Strategic Financial Management and Banking Sector Performance

This report delves into the significance of strategic financial management (SFM) in measuring the performance of the banking sector, using ABC Bank PLC as a case study. The introduction provides an overview of SFM, highlighting its importance in evaluating banking operations and enhancing growth and profitability. The report examines ABC Bank PLC's strategic focus on financial and resource management. The research background emphasizes the dynamic strategic planning in modern banking, with ABC Bank PLC, an international bank, as the chosen organization. The research aims to analyze SFM's impact on bank performance, identifying its concept, importance, and the tools used for performance measurement. A comprehensive literature review covers the concept of SFM, its importance in the banking sector, particularly for ABC Bank PLC, and the tools used for performance measurement, such as analytics, cash position management, and expense control. The report aims to provide a better understanding of SFM and its influence on the banking sector, offering insights for future researchers, finance scholars, and banking professionals, with ABC Bank PLC's management also benefiting from the analysis.

TITLE:
To analyse the significance of strategic financial management in measuring the performance of
the banking sector. A case study on "ABC BANK PLC".
INTRODUCTION
Overview of the Project
Strategic financial management is considered as a study of finance with a long term view which
considers the strategic goals of any financial institution or agencies. Understanding of bank financial
management is helpful in order to determine effectiveness of banking operations. It evaluates, whether
the bank is performing to an acceptable level. It can be done in a systematic way for the entire banking
industries. It might be done temporarily or for a particular aim so that overall growth and profitability of
banks can be enhanced in near future (Finnerty, 2013). Strategic financial management tools are
effective in strengthen the company and creates value in developing the performance of firm in
appropriate manner. Strategic financial management has involve various tools like reporting/ analytics,
cash positions management, accelerate receivables, control payables, manage expenses etc. these tools
are effective in measuring the performance of banking sector in appropriate way. Strategic financial
management includes precise analysis of an organisation's business objectives, goals, determining and
quantifying its available or significant resources and devising a plan for utilising finance and other capital
resources to attain its targets. Due to industry pressures, many banks have to stretch themselves into
market sectors. Strategic management in banking plan provides senior bankers and board members
with wide range of opportunities to reassess and explore the upcoming banking developments. The
banking industry is generally considered as an old industry and it is one of the essential factor behind
the growth and development of countries economy. Due to the contribution of banking industry which
is provided to the societies or countries. ABC BANK PLC is the chosen organisation for this particular

report. It is an international bank which provides various financial products and services in the country
of United Kingdom and internationally. The major focused area of firm is towards attaining higher
growth and profitability through managing the financial as well as other resource of firm in appropriate
manner. Resources are the key element of any business organisation as the financial and the other
resources are required to be mentioned in respect to attaining the targeted objectives of the firm. It is
necessary for banking industry to maintain its finance and capital in order to conduct long term business
operations which are beneficial for growth and development of firm. The present research is based on
the analysis of significance of strategic financial management in measuring the performance of banking
sector (Kerzner, 2011). In this report, importance of strategic financial management and its influence on
the performance of the firm will also be discussed.
Background of the Research
In this particular research, an analysis of modern banking in a competitive environment is
provided. Modern banking operations involve dynamic strategic planning in which a clear mission is
mentioned and this is significantly connected with profitability of firm. Different strategies are created
and certain objectives and goals are placed in a systematic way as to assisting the operations of firm in
right direction (David, 2011). ABC BANK PLC is an international bank and it’s headquarter is in Manama,
Kingdom of Bahrain. The network of the company spreads around five continents which covers the
middle East, North Africa, Europe, the Americas and Asia. ABC BANK PLC is founded in year of 1980 and
it is listed on the Bahrain Bourse and our major shareholders are the Central Bank of Libya and Kuwait
Investment Authority. The company provides trade finance solutions comprising contract bonding,
documentary letters of credit, specialized documentary, commodity finance, ECA financing, private
insurance backed products, Islamic finance, receivables financing, and forfeiting; and project and
structured finance advisory services to clients in the oil and gas, power and water, petrochemicals,
mining and metals, telecommunications, infrastructure, shipping, and aviation sector. The ABC BANK

