Professional Documents
Culture Documents
1.RETAIL BANKING
DEFINITION:
Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so
Retail Banking environment today is changing fast. The changing customer demographics demands to create a differentiated application based on scalable technology, improved service and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility
The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the banks customer gets Uniformity and Consistency of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering mass-market servicing is prohibitively expensive.
Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale.
INTRODUCTION
Retail banking is, however, quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Retail banking refers to provision of banking services to individuals and small business where the financial institutions are dealing with large number of low value transactions. This is in contrast to wholesale banking where the customers are large, often multinational companies, governments and government enterprise, and the financial institution deal in small numbers of high value transactions
The concept is not new to banks but is now viewed as an important and attractive market segment that offers opportunities for growth and profits. Retail banking and retail lending are often used as synonyms but in fact, the later is just the part of retail banking. In retail banking all the needs of individual customers are taken care of in a well-integrated manner. Todays retail banking sector is characterized by three basic characteristics:
a) Multiple products (deposits, credit cards, insurance, investments and securities) b) Multiple channels of distribution (call center, branch, internet) c) Multiple customer groups (consumer, small business, and corporate.
This study is not an academic exercise. Rather, it has grown out of a common thread of themes which are emerging from client assignments worldwide. These themes have been assessed and micro-economic analysis undertaken in order to understand how they operate and where they are taking the industry.
Trends underway: So what are the trends that we see in retail banking? Our core conclusion is that the retail banking industry, owing to a variety of factors, is currently not susceptible to scale economies. By this, we mean that retail banks do not seem to get anymore efficient as they get larger. If anything, the reverse appears to be the case. However, there are a number of strong reasons to suppose that this will change in the future. We believe that retail banking will increasingly be susceptible to scale economies. In turn, this will create pressure for the industry to restructure.
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telecommunications industry -- and noted that the forces which drove their restructuring, and the consequences. Modifying the driving forces for these industries to those circumstances which are particular to retail banking, we have been able to come to a vision of how the retail banking industry is likely to restructure over the coming decade. We have also looked at other trends. Technology in particular will change the retail banking industry fundamentally in the years to come. The first key consequence is that banks will lose their monopoly as centres for money transmission. In other words, the activity of transmitting money from one person or company to another will increasingly be able to be carried out be a variety of providers. As with telecommunications, vigorous cost competition will result. The second key consequence of technology will be the proliferation of distribution channels for retail banking products. Whereas in the past, the bank branch was the only channel for distributing most financial services products, in the future a number of different channels will continue to erode the branch's predominance. Many of these we are currently familiar with -- telephone, especially Mobile phone, ATM's, email etc. In addition, however, new channels are slowly emerging from the primordial soup of the information superhighway. Although we can only guess at how they will affect the distribution of retail banking products, we are confident that these will ultimately supplement the other alternative channels and further erode bank branch's share. Consequences of these trends: The consequences of the above will be wholesale restructuring. We believe that retail banking will disaggregate into an interlinked
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l. Product Formulators: Within retail banking there will increasingly be divisions or stand-alone companies who focus on formulating products such as mortgage or savings, for delivery either direct to clients or to intermediaries. 2. Customer Gateways: We believe that there will be an opportunity for an intermediary to capitalise on superior customer knowledge and efficient delivery channels to sell and service a range of products to individual customers through a range of delivery channels of the customer choosing. 3. Industry Services: Increasingly the support functions which are at present woven in to the fabric of the bank will be seen as peripheral supporting activities, and spun off to either separate divisions within a bank or to third party "outsource" providers. This will eventually create an industry for bank services, with new providers offering a broad range of support activities. The evolution outlined above will vary significantly by country. This is firstly because the structure of the retail banking industry today is different in each nation -- a legacy of historical market evolution and regulation. In addition, the manner and rate at which markets will be deregulated in the future will also vary. This means that not only does the retail banking industry in different countries start from a different point, but that its change trajectory in the future will also vary as the result of nationally-idiosyncratic deregulation.The bank of the future will not win by creating a single strategy. Rather, each of its activities within products, customer channels, and support services will be the subject of a discreet "business unit" strategy, which will be benchmarked against market-segmented customer
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Retail Banking in India Retail Banks: Their Structure and Function Definition :Retail banks offer a range of services to individual customers and small businesses, rather than to large companies and other banks. The services can include current accounts, savings accounts, investment advice and broking, and loans and mortgages. Retail banks perform two crucial functions for customers: firstly, they enable customers to bank their money securely, access it easily, and conduct transactions; and secondly, they provide access to additional money to fund large purchases, such as buying a home. In return for holding customers funds, which they can then invest, banks pay customers interest. Traditionally, retail banks have provided these services directly to the customer via branches. While many still do this, retail banks now offer their services by telephone and the internet as well. Some operate solely via the internet and do not have facilities to serve customers at physical outlets. Other organizations, such as supermarkets, have now entered the banking sector and also offer a wide range of banking services. It has become more difficult to identify the traditional retail bank a bank that funds itself through customer deposits and lendingbecause retail banks now often combine retail and wholesale banking. It is therefore more relevant to toda ys banking structure to regard retail banking as a series of processes rather than as an institution.
