summarizing

First Citizens Community Bank: Proposal of New Division

First Citizens Community Bank is located in Mansfield, Pa and has 28 branches all over northeastern pa (https://www.firstcitizensbank.com/). They offer services that include checking and savings accounts, mortgages, personal, agricultural and car loans, business services, and investments. First Citizens Community Bank is committed to improving the lives of their customers, which is evident in their mission and vision statement. One issue that First Citizens is currently having is that their money going out through loans is exceeding their money coming in through new accounts and deposits. One way to add cash flow is to add an insurance division. This serves many purposes, including adding much needed cash flow, and adding yet another service to their customers, all while following the mission, vision, and values First Citizens holds dearly. When customers take out a loan or mortgage, often insurance is required by the bank. By offering insurance First Citizens is catering to their customers, while developing a competitive advantage in both banking, and insurance. In addition, the insurance division has a mission and vision statement that will guide the new division and their strategic planning. These statements align with the company’s statements which will provide unity between the two divisions. Insurance is a billion-dollar industry with monthly cashflows that will help First Citizens continue to grow and serve their customers in the future.

New Division

The proposed new division for First Citizens is an insurance division. This division will offer home insurance, vehicle insurance, and flood insurance. These three products are complimentary to auto loans, and mortgages. In addition, First Citizens requires customers to carry insurance on cars and homes when they take out a loan. This relationship is important for the new insurance division and offers customers quick and convenient access to insurance. The insurance divisions mission statement is “Reliable, quality insurance conveniently located in every First Citizens Bank, with competitive rates, and knowledgeable agents.” This mission statement will let customer know what the new division does, which is an important component of a mission statement (David, & David, 2017). The insurance can either be paid in conjunction with the loan or separately. Fist Citizens will also offer customers loans and insurance in a bundle to make it easy for them to get their loan and insurance. This differentiates First Citizens from other banks because it offers customers the convenience of one stop shopping. The new insurance division is differentiated from other insurance companies, because they have access to new customers immediately. This also gives the new insurance division a competitive advantage by eliminating the need for customers to “search” for insurance. The new insurance division actually serves the customers in the same way, by offering the convenience of insurance at the point of sale for the loan. Finally, the new insurance division will allow First Citizens to offer bundle discounts to customers on their loan rates, and insurance premiums. This will also give Fist Citizens insurance division a competitive advantage because it will be able to offer customers the best combination of rates and premiums. These points are furthered in the insurance divisions vision statement.

Vision and Business Model

First Citizens insurance division will follow a business model like most insurance companies. It will offer insurance for a monthly premium, provide service and support via agents, and offer an array of deductibles to meet customers’ needs and preferences. When a claim is made an agent will assess the damage and do the necessary paperwork to fulfill the insurance policy. The key difference is that First Citizens will use the monthly insurance premiums as a cash flow that will help supplement their loan operations. Since First Citizens has a reserve mandated by the FED, they will always have enough cash on hand to fulfill an insurance claim, but the added cash flow will allow the banking division to generate profit for the entire organization. The basis for success of the insurance division is that they will have the first shot at providing insurance to new customers. When a loan is approved in the banking division, the insurance agent will then layout the plans and coverages for the customers. This will be convenient and relieve the burden on the customer to secure insurance elsewhere and forward the necessary documents to the bank to complete the loan. The insurance divisions vision statement is “First Citizens insurance divisions vision is to provide quality, and reliable insurance to customers conveniently located in every First Citizens Bank to ensure the success of our customers and shareholders alike”. A vision statement is meant to show the direction of the division going forward (David, & David, 2017). First Citizens will authorize one of its bank employees at each location to quote insurance rates, however, final approval will come from the corporate office. There will be a VP of the insurance division that will oversee it and answer directly to the CEO of First Citizens.

Two Divisions United

First Citizens Bank is very customer oriented and emphasizes personal relationships. Their mission statement is “Your Success is Our Mission” (https://www.firstcitizensbank.com/). This is a broad mission statement, but really shows how their products and services are targeted toward the best interest of their customers. This aligns with the new insurance divisions mission statement because as part of overall success, customers will need to insure the items (house or car) that they are taking out a loan on. By offering insurance in conjunction with the loan it allows customers easy access to insurance in every branch. Similarly, the vision statement of the insurance division aligns with First Citizens vision statement, which is “To ensure our long-term survival as a highly successful independent community bank by consistently exceeding customer expectations, cultivating effective employees, delivering superior shareholder value and exhibiting social responsibility and good citizenship. (https://www.firstcitizensbank.com/)” The key is that the insurance is located in every branch, which adds to the community feel of the bank. Also, few banks offer insurance so this new division will help First Citizens to continue to exceed customer expectations. Finally, the added cash flows will help First Citizens to continue to be profitable which adds to shareholder value. In addition to aligning with First Citizens banking division, the vision, mission, and values will also be valuable for the strategic direction of the new insurance division.