PLC is concerned on providing effective financial products and services to their significant customers in
respect to sustain them for long run of business operations. The company is significantly focused on
using strategic financial management tool in respect to maintaining the resource of firm so that growth
can be attained in effective manner.
Significance of Research
This research is conducted to provide a better understanding on the concept of strategic
financial management and its impact on the performance of banking sector. This research work will help
readers and scholars to ascertain the importance of this method with the context of banking segment of
financial services sector. This research will play a pivotal role for future researchers as they wont need to
conduct any market research and can analyse various results by considering this research report (Bryce,
2017). This research can help scholars engaged in the study of finance and the professionals engaged in
management of banking company. In this report, ABC BANK PLC has been analysed which can assist
professionals working in banking segment. With the help of this research, researcher will be able to gain
knowledge and understanding about the topic and will be able to convey all aspects of this topic.
Management of ABC Bank will also be benefited as they can ascertain their problems areas and ways by
which strategic financial management can increase their financial performance. Importance related to
the topic of strategic financial management includes identification of ability of measuring financial
power of an organisation.
Purpose of this Research
The reason behind conducting this research is to understand the concept of strategic financial
management and its significance in banking sector especially in ABC BANK PLC. The major purpose of
this research is to overcome with the issues related with previous research of same area. The main focus
of this report is banking segment of financial services (Resch, 2011).

Research Aim
This is the most fundamental element of a research project as it provides an appropriate
direction to the researcher or investigator about the topic. The major aim of this research is “To analyse
the significance of strategic financial management in measuring the performance of the banking sector”.
A case study on ABC BANK PLC.
Research Objectives
Research objectives for this investigation are mentioned below:
 To identify the concept of strategic financial management.
 To determine the importance of strategic financial management in banking sector especially
ABC BANK PLC.
 To evaluate the strategic financial management tools which help in measuring the performance
of ABC BANK PLC.
Research Questions
Questions for this specific research are portrayed below:
 What is the concept of strategic financial management?
 What is the importance of strategic financial management in banking sector especially ABC
BANK PLC?
 What are the strategic financial management tools which help in measuring the
performance of ABC BANK PLC?
LITERATURE REVIEW
This element of the research includes in depth research about the objectives of the research.
This segment provides a theoretical framework which helps in deciding the assessment of different

writers and journalists (Patanakul and Shenhar, 2012). Literature review for this particular research
report is discussed below:
Concept of strategic financial management
This concept refers to the specific planning which is related with the management of company's
financial resources. This concept is concerned with the assistance of an organization in order to attain
their business objectives (Brook and Pagnanelli, 2014). It involves the process of defining an
organization's goals and objectives so that management of the entity can plan for available resources.
These resources include financial funds, personnel of the firm, other tangible and intangible resources
etc. This method of strategic financial management is used by any company to not only manage their
resources but to strategically manage their resources. Strategic management is an advanced branch of
management in which all resources whether financial or non financial has to be first analysed and then
distributed according to the nature of activity. This analysis of resources is conducted by ascertaining
potential of those resources.
According to Dennell R. Lester,; financial industries are the most influenced sector when it
comes to political and economical factors especially banking segment. In order to protect operations
and development of banking companies, the management of these companies are initiated to adopt
strategic financial management. It is a planning process which has various stages and among these
stages, the initial phase of planning is most crucial as it involves financial decisions and evaluating cost
occurrence with the help of several techniques such as budges (Daniel, Ward and Franken, 2014). Other
stages of this process are concerned with implementing strategies and distribution of resources.
Financial decision making is an element of this concept which assists the managers of a banking
company to take reliable and profitable investment decisions.

Importance of strategic financial management in banking sector especially ABC BANK PLC
ABC BANK PLC is a public limited company which operates in multiple countries including United
Kingdom, Italy, France and Germany. The headquarters of this bank is in London and deals in commodity
finance, treasury services and many more. Strategic financial management is considered to be most
beneficial for banking sector due to which ABC BANK PLC has adopted this method in order to operate
efficiently.
From the view point of Anna Mok; banking segment of financial services sector is facing intense
competition in current scenario and in order to obtain competitive advantage they offers various
innovative services to their clients. These services are internet banking, numerous options of accounts
and many more (Petit, 2012). To attain the maximum level of satisfaction from their customers, it is
important to efficiently manage all these services and their related operations. ABC BANK PLC uses
methods of strategic financial management to manage all their operations by effectively utilising their
resources. In context of banking sector, resources are mainly the funds which are gathered from the
clients which needs to be invested in order to gain profit. Significance of this concept or method can
include efficient financial planning and sensible approach to resources. This method helps ABC BANK PLC
to establish their objectives and formulate all the policies which can assist in achievement of
organizational plans. Along with developing strategies, this method also guide to implementation of
those strategies. ABC BANK PLC is a large scale company which deals in multiple services and has to
perform numerous operations. In order to manage all their operations, this bank uses this method so
that they can identify all their available resources and distribute them effectively in order to gain profit
as well as development.

