed by the current large number of transactionsbecause of the increase in the customer base of the bank. Thisimplies more losses for the bank because such amounts have to bebalanced and repaid using the bank’s revenue.

Thecurrent system breakdown and switching to an offline mode of thesystem in use is likely to scare away potential investors. In thebanking industry, the primary stakeholders are the large depositorswith the bank. It is only natural that these investors will be scaredto lose their large sums of money when the system breakdowns as theymake the deposits. Such clients might lose trust with the bank andseek services in other banks where they feel their money is secure.The loss of these depositors will imply that the bank will not haveaccess to the money which could have been otherwise used to lend outto other clients and profit the bank. In such a case, the bank isforced to rely more on the borrowed funds which do not bring in asignificant profit as compared to using the clients’ money lying inthe bank for business (Laeven Etal. 2010).

Duringthe system breakdown, it becomes the most difficult period for theemployees working in the bank. The customers haul all sorts ofinsults to the employees because they feel that they are not doinganything to make them perform their transactions normally. What theseclients do not understand is the fact that, everything is being doneto restore normalcy of the bank operations. This hauls of insults putso much pressure on the employees who are already overwhelmed by thefact that they cannot deliver to their clients. It becomes hard toexplain to one client after the other the same story of the fact thatthere is a challenge with the operations, and it is not possible forthem to carry out the transactions for as long as the problempersists. The employees become worn out and begin to experienceburnout affecting negatively the operations of the bank, which inturn affects the generation of revenues negatively. It becomes hardfor the employees to keep encouraging the clients to keep bankingwith us because of the frequency of the breakdowns.

Agraph showing a decline in the level of XYZ Bank deposits

Fromthe graph, it is evident that there has been a decline in the amountof deposits which is attributable to the challenge of the system.

Theproposed solutions for XYZ Bank

Itis evident that the customer base and the number of transactions haveincreased tremendously from the time the current system was put inplace. The number of the clients and transactions has exceedinglygone beyond the capability of the system to support the currentnumber of transactions especially towards the end of the month andthe beginning of a new month. The profitability of a bank is testeddepending on their ability to handle their customers with the highestlevel of professionalism and at the convenience of the customer(Laeven Et al.2010). In the situation whereby the clients feel thatthe bank is manipulating them, and they are experiencing challengesin undertaking any transaction at whichever time convenient for them,they are likely to withdraw from seeking the services of the bank.

Withthe continuous breakdown of the system in place by XYZ bank, it isevident that there is a challenge which needs to be addressed lestthe bank loses its loyal clients and the ability to attract newcustomers. The most beneficial solution which I propose to solve theproblem of continuous breakdown of the bank system is to set asidefunds to acquire a new system for the bank. The system should possessa broader capacity to handle a large number of transactionsconcurrently without breaking down or going offline. A new systemmeans a change in the way of operations implying that the bank alsohas to set aside funds to train employees on the use of the newsystem.

Purchaseof a new system

Buyinga new system would be very crucial for the bank to ending thechallenges that result from the inconsistencies with the currentsystem. The new system will have a greater broadband and thus theability to withstand many transactions at the same time. This newsystem will save a lot of money for the bank in the long run whichcould have been otherwise used to keep calling the systemadministrators and technicians to rectify the problem. The bank willalso prevent losses that are likely to occur when fraudulentactivities are performed during the system breakdown because thesystem may fail to detect some of the transactions after normalcyresumes.

Again,with the new system, the clients will gain confidence with the bankto keep transacting with XYZ bank hence getting more revenues. Thelarge depositors, who in this case are the major stakeholders of thebank, will have confidence with the bank hence continue keeping theirdeposits with XYZ bank. The deposits can then be used to undertakebusiness for the bank hence increasing the revenue and profits fromtransacting with the deposits.

Thecost of purchasing a new system for XYZ would be approximate $ 20,000.