Disadvantages
Banks are a business, and they need to make money from looking after yours. If the bank decides to apply charges to your account (within the terms of the account), you may only find out about it afterwards for example if you accidentally go overdrawn without permission. If you disagree with a charge, you will need to contest it to recover the money.
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The subject matter of retail banking is of prime importance. In recent years, commercial banks have witnessed development in the form of retail lending, all over the world. The growth in the field of retail lending is primarily because of the speedy advancement in the IT sector, evolving macroeconomic environment, numerous micro level demand and supply side factors and financial market reform. This criterion is based on the market research report on retail banking. India has also experienced growth in the field of retail banking. The retail loan accounted for approximately one-fifth of the entire bank credit. The housing sector is undergoing a boom in its credit. The retail loan market has detrimentally undergone a change, from the sellers market to the buyers market. The time is no more the same, when it was difficult to get loans from the bank. This indicates that the retail loan market has shown phenomenal growth and development over recent years. The market research reports that were made exclusively for the Indian retail banking market indicated, that India offers tremendous opportunities in this field. It further indicated that retail banking market is a booming sector in India. One of the key contributors for the boom in the Indian retail banking industry is, the increasing ratio of the Indian middle class. The number of people who fall in the category of the middle class is increasing rapidly. The younger population of the country has increased not only its purchasing power; it is also comfortable acquiring personal debts as compared to their older generations. This dual combination of increased purchasing power and comfort acquiring personal loans has contributed majorly in the development of the retail loan sector in India
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market research reports made on retail banking. Further growth and success of the retail market (in the banking sector) will depend upon the capacity and ability of the banks to meet with the challenges and make the best use of the opportunities. The technological base and efficiency in operations would give the retail banking market a competitive edge and will contribute in the success of the business in India. Prime importance has to be given to consumer interest. The biggest challenge faced by the Indian banks in the field of retail banking is going to be the rising indebtedness and lack of technological advancements, a report by Federation of Indian Chambers of Commerce and Industry (Ficci) pointed out. A report of Ficci, namely, Status of the Indian Banking Industry - has identified these two areas as the factors which may affect the future of retail banking in India. The study has said majority of the respondents do not anticipate any fall in demand due to hike in interest rates. On the interest rate front, 64% interviewed, foresee a rise in the interest rates in the future. Out of these, 74% expect the interest rate to increase by 0.5% and the remaining expect it to increase by 1%. The increased interest rates are likely to have an adverse impact on the corporate sector lending to some extent, especially AAA rated borrower, as highlighted by 62% of the banks. The study has also outlined other issues like customer information and distribution network, the areas banks need to address. While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting. How far the retail
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India has 200 million households and 400 million middleclass population more than 90% of the savings come from the house hold sector. Falling interest rates have resulted in a shift. Now People Want To Save Less and Spend More.
Nuclear family concept is gaining much importance which may lead to large savings, large number of banking services to be provided are day- by-day increasing.
Tax benefits are available for example in case of housing loans the borrower can avail tax benefits for the loan repayment and the interest charged for the loan.
This document analyzed the key policy issues relevant to the retail banking sector and highlighted the role of financial inclusion, responsible lending, access to finance, and consumer protection. It is in this context that that one is reminded of the needs to develop the standards and codes for banking.