Use of strategic financial management in order to measure the performance of ABC BANK PLC
Strategic financial management is a process which has set of functions and techniques which can
be used to measure the performance of a company. In case of ABC BANK PLC, performance aspects
which is required to be measured are profitability, growth rate, liquidity and ability of paying debt in due
period (Cooremans, 2011). This company deals in financial services due to which it is important to
measure their financial position which can be determined using above aspects.
According to Amy Van Looy and Aygun Shafagatova, the process of strategic financial
management combines planning and formulation of strategies which can help in determining
policies of administrating capital and amount of capital that is needed to be raised so that
profitability can be measured. There are various tools which assist an organisation to measure
their performance such as Analytics, Cash position management, manage expenses and control
payables. ABC BANK PLC uses these tools to ascertain efficiency in their activities. Analytics
tool helps in tracking all the data and information of the company and distil it with Key
performance indicators from which they can measure their big data by interpreting them into
smaller pieces. Another tool of measuring performance is cash position management in which all
cash inflows and outflows are analysed by the help of break even and budgeting. Manage
expenses and control payables are few other tools which helps ABC Bank Plc in controlling cash
flows so that they can measure the performance. They look after functions which affects
performances such as electronic payments, electronic approvals and electronic invoices. In the
process of manage expenses; spend optimisation, strategic outsourcing and financial literacy are
few tools which measures the performance related to spend power of a bank (Killen and et. al.,
2012).

RESEARCH METHODOLOGY
It is simply the method by which a research is conducted. Some significant elements of this
methodology are discussed below:
Research Design
Research design is a systematic approach that a researcher adopts while conducting a scientific
study. It is the combination of all the components which are identified while conducting the research.
Research design should follow a strategic methodology in order to come up with accurate and reliable
design (Eweje, Turner and Müller, 2012). It is a process of collecting information and data for the
purpose of making business decisions. The information which is used in research can include both
present and historical information. This blueprint of the research which defines priorities of all the tasks
required to be completed in the research. There are four types of research designs and they are
exploratory, descriptive, explanatory and evaluation. In the present research work exploratory research
design is selected by the investigator as it is effective in exploring the outcome of qualitative research by
providing appropriate description and evaluation. The reason for not using descriptive design is that it is
based on specified case study or naturalistic observation in which highly in-depth analysis is required.
The experimental research is based on statistical data and information as it is based on quantitative
research.
Exploratory research design is considered as a study which is designed to explore not predict the
research in an accurate way. This design is a scientific method which involves observing and describing
behaviour of the topic. This design can be used by observation, case study or by survey. The focus is on
gaining insights and familiarity for later investigation or undertaken when research problems are in a
preliminary stage of investigation.

Research philosophy
This considered as the most essential part of research methodology. It refers as the belief about
a way in which data and information related to a phenomenon needs to be accumulated, analysed and
used (Thomas and Silva, 2016). The major obligation of an investigator is to select the suitable
philosophy as to providing support to the study through analysing the opinion of various authors. The
investigation is mainly based on two parts like interpretivism or positivism research philosophy.
Interpretivisim philosophy is encompasses on interpretivists content that only through the qualitative
interpretation of and intervention in reality in which reality can be fully understood. On the other side
positivism philosophy is appropriate for the investigation in which scientific and mathematical models
are applied as to analysing and accumulation of data. The current study is based on the significance of
strategic financial management in measuring the performance of the banking sector. In the present
research work interpretivism philosophy has been taken into proper action by the investigator as it is
based on qualitative research work or in this data has been accumulated on the basis of real
assumption. Interpritivism is effective for this report as it is suitable in drawing valid and reliable
outcome for the report.
Research Approach
This is also an essential part of research methodology, an approach is considered as a plan and
procedure for the investigation which span the stages through assumption to detailed tools of data
collection, analysis and interpretation. It is important for an investigator to choose the most appropriate
approach to assist the research in right direction. This section is emphasis on two major types like
deductive or inductive research approach. In the deductive research approach new theory is developed
and it is proved through the implementation of hypothesis, thus in this outcome is fixed by the
observation of available facts and figures. On the other hand inductive approach is based on observing
existing facts and perceptions. The present investigation is based on the significance of strategic

