Balanced Scorecard (BSC) in Retail Banking in UAE: a Study on Sustainability.

AuthorBose, Indranil


The banking industry in UAE is the biggest by investment value in the Gulf Cooperation Council (GCC) business. As on 2016, UAE banking industry is dominated by forty six banks, both national and international. Nine foreign banks have their representative offices (Central Bank of the UAE, 2016). Dubai is considered as one of the key international financial hubs in the world and is fast emerging as the most important banking hub of Middle East and North Africa (MENA) region. Ten UAE based banks rank among the top 500 strongest banks worldwide and additionally four other banks have found their places in the first half of this list (, 2014). Emirates NBD is the largest and best bank in UAE and Middle East area. (, 2014). Currently, Emirates NBD has more than 9,000 people, representing 70 nationalities, which is considered as one of the most multi-culturally diversified organizations in the UAE, and is delivering a continuous high value to its shareholders, customers and employees year after year. The same is visible in terms of their customer composition. Emirates NBD has the existing cus tomer base of more than 120 nationalities (, 2016). As of 30 June 2015, total assets were AED 50.1 billion. The Group is running its activities in the UAE, Kingdom of Saudi Arabia, Qatar, Egypt, United Kingdom, Singapore, India, Indonesia and China. In terms of the socially responsible corporation (SRC), Emirates NBD involves in many SRC functions, concentrating on important foundations in the UAE, in fields of charity, environment, culture, education, sport and art. (, 2016).

In 1990, Nolan Norton Institute (the research arm of KPMG) conducted a study and came with a multiple stakeholders' based performance measurement model for an organization, replacing the traditional financial accounting model of measurement. Thus, the concept of Balanced Scorecard was born, which revolutionized the overall perspectives of organizational performance measurement orientation. The new model linked the concept to all major stakeholders of business by redefining 'Key Performance Indicators (KPIs)' of business through financial, customer, operations/ internal business process and employees involvement. Such an approach of measurement enhanced the legitimacy of the initiatives as the better tool for sustainable business as it was an improvement from the traditional financial based process towards entire business focus integration and strategic design implementation.

The present research intends to measure the organizational sustainability through adopting the Balanced Scorecard (BSC), which is being used in the Retail Banking section of Emirates NBD Bank, Dubai head quarter, since 2007. The retail section is managing three portfolios (individual, small and medium enterprises, wealth management) with customer base exceeding one million customers.

Theoretical Background

Balanced Scorecard (BSC) is a strategic management tool, which helps to integrate different managerial levels of the organizational structure in order to achieve a common organizational goal which is actually the long run vision and objective of the company. Though in an ideal organizational set up all the layers of management and all the departments should be played in the same tune but in practice lot of gaps can be observed in the process, understanding and perception. BSC joins those discrete dots in order to provide a continuous shape to the organization through close monitoring of the entire process. BSC analyses the organizational proceedings through four basic interconnected processes, viz. Learning and Growth, Internal Business Processes, Customer Perspective and Financial Measures. It also goes beyond to develop metrics after collecting the data and exercise control on the process through business analytics. Though the concept was developed in early 90's it was first published by Dr. Robert Kaplan and David Norton in 1992 through an article: "The Balanced Scorecard--Measures that Drive Performance" in the Harvard Business Review. In no time it had been popularized and in 1996 another article: "The Balanced Scorecard: Trans lating Strategy into Action" written by the same authors became the business bestseller. As per a recent study done by Bain & Co. it has been identified as the fifth of the ten most widely used management tools around the world. The editorial board of Harvard Business Review describes BSC as one of the most influencial business ideas of the past 75 years of history of management sciences (, 2016)

Brief Review of Literature

Though there are several studies on Balanced Scorecard, only a few have been found to be establishing the principal model of the scorecard at the stage of implementation. The availability of research literature is found to be more limited, while coming to the research on banking industry. A study on Austrian, German and Swiss banking organizations (Speckbacher et al., 2003) has revealed that almost sixty percent of them have somehow implemented Balanced Scorecard in their organizations. Another study by Soderberg (2012), has revealed that none of the banking and financial organizations implemented Balanced Scorecard across all the divisions and adopted on a limited scale. However, the study has acknowledged that all the surveyed organizations have complied with the original purposes and methods of Balanced Score card implementation as suggested by Kaplan like linking the same with strategic objectives, maintaining functional balance, understanding cause-effect relations and clear policies about incentives for successful implementation of Balanced Scorecard. Over a period of time, different measurement metrics have been developed by different scholars in the process of implementation of Balanced Scorecard in the industry. Ahmed Al-Baidhani (2010), in his study has identified bonus scorecard, personal scorecard, process scorecard, KPI scorecard, stakeholder scorecard, strategy scorecard, enterprise scorecard, board scorecard and executive scorecard. Ralph (2011) in his research work based on almost two hundred manufacturing organizations based in Europe has recommended that for effective implementation of Balanced Scorecard, each stakeholder's interest must be taken care of separately and separate metrics must be developed. Mehta (2012) has also developed a comprehensive performance measurement metrics related to Balanced Scorecard implementation in the hospitality industry of South Asia. Though the ideal applicability of different dimensions of Balanced Scorecard at different stages of business has been categorically described by Kaplan, yet, many other subsequent studies have revealed that such structured pattern is not universally followed across different industries. Daniel (2011) has shown in his research that in the banking industry in North America, especially in the USA and Canada...

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