The Core Functions of the Bank of Hawaii
The Bank of Hawaii is one of the oldest financial institutions in the country. It has operated since 1897 and is located in Honolulu (Yahoo Finance, 2023). This institution offers financial services to individuals and companies, ensuring sufficient economic activity.
Retail Banking
One of the bank’s functions is retail banking, offering savings services, deposits, residential mortgages, and car loans. The bank’s strength can be called an extensive system that allows clients to use the bank’s services more conveniently. Branches and terminals can be quickly accessed from any area in Hawaii (The Bank of Hawaii, 2023a).
Another positive aspect is that the institution offers clients a variety of deposit and account options, which creates variety and allows people to choose. At the same time, the weakness is the intense competition from other regional banks. Such financial institutions exert severe pressure and threaten the bank’s market share.
Commercial Banking
Another function is commercial banking, which provides opportunities for business development to country residents. This direction has a significant benefit since the bank is well acquainted with the region’s business environment, which is its advantage over other financial institutions (The Bank of Hawaii, 2023a). At the same time, the bank may be more exposed to economic downturns and downward trends in the Hawaiian economy.
Investments, finance, and planning form a significant part of the organization’s work, creating advantages, such as managing significant funds that help the company develop. The bank has a solid financial position in the country, representing its advantage over international banks as it better understands the market specifics. A diversified product portfolio also means more excellent insurance against any incidents.
Potential Weaknesses of Internal Controls
For a financial organization, internal control is of imperative importance since this parameter must be ensured to be of the highest possible quality to protect depositors’ funds. However, some weaknesses in the Bank of Hawaii must be considered and understood. First of all, there is no Segregation of Duties (SoD) when one person controls several transactions in the financial chain, which increases the risk of fraud (Yahoo Finance, 2023). Thus, one employee who processes requests for purchases, issuing credit funds, and processing payments can create schemes for theft.
Insufficient documentation is another significant drawback that leads to specific difficulties. This significantly impacts the bank’s operations, as failure to maintain sufficient and correct reporting can lead to errors and non-compliance.
The bank also has weak cybersecurity measures, which means that the risk of data leakage increases and can cause significant financial losses. Unauthorized access to customer data can affect how people trust the bank. Thus, a high-quality technical part must be provided in the bank since the clients’ money and how they will invest it in the future may depend on this. Outdated software can critically affect the system because it will be easier to bypass and penetrate (Lee, 2020).
Another disadvantage is the lack of training and control over employees, which affects how they perceive instructions and responsibilities. In a corporate environment, the ethical component is of great importance, and it should ensure the competent construction of regulatory interaction between personnel. Thus, establishing proper employee performance monitoring is mandatory to obtain objective information about their performance.
Strategic Direction
The company’s strategic direction defines long-term goals and guidelines that can significantly influence the regulation of the bank. The company’s current goal is to develop and train Customer Experience (CX) leaders to learn and implement new ways to interact with customers to create better experiences for them (The Bank of Hawaii, 2023b). Strengthening this aspect is an important long-term goal that can help the organization develop and increase its ability to provide services.
Bank employees were allowed to take more responsibility and freedom in their actions regarding their approach to clients. One of the qualitative manifestations of this was the CX Advocate training program, which allowed employees to understand the human-centric approach and become advocates for the interests of their customers (The Bank of Hawaii, 2023b). In the future, this project will be distributed in large volumes throughout all branches, which will affect the bank’s overall efficiency.
Key Performance Indicators
It is necessary to analyze key performance indicators to determine whether the steps and strategies taken are relevant to current realities and whether they can help in the future. The net interest margin is evidence of the bank’s main profit from lending and investment activities. This figure for Bank of Hawaii is 2.1%, corresponding to analysts’ forecasts, and may indicate the institution’s stability (Zacks Equity Research, 2023). The efficiency ratio is another important statistic, which is pegged at 61.7% compared to the consensus estimate of 65.1% (Zacks Equity Research, 2023).
A lower percentage indicates more adequate cost and operational management. Total interest-earning assets are $22.71 billion, while forecasts are pegged at $22.97 billion (Zacks Equity Research, 2023). The difference in this indicator may be due to changes in customer deposits, which may impact the bank’s activities. It can be said that the company’s key aspects are satisfactory and indicate an effective Accounting Information System (AIS). This element is auxiliary to control all characteristics and help management keep them within the norm.
References
Lee, K. (2020). Economics of technological leapfrogging. SSRN.
The Bank of Hawaii. (2023a). Bank of Hawaii branch locations. Web.
The Bank of Hawaii. (2023b). Creating a lasting legacy. Web.
Yahoo Finance. (2023). Bank of Hawaii Corporation (BOH). Web.
Zacks Equity Research. (2023). Bank of Hawaii (BOH) reports Q3 earnings: What key metrics have to say. Nasdaq. Web.