financial management in measuring the performance of the banking sector. The current study is based
on theoretical aspects and in this inductive research approach has been taken by investigator as to
drawing substantial and dependable outcome for attaining objectives of the subjective investigation.
Method of Data Collection
Data collection is considered as the process of gathering data and information through relevant
sources to find out answers to the research problems, test the research phenomenon and analyse the
outcome. This can be categorised among two major parts such as primary and secondary source of data
collection (Boesso, Kumar and Michelon, 2013). In this section of the investigation, researcher having
the option to gather data from primary or secondary source as per the reliability of the study. The data
which is gathered for the very first time through the primary source like survey, observation etc. is
known as primary information. The secondary information is on the other side evaluated as the source
in which data is gathered through extracted sources like books, journals, articles etc. in an investigation
data has been gathered through both primary as well as secondary source of data collection. Primary
tools is effective in conducting survey through applying the measures of interviews, questionnaire focus
group etc. secondary tools is effective in conducting the section of literature review in effective manner
through fathering data and information with the help of books, published journals, articles etc. in the
present research work secondary source is applied by the researcher as to creating a relevant
theoretical frame work. The major reason for selecting secondary tool is to gather reliable data in
respect to drawing valid and accurate outcome. This is the best tool because this provides a brief
discussion on the specified area of study through analysing the opinion of various authors and writers.
Data Analysis
This determined as an essential part of research methodology, which plays vast role in analysing
the aspects of research in effective manner. Data analysis if considered as a process of inspecting,

cleansing, transforming, and modelling data with the goal of discovering useful information, informing
conclusions, and supporting decision-making. It is required for the investigator to analyse the
accumulated data and information in respect reaching at a valid and reliable outcome. In respect to
conduct an evaluation, the investigator can adopt qualitative or quantitative means as it is based on
which is accumulated by the researcher for carry out the investigation in a right direction. It is through
adoption of suitable methods that the researcher is able to draw valid and reliable outcomes. The
research into consideration is of qualitative nature which in turn indicates application of qualitative
means. In a research work data analysis is considered as the essential element as it is required for the
researcher to analyse the accumulated data as to drawing valid and reliable outcome. In this report data
will be analysed through conducting survey as in this thematic analysis will be conducted by using graphs
and charts.
Ethical Consideration
The ethical consideration is emphasis as very critical component for directing an exploration in
an appropriate way. At the time of conducting an investigation researcher faces various kind of issues
and conflicts, thus it is the major obligation of the investigator to ensure their respondents about the
safety and security of their personal as well as professional information (Martos-Vila, Rhodes-Kropf and
Harford, 2013). Deductive disclosure, also known as internal confidentiality is the process of data
protection which the researcher has used while conducting the survey, which helped the investigator in
protection of personal information. In strategic level research on banking sector, it is important to
collect financial information of banking companies such as ABC BANK PLC but this data is access
sensitive. The main access issue while collecting this data is there is no primary information about banks
are available. In order resolve this issue instead of primary information, secondary data from various
sources is collected. Researcher ought to guarantee that personal questions are not being asked during
the observation. Over the span of directing exploration work, researcher needs to ensure that research

is led as per the selected targets of the investigation. The researcher needs to collect all the important
data through real and dependable sources. It very well may be said that the investigator is dependable
to direct research activities according to the implemented rules and standards. It is basic for researcher
to think about every single ethical norm, while directing exploration work. Time and cost are also
considered as the another essential issue which has direct influence on the research activities. It is
essential for the investigator to design an appropriate time frame in which all the activities are
implemented as per the priority of the research operations. Cost is also a major issue it is also important
for the investigator to maintain appropriate flow of funds and capital as to conducting research activities
in effective and efficient manner.