ANALYSIS OF BANKING INDUSTRY On the Basis of 7Ps and S.W.O.

T

Submitted To By Mr. Vijay Nagrani Jain (56) (48)
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Submitted Vedansh Shish kant

CONTENT
S.NO 1 2 3 PARTICULAR ACKNOWEDGEMENT EXECUTIVE SUMMARY INTRODUCTION Axis Bank Yes Bank Kotak Mahindra Bank 4 COMPARISON Product Price Place Promotion People Process Physical evidence 5 SWOT ANSLYSIS AXIS Bank YES Bank Kotak Mahindra Bank 6 APPENDIX 8 10 10 11 12 12 13 14 19 21 23 25 5 6 7 Page No. 3 4

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ACKNOWLEDGEMENT

“For any successful work, it owes its thanks to many” Hard work, knowledge, dedication & positive attitude all are necessary to do any task successfully but one ingredient which is also very important than others and at times more important than others is cooperation & guidance of experts and experienced person. Firstly I would like to extend my heartfelt gratitude to Mr. Vijay Nagrani, for his guidance throughout the project. Without his support and cooperation I would have failed in my endeavours and targets in this project Report.

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EXECUTIVE SUMMARY The rise of retail lending in emerging economies like India has been of recent origin. Asia Pacific’s vast population, combined with high savings rates, explosive economic growth, the and most underdeveloped retail banking services, provide

significant growth opportunities for banks. Banks will have to serve the retail banking segment effectively in order to utilize the growth opportunity. Banking strategies are presently undergoing various

transformations, as the overall scenario has changed over the last couple of years. Till the recent past, most of the banks had adopted fierce cost cutting measures to sustain their competitiveness. This strategy however has become obsolete in the new light of immense growth opportunities for banking industry. Most bankers are now confident about their high performance in terms of organic growth and in realising high returns. Nowadays, the growth strategies of banks revolve around customer satisfaction. Improved customer relationship management can only lead to fulfilment of long-term, as well as, short-term objectives of the bankers. This requires, efficient and accurate customer database management and development of

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well-trained

sales

force

to

develop

and

sustain

long-term

profitable customer relationship. The banking system in India is significantly different from that of the other Asian nations, because of the country’s unique geographic, social, and economic characteristics. Though the sector opened up quite late in India compared to other developed nations, like the US and the UK, the profitability of Indian banking sector is at par with that of the developed countries and at times even better on some parameters. For instance, return on equity and assets of the Indian banks are on par with Asian banks, and higher when compared to that of the US and the UK.

INTRODUCTION AXIS BANK

Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India (UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd., The
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New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India Insurance Company Ltd. The Bank today is capitalized to the extent of Rs. 359.76 crores with the public holding (other than promoters) at 57.79%. The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Bank has a very wide network of more than 853 branches and Extension Counters (as on 30th June 2009). The Bank has a network of over 3723 ATMs (as on 30th June 2009) providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country. The Bank has strengths in both retail and corporate banking and is committed to adopting the best industry practices internationally in order to achieve excellence.

INTRODUCTION OF YES BANK YES BANK pursues a strong Employee Value Proposition of ‘Creating & Sharing Value’, with a vision to build an organisation, driven by Professional Entrepreneurship, where all YES Bankers
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truly partner to direct, manage and accelerate the development of YES BANK as the Young and Dynamic Bank of “Emerging India”. It is this untiring and relentless passion for Professional

Entrepreneurship that has resulted in YES BANK being recently ranked as the THIRD Best Bank in India by Business world. YES BANK also received the Continuous Innovation in HR Strategy award at The India times Mindscape Employer Branding Awards 2007. YES BANK recognizes that the only real source of sustainable competitive advantage for an organization is the power of its High Quality Human Capital. Therefore, we foster a leadership mindset that embraces meritocracy as a vital force to reward performance and exceptional competency. We have also institutionalized various key strategic initiatives including: Our Objectives
• •

To build a strong employer brand. To attain a preferred employer status in the Banking and Financial Services industry.

To ensure that the Bank is able to attract, engage and retain high quality human capital for its long-term success.

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INTRODUCTION KOTAK MAHINDRA BANK Established in 1985, the Kotak Mahindra group has been one of India's reputed financial organizations. It was previously known as the Kotak Mahindra Finance Limited, a non-banking financial organization. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company was given the license to carry on banking business by the Reserve Bank of India (RBI). This approval created banking history since Kotak Mahindra Finance Ltd. is the first nonbanking finance company in India to convert itself in to a bank as Kotak Mahindra Bank Ltd. The bank has a base of 8000+ employees. Within a small span of 6 years, the bank has spread it wings in several sphere of finances. Presently, spread in 82 cities in India, the bank caters to the needs of its 5.9 million customers spread throughout the length and breadth of country and even abroad. Kotak Mahindra Bank has over 217 branches spread across 126 locations in the country offering both traditional banking products and investment advisory services. The Bank has the products, the experience, really work. the infrastructure and most importantly the commitment to deliver pragmatic, end to- end solutions that

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The Bank offers comprehensive business solutions that include Trade Services, Cash Management Service and Credit facilities, keeping in mind the needs of the business community.