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The codes would establish the banking industry is key commitments and obligations to customers on standards of practice, disclosure and principles of conduct for their banking services. The Board will monitor compliance with the Codes by the affiliated banks.
Second, sharing of information about the credit history of households is extremely important as far retail banking is concerned. Perhaps due the confidential nature of banker-customer, banks have a traditional resistance to share credit information on the client, not only with one another, but also across sectors. Globally, Credit Information Bureaus have, therefore, been set up to function as a repository of credit information -both current and historical data on existing and potential borrowers. The database maintained by these institutions can be accessed by the lending institutions. Credit Bureaus have been established not only in countries
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Third, outsourcing has become an important issue in the recent past. With the increasing market orientation of the financial system and to cope with the competition as also to benefit from the technological innovations such as, ebanking, the banks are making increasing use of outsourcing" as a means of both reducing costs and achieving better efficiency. While outsourcing does have various cost advantages, it has the potential to transfer risk, management and compliance to third parties who may not be regulated. A recent BIS Report on Outsourcing in Financial Services developed some high-level principles. A basic requirement in this context is that a regulated entity seeking to outsource activities should have in place a comprehensive policy on outsourcing including a comprehensive outsourcing risk management programme to address the outsourced activities and the relationship with the service provider. Application of these principles in the Indian context is under consideration.
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4.HDFC BANK
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.
Promoters:HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
Business Focus :HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is committed to maintain the highest level of ethical standards,
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Capital Structure :The authorized share capital of the Bank is Rs. 550 crore. The paid-up capital as on said date is Rs. 459,69,07,030/- (45,96,90,703 equity shares of Rs. 10/- each). The HDFC Group holds 23.63 % of the Bank's equity and about 17.05 % of the equity is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). 27.45% of the equity is held by Foreign Institutional Investors (FIIs) and the Bank has about 4,33,078 shareholders. The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002.
Distribution Network
HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of 1,725 branches spread in 780 cities across India.All branches are linked on an online real-time basis. Customers in over 500 locations are also serviced through Telephone Banking. The Bank's expansion plans take into account the need to have a presence in all major industrial and commercial centres where its corporate customers are located as well as the need to build a strong retail customer base for both deposits and loan products. Being a clearing/settlement
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Management :Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from 6th July 2010 subject to the approval of the Reserve Bank of India and the shareholders. Mr. Vasudev has been a Director of the Bank since October 2006. A retired IAS officer, Mr. Vasudev has had an illustrious career in the civil services and has held several key positions in India and overseas, including Finance Secretary, Government of India, Executive Director, World Bank and Government nominee on the Boards of many companies in the financial sector. The Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years, and before joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia. The Bank's Board of Directors is composed of eminent individuals with a wealth of experience in public policy, administration, industry and commercial banking. Senior executives representing HDFC are also on the Board. Senior banking professionals with substantial experience in India and abroad head various businesses and functions and report to the Managing Director. Given the professional expertise of the management team and the overall focus on recruiting
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Tecnology
HDFC Bank operates in a highly automated environment in terms of information technology and communication systems. All the bank's branches have online connectivity, which enables the bank to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail customers through the branch network and Automated Teller Machines (ATMs). The Bank has made substantial efforts and investments in acquiring the best technology available internationally, to build the infrastructure for a world class bank. The Bank's business is supported by scalable and robust systems which ensure that our clients always get the finest services we offer. The Bank has prioritized its engagement in technology and the internet as one of its key goals and has already made significant progress in web-enabling its core businesses. In each of its businesses, the Bank has succeeded in leveraging its market position, expertise and technology to create a competitive advantage and build market share.
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BUSINESS
HDFC Bank offers a wide range of commercial and transactional banking services and treasury products to wholesale and retail customers. The bank has three key business segments: Wholesale Banking Services:The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian corporate to small & mid-sized corporates and agri-based businesses. For these customers, the Bank provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider of structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. Based on its superior product delivery / service levels and strong customer orientation, the Bank has made significant inroads into the banking consortia of a number of leading Indian corporates including multinationals, companies from the domestic business houses and prime public sector companies. It is recognized as a leading provider of cash management and transactional banking solutions to corporate customers, mutual funds, stock exchange members and banks.