Theinstallation cost for the entire branch network for XYZ would beapproximate $ 10, 000

Thetotal expenses for the bank to change the whole system would be $ 30,000.

Thiscost compared to the cost of the frequent repairs and losses from thebreakdown of the current system in use would save a lot of revenueand profits for XYZ bank.

Trainingstaff on the use of the new system.

Withthe introduction of a new system, it is very crucial for the bank toset aside funds to train the staff on the usage of the system. Thistraining will ensure a smooth running of the operations of the bankand thus keeping and attracting more clients. The training process ismet by a cost for the bank. For instance, the average number of staffin large branches is approximately thirty-five while the smallagencies have around fifteen staff members. The cost of training eachstaff would be approximate $ 30. The good thing is that the team neednot to undertake the training at the same time. Besides, half numberof the staff can be trained and then train the rest of the membersduring the branch meetings. This will reduce the cost of training toaround eight members for the agencies multiplied by the cost oftraining each staff which is $ 30 to get $ 240. There are tenagencies of XYZ bank translating to $ 2400 as the total cost oftraining the staff from the agencies. The main branches will need totrain fifteen members at a cost of $ 30 totaling $450. The entirenetwork of XYZ has 40 main branches translating to a total cost of$18 000 for training the staff from the main branches.

Thecost of training staff from the agencies


=$240,the total for the ten agencies would be



Thecost of training staff from the branches


=$450.The total for the forty branches would be



Thetotal cost for the entire XYZ Bank would be




Thetotal cost for training would be $ 20, 400. This cost would be addedto the purchasing and installation cost of the system to get a totalcost of

$20 400

+$30 000

=$50 000.

Thegood thing about the system is that it is friendly to use, and thusthe staff will not have challenges in serving the clients. They will,therefore, be motivated to deliver the best services to thecustomers. The system is also fast, and this means the clients willbe served within the given service level agreement. The breakdownsand offline networks will be a thing of the past despite the time ofthe month because the system has a greater broadband and networkcapacity to handle a large number of clients concurrently. The systemwill be beneficial to both the clients and the staff because thestaff will have a good working environment while the clients will bein a position to get the necessary services appropriately. This will,in turn, be beneficial for the bank because it will be able to makegood profits from the large customer base.

Agraph showing prospected amounts of withdrawals and deposits afterpurchase of new system

Itis clear from the graph that there will be a rise in the amount ofdeposits after the purchase of new system. The rise is as a result ofmore confidence from the clients due to stability of the new system.The deposits will be used by the bank to transact business raisingthe amount of revenue.

Thechart shows a decline in level of opeartional costs after inceptionof the new system which implies that more revenue will be generated.

Conclusionand recommendations

Itis my recommendation that the concerned stakeholders make thedecision to purchase the new system for XYZ bank. By buying the newsystem, the cases of breakdowns will be a thing of the past. Theclients for the bank will also regain the lost confidence with thebank if the bank purchases the new system because it will ensuresmooth running of the operations of the bank

Thestaff also face a rough time explaining the challenge with the systemto the clients. It is very hard to deny a client access to his or hermoney just because the system is not working well at the particularinstant. Such cases demotivate the staff and drain their morale inworking because of the heat from handling the impatient clients.

Thepurchase of the new system goes hand in hand with staff training onthe use of the system. I recommend training for the half of the staffmembers to bring the costs at minimal.

Thecost incurred in rectifying the frequent breakdown and the lossesfrom the number of customers likely to move to other banks cannot becompared to the cost of purchase of a new system and training for thestaff. The new system will work best for the clients, staff, and theXYZ Bank as a whole. I hope to discuss more details of this proposalas well as the implementation plan as I make a clarification andanswer any questions you may have regarding the proposal.


Laeven,L., Ratnovski, L., &amp Tong, H. (2010). Bank Size, Capital, andSystemic Risk: Some International Evidence. Journalof Social Science Research Network.