COMPARISON ON THE BASIS OF 7Ps PRODUCT
AXIS BANK YES BANK KOTAK BANK

Banking and Savings Banking and Savings Banking and Savings

Banking Accounts

and

Banking Accounts

and

Banking Accounts

and

Convenience Banking Credit Cards NRI Services Demat Deposits

Convenience Banking Credit Cards NRI Services Demat Deposits

Convenience Banking Credit Cards NRI Services Demat Deposits

• • • •

• • • •

• • • •

Corporate Institutional

and Corporate Institutional

and Corporate Institutional

and

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Corporate Finance Treasury Investment Banking Institutional Equities

Corporate Finance Treasury Investment Banking Institutional Equities

Corporate Finance Treasury Investment Banking Institutional Equities

• •

• •

• •

Investments Insurance
• • • • •

and Investments Insurance
• • • • •

and Investments Insurance
• • • • •

and

Life Insurance Mutual Funds Gold Share Trading

Life Insurance Mutual Funds Gold Share Trading

Life Insurance Estate Planning Mutual Funds Gold Share Trading

Loans Borrowings

and Loans Borrowings

and Loans Borrowings

and

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• •

Car Finance Commercial Loans Home Loans Personal Loans Loans Against Property
• • • • •

Car Finance Commercial Loans Home Loans Personal Loans Loans Against Property

• •

Car Finance Commercial Loans Home Loans Personal Loans Loans Against Property

• • •

• •

Agriculture Loan

PRICE
AXIS BANK YES BANK KOTAK BANK

The pricing decisions or the decisions related to interest and fee or commission charged by banks are found instrumental in motivating or influencing the target market. The RBI and the IBA are concerned with regulations. The rate of interest is regulated by the RBI and other charges are controlled

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by IBA.

PLACE
AXIS BANK YES BANK KOTAK BANK
Spread In 126 Cities In India 217 Branches Spread Across Over 800 ATM

827 Branch 3595 ATM 17 State In India

123 Branch Future Target 2015 Is 3000 ATM Across Country

PROMOTION
AXIS BANK
Advertising: Television Radio

YES BANK
Advertising: Television Radio
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KOTAK BANK
Advertising: Television Radio

Movies

Movies Theatres

Print Media: Hoardings Newspaper Magazines

Print Media: Newspaper Magazines

Print Media: Hoardings Newspaper Magazines

Publicity: Campus Visits Sponsorship

Publicity: Campus Visits Sponsorship

Publicity: Campus Visits Sponsorship

Sales Promotion: Gifts Personal Selling: Cross-Sale (Selling At Competitors Place) Personalized Service

Sales Promotion: Gifts Personal Selling: Cross-Sale (Selling At Competitors Place)

Sales Promotion: Gifts Personal Selling: Cross-Sale (Selling At Competitors Place) Personalized

Personalized Service

Service

PEOPLE
AXIS BANK YES BANK KOTAK BANK

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14000 Employee base 3150 Employee Base

9800 Employee Base

PROCESS
AXIS BANK YES BANK KOTAK BANK

Standardization: Bank has got standardized procedures got typical transactions. In fact not only all the branches of a single-bank, but all the banks have some standardization in them. This is because of the rules they are subject to. Besides this, each of the banks has its standard forms, documentations etc. Standardization saves a lot of time behind individual transaction. Customization: There are specialty counters at each branch to deal with customers of a particular scheme. Besides this the customers can select their deposit period among the available alternatives. Number of steps: numbers of steps are usually specified and a specific pattern is followed to minimize time taken. Simplicity: Banks various functions are segregated. Separate counters exist with clear indication. Thus a customer wanting to deposit money goes to ‘deposits’ counter and does not mingle elsewhere. This makes procedures not only simple but consume less time. Besides instruction boards in national boards in national and regional language help the customers further. Customer involvement: ATM does not involve any bank employees. Besides, during usual bank transactions, there is definite customer involvement at some or the other place because of the money matters and signature requires.

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PHYSICAL EVIDANCE
AXIS BANK

YES BANK

KOTAK BANK

Internet/Web Pages

Internet/Web Pages

Internet/Web Pages

• Paperwork • Brochures • Furnishings

• Paperwork • Brochures • Furnishings

• Paperwork • Brochures • Furnishings

Business Cards Building

Business Cards Building

Business Cards Building

• Signage

• Signage

• Signage

Financial Reports

Financial Reports

Financial Reports

• Tangibles
• •

• Tangibles
• •

Punch Lines Employee’s Dress Code

Punch Lines Employee’s Dress Code

• Tangibles
• •

Punch Lines Employee’s Dress Code

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SWOT ANALYSIS OF BANKS
STRENGTH • Indian banks have compared favourably on growth, asset quality and profitability with other regional banks over the last few years. The banking index has grown at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market index for the same period. • Policy makers have made some notable changes in policy and regulation to help strengthen the sector. These changes include strengthening prudential norms, enhancing the payments system and integrating regulations between commercial and co-operative banks. • Bank lending has been a significant driver of GDP growth and employment.