Retail Banking services :The objective of the Retail Bank is to provide its target market customers a full range of financial products and banking services, giving the customer a one-stop window for all his/her banking requirements. The products are backed by worldclass service and delivered to customers through the growing branch network, as
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Treasury :Within this business, the bank has three main product areas - Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the liberalization of the financial markets in India, corporates need more sophisticated risk management information, advice and product structures. These and fine pricing on various treasury products are provided through the bank's Treasury team. To comply with statutory reserve requirements, the bank is
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RATINGS
Credit Rating:The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Bank's Fixed Deposit programme has been rated 'CARE AAA (FD)' [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the bank's Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "AAA ( ind )" rating to the Bank's deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high"
The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA (ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A]" for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA / Stable" for the Bank's Perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments.
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Branch Services
Welcome to the networked world of HDFC Bank. You can open an account at any branch nearest to your residence or office and access it at any branch in the city or anywhere in the country.
ATM :Withdraw cash, check your balance, order a cheque book, all at your own convenience, from any of the over 4,393 HDFC Bank ATMs across the country. The fast, easy and convenient way of transacting through your account
Accounts & Deposits:Banking should be effortless. With HDFC Bank, the efforts are rewarding. No matter what a customers need and occupational status, we have a range of solutions that are second to none. Whether youre employed in a company and need a simple Savings account or run your own business and require a robust banking partner, HDFC Bank not only has the perfect solution for you, but also can recommend products that can augment your planning .
Savings Accounts:These accounts are primarily meant to inculcate a sense of saving for the future, accumulating funds over a period of time. Whatever your occupation, we are confident that you will find the perfect banking solution. Open an account in your name or register for one jointly with a family member today.
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Retail Banking in India Current Accounts:Now, with an HDFC Bank Current Account, experience the freedom of multi-city banking! You can have the power of multi-location access to your account from any of our 1,725 branches in 780 cities. Not only that, you can do most of your banking transactions from the comfort of your office or home without stepping out. We make it our business to help you with your business by offering you a Current Account with all the benefits you need to stay ahead of your competition.
At HDFC Bank, we understand that running a business requires time and money, also that your business needs are constantly evolving. That's where we come in. We provide you with a choice of Current Account options to exclusively suit your business - whatever the size or scope.
Fixed Deposits:Long-term investments form the chunk of everybody's future plans. An alternative to simply applying for loans, fixed deposits allow you to borrow from your own funds for a limited period, thus fulfilling your needs as well as keeping your savings secure.
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ICICI Bank is Indias second-largest bank with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896 million) for the year ended March 31, 2010. The Bank has a network of 2,035 branches and about 5,518 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its 28pecialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in
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ICICI Venture is the largest and one of the most successful private equity and venture capital management companies in India with aggregate funds under management in excess of USD 2 billion. ICICI Venture is a subsidiary of ICICI Bank, Indias second-largest bank with total assets of about US$ 56.3 bn (March 31, 2006) and market capitalization of about USD 10.8 bn (June 2006). Over the years, ICICI Venture has built an enviable portfolio of companies in the sectors of information technology, pharmaceuticals, biotechnology, media and retail thereby delivering value consistently to its investors. ICICI Venture has the distinction of managing a large number of exits in the country. With over 100 liquidity events, the organization has reaped rich experience and is well positioned to handle IPOs, strategic sale and/or mergers.
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Loans
ICICI Bank offers wide variety of Loans Products to suit your requirements. Coupled with convenience of networked branches/ ATMs and facility of Echannels like Internet and Mobile Banking, ICICI Bank brings banking at your doorstep. Select any of our loan product and provide your details online and our representative will contact you for getting loans.
Home Loans:The No. 1 Home Loans Provider in the country, ICICI Bank Home Loans offers some unbeatable benefits to its customers - Doorstep Service, Simplified Documentation and Guidance throughout the Process. It's really easy !
Personal Loans:If you're looking for a personal loan that's easy to get, your search ends here. ICICI Bank Personal Loans are easy to get and absolutely hassle free. With minimum documentation you can now secure a loan for an amount upto Rs. 10 lakhs.
Car Loans:The most preferred financier for car loans in the country. Network of more than 1000 channel partners in over 200 locations. Tie-ups with all leading automobile manufacturers to ensure the best deals. Flexible schemes & quick processing. Hassle-free application process on the click of a mouse.