Strategic Direction

The vision, mission and values of First Citizens insurance division guide the strategic plan of the new division in many ways. The mission statement includes reliable and quality, two things that are very important for the new division, as it will have to earn the trust of its customers. Often insurance is purchased based on reputation or history. Since First Citizens does not have a reputation in the insurance business and no historic customers, it will be imperative to exude quality and reliability. Similarly, competitive rates, and knowledgeable agents are listed. As part of the strategic plan First Citizens will have to train or hire employees with knowledge of insurance. This point is furthered through the visions statement, which calls for an insurance representative in each branch. With the large number of branches, it may not be feasible to hire that many new people, so part of First Citizens strategic plan will be to delegate insurance responsibilities to an employee in each branch. Once these employees are trained or insurance minded employees are hired, First Citizens insurance will utilize HARD goal setting. HARD stands for heartfelt, animated, required, and difficult (Bird, Smith, 2016). The HARD goal setting model surveys employees to determine which goals are most likely to drive great accomplishment (Bird, Smith, 2016). A heartfelt goal represents values that employees are passionate about. An animated goal is vividly painted and depicts how success should look and feel. A required goal is critical to the success of the division. Finally, a difficult goal challenges employees to leave their comfort zone, increase skill and knowledge, and elevate performance (Bird, Smith, 2016). The HARD survey will yield the goals that are important for employees and will be used to derive the strategic plan. This is a way of including as many employees as possible so they get behind the strategic plan. Also, there is an implied convenience in both the mission and vision statement, so the designated insurance representative should be present when customers are applying for loans. One last note on First Citizens insurance strategic plan is that loan rates and insurance premiums will be able to be manipulated to ensure the customer is in the best position for success. In addition, this will make First Citizens insurance more attractive to customers, which will lead to the overall success of First Citizens and its stakeholders. However, this could cause some ethical issues, so the insurance divisions guiding principles and values will be important.

Guiding Principles

The insurance division will face some important culture, social responsibility, and ethical issues, so guiding principles, and values will be important to maneuver these issues. One of the biggest issues the new division will face is an ethical issue. There will be times that the agents will think about adjusting the premiums or loan rates to secure a customer. In these instances, the agent should refer to the vision statement, and only make deals that are in the best interest of the customer and the stakeholder. Similarly, in this situation agents should exude social responsibility. Suspicious business practices to make a sale will reflect poorly on the entire organization. Another issue that First Citizens insurance division will face is a cultural issue because they have branches located in a prominent Amish area. The loans that come from this area can be for anything from livestock, to a community church. The agents at First Citizens will need to respect the culture of these different demographics and respect their right to choose their own insurance. To assist agents in dealing with the issues discussed above, a set of guiding principles and values will be in place for reference. The values of First Citizens insurance are that agents should always act in the best interest of both the customer and the stakeholders. Their decisions should reflect the mission and vision statements set forth by First Citizens insurance division, and the insurance division as well as the banking division are both equal opportunity for both employees and customers. These guiding principles should be used to navigate any questionable situation for the insurance division.

Conclusion

First Citizens insurance division will take on many of the same values of the banking division. Customer success is important, and through quality and reliability the agents will provide insurance in conjunction with loans and mortgages. The convenience of the one-stop business model will give First Citizens a competitive advantage in both divisions. Implementing the mission and vision into the strategic plan will also be important and will help to deal with ethical, cultural, and socially responsible situations. Moving forward, the insurance division will have to continually make sure its mission vision and values align with the bank division. This will ensure the long-lasting success of both division and First Citizens as a whole.

References

Bird, S., & Smith, E. (2016). Strategic Planning is HARD. Texas Library Journal,92(1), 10-11. Retrieved January 29, 2018, from https://search-proquest-com.contentproxy.phoenix.edu/docview/1788990537/fulltext/BB1D4CC796774E25PQ/1?accountid=35812.

David, Fred R. & David, Forest R. (2017). Strategic Management: A Competitive Advantage Approach, Concepts and Cases (16th ed.). Upper Saddle River, NJ: Pearson Education, Inc

First Citizens Community Bank. (2017). Retrieved January 29, 2018 from https://www.firstcitizensbank.com/