RETAIL BANKING

STRATEGIES FOR THE FUTURE

Mrs. Soundara Kumar

GM Personal Banking
State Bank of India
 Present Scenario
 Indian retail banking has been showing phenomenal
growth
 In 2004-05, 42% of credit growth came from retail

 Over the last 5 years CAGR has been over 35%

 Retail credit levelcrossed Rs.189K Crore in 2004-05

 Market has transformed into a ‘buyer’s market’ from

a ‘seller’s market’
 Comprises of multiple products, channels of
distribution and multiple customer groups
 Economy vs. Retail Banking
 Retail assets are just 22% of the total banking
assets of India
Contribution of retail loans to GDP:
India 6% China 15 %,
Thailand 24% Taiwan 52%
Indian population below 35 yrs of Age – 70 %
Reach of Formal Banking Channels – 20-25%
of Indian population
Source: Cygnus Industry Insight
Market Share: Retail Loan -
2005
Consumer
Durables
7%

Auto
28%
Home
49%

Other personal
Loans
16%
 Drivers Of Retail Growth
CHANGING CONSUMER DEMOGRAPHICS
 Growing disposable incomes
 Youngest population in the world
 Increasing literacy levels
 Higher adaptability to technology
 Growing consumerism
 Fiscal incentives for home loans
 Changing mindsets-willingness to borrow/lend
 Desire to improve lifestyles
 Banks vying for higher market share
 Industry’s response to the change
 “Any where”, “Any time” Banking
 Improved processes/Bundled product offerings
 Faster service/Reduced TATs
 Customer specific products/offerings on a regular
basis
 ‘Bank’ customer has replaced ‘Branch’ customer
 Focus on understanding customer needs/
preferences
 Segmentation/Differentiation of customers
 Customer driven strategies
 Building relationships
 Future Of Retail Banking
 The accelerated retail growth has been on a historically
low base
 Penetration continues to be significantly low compared to
global bench marks
 Share of retail credit expected to grow from 22% to 36%
 Retail credit expected to grow to Rs.575,000 crs by 2010 at
an annual growth rate of 25%
Source: Cygnus industry insight
 Future of Retail Banking Contd….

 Dramatic changes expected in the credit

portfolio of Banks in the next 5 years
 Housing will continue to be the biggest
growth segment, followed by Auto loans
 Banks need to expand and diversify by
focussing on non urban segment as well as
varied income and demographic groups
 Rural areas offer tremendous potential too
which needs to be exploited
 Strategic prerequisites….
 Performance oriented leadership

 Sophisticated marketing and sales

 Efficient distribution channels

 Process efficiency and ease of scalability

 Superior credit policy, procedures and skills

Source: Mckinsey
 Challenges

 Sustaining Customer loyalty

 NPA reduction & Fraud prevention

 Avoiding Debt Trap for customers

 Bringing Rural masses into mainstream banking

 Strategies for Future…
 Reaching to masses : Need to customize
 Customer segmentation/differentiation
 Data mining/CRM based campaigns
 Products per customer/loyalty
 Promoting low risk retail lending products

 Offer an array of products and financial advisory.

 Strategies for Future… Contd.
 Cost effective expansion
 Renewed emphasis on superior execution by
front-line employees
 Grow through Alliances:
Hospitality Education
Retailers Automobiles
Consumer Durables Housing/Construction
 Winning Strategy

The bank that best addresses and anticipates

customers needs, delivers consistently higher
quality service and connects to the customer
via their channel of choice wins

Y.Y.Chin, OCBC Bank

Thank You !