Commercial Vehicle Loans:We have extended products like funding of new vehicles, finance on used vehicles, top up on existing loans, working capital loans & other banking products.
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Retail Banking in India Loans against Securities:You dont have to sell your securities. All you have to do is pledge your securities in favour of ICICI Bank. We will then grant you an overdraft facility up to a value determined on the basis of the securities pledged by you.
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Dream Deposits:A unique offering of four term deposit plans that enable you realise your dreams at every stage of your life.
Fixed Deposit:Fixed Deposits at ICICI Bank comes with nomination facility. We also offer online access to your Fixed Deposits through our Internet Banking channel. Internet Banking at ICICI Bank allows you to connect your Credit Card, Loan and your Fixed Deposit with your savings account.
Savings Account:Debit-cum-ATM Card With ICICI Bank Savings Account you will get a debit card that you can use to withdraw cash from any ATM. You may also use your debit card to directly make purchases through a Visa/Mastercard POS (Point of Sale) machine available at most stores! This will help you access your money from anywhere.
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Retail Banking in India Life Plus Senior Citizen Services:ICICI Banks Life Plus Senior Citizen Services have been designed to empower senior citizens to independently carry out the day-to-day banking transactions with dignity and confidence. These senior citizen benefits are exclusively for customers above 60 years of age.
You can transfer pocket money into your child's account. You can even shop with him / her at Young Stars Shopping Page. You can also open a recurring deposit in your Childs name. Once you are done with your 'banking', you can access your child's account with all the fun links to special zones designed to suit your child's area of interests and also impart knowledge on the current events of the world.
Child Education Plan:ICICI Bank presents Child Education Plan, a unique way to save for your child's future. To fulfil your child's dream & aspirations, begin by making small investments in a
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Bank Branch
You can find a host of ICICI retail products at our widespread Bank Branch network-Bank Accounts,Credit and Debit cards, Bonds, Demat Accounts, Loans against Shares, etc.
Anywhere Banking:ICICI Bank is the second largest bank in the country. It services a customer accounts through a multi-channel access network. This includes branches and extension counters, ATMs, Call Centre and Internet Banking .
Thus, one can access the various services ICICI Bank has to offer at anytime, anywhere and from anyplace. To learn more about the various channels, please click on the topic of your interest mentioned in the left menu.
ATM:ICICI Bank's 24 Hour ATM network is one of the largest and most widespread ATM Network in India. Our ATMs are located in commercial areas, residential localities, major petrol pumps, airports, near railway stations and other places which are conveniently accessible to our customers. ICICI Bank ATMs features user-friendly graphic screens with easy to follow instructions. We have introduced ATMs which interact with customers in their local language for increased convenience.
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Retail Banking in India ICICI Bank Phone Banking - Why Walk When you Can Talk
A user friendly automated service menu offers you convenient access to your account coupled with security as, all your transactions are protected by a Atm Pin - The Personal password to your Banks & Credit card Account and Tpin for your Demat Account . But if you do need any assistance our officers will be glad to help you.
For Bond Account Holders -The customer would need to key in his
Bonds holder Number only.
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Retail Banking in India 6. Who's the Retail banking king? ICICI or HDFC?
Even their offices reflect their attitudes. ICICI Bank's headquarters in suburban Mumbai [ Images ] is a huge, imposing edifice in glass and granite. HDFC Bank's office in central Mumbai is comparatively smaller and more sedately furnished. The two banks have carried forward their style statement in their approach to business. ICICI Bank thinks big, is all for growth and hungry for marketshare. HDFC Bank is more conservative and cautious, grows at a measured pace, without taking any undue risks. ICICI Bank's assets in the retail space stand at Rs 56,000 crore (Rs 560 billion). In comparison, the tally for HDFC Bank is Rs 18,000 crore (Rs 180 billion). ICICI Bank also leads HDFC Bank in almost every segment they are present in. But that's just the current update.
