Study on Balanced Scorecard of Commercial Bank in Performance Management System

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ISBN 978-952-5726-00-8 (Print), 978-952-5726-01-5 (CD-ROM) Proceedings of the 2009 International Symposium on Web Information Systems and Applications (WISA’09) Nanchang, P. R. China, May 22-24, 2009, pp. 206-209

Study on Balanced Scorecard of Commercial Bank in Performance Management System Yansheng Zhang1, Longyi Li2

South China University of Technology, Guangzhou, China 1 2

Abstract—Performance management of commercial banks is an important aspect of banking business management. this paper makes study about how to use the Balanced Scorecard as a tool, which is applied to commercial banks performance management system, and points out that it breakthrough the defects in the traditional single application of financial indicators which measures performance. And it raises the value of performance management appraisal system based on the introduction of customer factors, internal business processes, employee learning and growth and financial factors. This paper also makes study about the commercial banks in the performance of the Balanced Scorecard Management System mechanism, the strategy of application, application limitations, and outlook on the future of commercial banking services model based on the above points. Index Terms—Balanced Scorecard, commercial banks, performance management

I. INTRODUCTION The introduction of performance management of commercial banks have some important roles in the commercial banks. Since the Balanced Scorecard was invented in 1990s, it was received a wide range of use and promotion in the global business community, and some of the major international banks have successfully used the Balanced Scorecard, which makes its performance increase greatly. China Domestic banks should learn from successful experience of international large banks, and establish a comprehensive performance evaluation system which meets self-demanding[1]. In recent decades, in the context of constant innovation of global financial products, especially in the United States in 2008 financial crisis triggered by global financial turmoil, how to manage the banking performance effectively? In response to this problem and the current problems of commercial bank performance management, this paper makes research about how to use the Balanced Scorecard as a tool, which is applied to commercial banks performance management system[2]. II.THE PROBLEMS IN PERFORMANCE MANAGEMENT OF COMMERCIAL BANKS In the rapid development of financial markets, commercial banks are facing with intense competition. The traditional performance management appears to be inadequate in how to measure all-round performance to

meet the banking needs of strategic development. Specific performance: • Put emphasis on the financial indicators, and ignore the non-financial indicators. Traditional performance management ignored the nonfinancial factors, with the result that the conclusion can not be fully reflected the overall operations of the bank. At the same time, financial indicators can only reflect the performance of banks in the past and does not reflect the bank's future operating conditions. • Put emphasis on internal evaluation of operating conditions, while neglecting external factors. In the rapid and complicated changing of business environment, banks are facing with challenges from the external environment. If the banks did not correctly analyze the external environment and reflect what it is during the process of performance management, banks can not give an accurate analysis of their own strengths and disadvantages, it can not understand the opportunities and threats facing either, so it is difficult to win in the fierce competition[3]. • Put emphasis on traditional assets, and neglet intangible assets. Bank of fixed assets are important, but the banking sector is a knowledgeintensive industries, and financial knowledge, intellectual resources and other intangible assets of banks are...
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