The DNA of the strategy:ICICI Bank began its retail banking venture in mid-1999. By January 2000, it had moved on to introducing home loans, car loans, personal loans and credit cards. Realising the need for a bigger retail deposit base, the bank started building a branch and an ATM network. The acquisition of Bank of Madura in March 2001 added 263 branches, many of them in cities where ICICI Bank did not have a presence. The merger of the erstwhile financial institution ICICI Limited with the bank in April 2002, gave it a ready-made corporate clientele. The flip side was that ICICI Bank had Rs 10,000 crore (Rs 100 billion) of restructured assets for which it had to make provisions.
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Better pick-up:The numbers tell the story. ICICI Bank's retail deposits are nudging Rs 60,000 crore (Rs 600 billion) and in FY05, it grew its deposits by 47 per cent compared with the industry deposit growth of 14 per cent. HDFC Bank's retail deposits are about Rs 23,000 crore (Rs 230 billion). Even in home loans, ICICI Bank commands 30 per cent of the market, having eaten into housing finance pioneer, HDFC's share. Says Morparia, "The convenience proposition together with the geographical reach has paid off. We rolled out ATMs far ahead of the others and were able to crosssell our products.
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Mar-09
Branches ATMs Cities Retail assets (Rs crore) Deposits crore) Car crore) loans (Rs (Rs
18,000 56,000
38,000 99,800
2,500 11,500
Credit cards (Mn) 1.3 Retail customers (Mn) Cost of deposits (%) Net interest
6.4
13.7
3.2
4.5
3.2
2.4
0.2
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Even in the number of customers ICICI Bank leads by a distance, Nearly 14 million customers bank with ICICI Bank, while the number for HDFC Bank is less than half (6.4 million). ICICI Bank has issued 3 million credit cards -- that is more than twice the number of HDFC Bank's credit card users. However, industry observers point out that ICICI Bank's effective users for credit cards may not be high. Nonetheless, they concede that even with a discounted customer base, the numbers will still be strong. Even in businesses like online trading where the risks are relatively low, ICICI Bank commands a two-thirds marketshare. Says Morparia, "We are the largest distributors of mutual fund products and RBI Bonds."
'Tell all' street:The stock market has always valued HDFC Bank at a huge premium -- at the current price of Rs 585, HDFC Bank is valued at 3.5 times price to forward book (valuation based on estimated book value in FY 06 of Rs 165). The multiple for ICICI Bank that quotes at Rs 415, is just 2.1 (estimated book value Rs 194). The reason: the impeccable quality of HDFC Bank's balance sheet. With NPLs of less than 0.2 per cent, compared with 2 per cent for ICICI Bank, its books are definitely in far better shape. HDFC Bank's operations are also more profitable -- its net interest margin at 3.2 per cent is way higher than that of ICICI Bank's 2.4 per cent. Also, it is able to
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Operationally, there is a possibility that technology go beyond merely reducing the cost & improving the quality of current products.It may prove possible, even profitable, to combine functions in new ways. The future of retail banking lies more in mobile banking. Mobile telephone market is penetrating, and mobile phones are ideal to utilize Internet banking services without customer accesses to PC. By a tacit acceptance India has around three million mobile phone users and this number is expected to reach to eight million by 2003. Smart card revolution will further change the face of retail banking. Smart cards can store information; carry out local processing on the data stored and can perform complex calculations.
At present, India has around 3.4 million smart card users and it is estimated that by the end of 2004 it will reach 14.7 million
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8.CONCLUSIONS
Retail banking is the fastest growing sector of the banking industry with the key success by attending directly the needs of the end customers is having glorious future in coming years. There is a need for constant innovation in retail banking.
Retail Banking is a booming sector. It is dynamic in nature. There has been a significant change in demographic profile of customers. There is huge market to cover so banks have greater opportunity. There is scope for the development of new innovative products. Banks have to come with the new innovative products and service to retain market.
In current situation the branch banking is dead, the amount of transations done at branch is just 28% but it is not at all dead and it cant be replaced by any other delivery channel.
In current scenario, ICICI Bank for many reasons can be said as a No.1 bank dealing with retail operation in country.
In future, bank need to equip themselves with internal capabilities and build efficient and viable business models to create the advantage of new opportunities available into a long terms sustainable competitive advantages. Which will help them capture the words thus ,promising a forever sunshine in future of Retail Banking.
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BIBLIOGRAPHY
News paper referred Economic times Times of India
Books Referred Retail Marketing management - By David Gilbert Retail management - By Gibson.vedamna.
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