Extensive reach: the vast networking & growing number of branches & ATMs. Indian banking system has reached even to the remote corners of the country.

• The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalisation of 14 major private banks of India. • In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent
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balance sheets relative to other banks in comparable economies in its region. • India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake)after merger of New Bank of India in Punjab National Bank in 1993, 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively. • Foreign banks will have the opportunity to own up to 74 per cent of Indian private sector banks and 20 per cent of government owned banks.

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WEAKNESS

PSBs need to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organizational performance ethic & strengthen human capital.

• Old • The

private cost of

sector

banks

also

have

the high

need and

to

fundamentally strengthen skill levels. intermediation remains bank penetration is limited to only a few customer segments and geographies. • Structural weaknesses such as a fragmented industry structure, restrictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labour laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs), unless industry utilities and service bureaus.
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Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU banks below 51% thus choking the headroom available to these banks for raining equity capital.

Impediments in sectoral reforms: Opposition from Left and resultant cautious approach from the North Block in terms of approving merger of PSU banks may hamper their growth prospects in the medium term.

OPPORTUNITY • The market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment banking on the wholesale banking side. These require new skills in sales & marketing, credit and operations.

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Banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. This will expose the weaker banks.

• With increased interest in India, competition from foreign banks will only intensify. • Given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks. • New private banks could reach the next level of their growth in the Indian banking sector by continuing to innovate and develop differentiated business models to profitably serve segments like the rural/low income and affluent/HNI segments; actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms. Attracting, developing and retaining more leadership capacity • Foreign banks committed to making a play in India will need to adopt alternative approaches to win the “race for the customer” and build a value-creating customer franchise in advance of regulations potentially opening up post 2009. At the same time, they should stay in the game for potential acquisition opportunities as and when they appear in the near term. Maintaining a fundamentally long-term valuecreation mindset. • reach in rural India for the private sector and foreign banks.
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• With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. • the Reserve Bank of India (RBI) has approved a proposal from the government to amend the Banking Regulation Act to permit banks to trade in commodities and commodity derivatives.

Liberalisation

of

ECB

norms: The government also

liberalised the ECB norms to permit financial sector entities engaged in infrastructure funding to raise ECBs. This enabled banks and financial institutions, which were earlier not permitted to raise such funds, explore this route for raising cheaper funds in the overseas markets.

Hybrid capital: In an attempt to relieve banks of their capital crunch, the RBI has allowed them to raise perpetual bonds and other hybrid capital securities to shore up their capital. If the new instruments find takers, it would help PSU banks, left with little headroom for raising equity. Significantly, FII and NRI investment limits in these securities have been fixed at 49%, compared to 20% foreign equity holding allowed in PSU banks.

THREATS
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• Threat of stability of the system: failure of some weak banks has often threatened the stability of the system. • Rise in inflation figures which would lead to increase in interest rates. • Increase in the number of foreign players would pose a threat to the PSB private players. as well as the

SWOT ANALYSIS OF AXIS BANK
1. STRENGTH • Extremely Competitive And Profitable Banking Franchise • Banking Services Include Corporate Credit, Retail Banking, Business Banking, Capital Markets, Treasury And International Banking.

Sound Technological Platform With Centralized Database And Operations

Retail Banking Savings Bank Deposits Grew To Rs. 25,822 Cr. On 31st March 2009 From Rs. 19,982 Cr. As On 31st March 2008 Showing A Year On Year Growth Of 29%.

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Corporate Banking: Current Account deposits grew by 24% yoy, from Rs. 20,045 crores as at end March’08 to Rs. 24,822 crores as at end March’09.

• Support of various Promoters • Strong technology
• • • •

Total Deposits Rs 1,17,374 crore Net Advances Rs 81,557 crore Net NPA 0.35% Capital Adequacy Ratio 13.69%

2. WEAKNESS

Not having Image UTI (fraud)

• Higher cost • Customer service • Market Capitalization Very Low

3. OPPORTUNITY • Large retail and corporate market

Wide scope in rural India

• Other Activity (Non Banking Activity) • People are become more service oriented

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4. THREAT • Other better Saving, investment option available (like Insurance, Mutulfund, Real-estate, Gold) • Government Rules And Regulation

Very high competition with Private sector (ICICI Bank, HDFC bank) or public sector (BOB, PNB) Bank.

• Capital Market slow-down • Rising Rates • Future Market Trands

SWOT ANALYSIS OF YES BANK
1.STRENGTH
• High Quality, Customer Centric, Service Driven, Private Indian Bank Catering To The “Future Industries Of India”. • The Bank Has Adopted International Best Practices, The Highest Standards Of Service Quality And Operational Excellence,

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World-Class

Team,

Based

On

Professional

Recruitment

Methodologies, And Attract The Best Talent In The Industry

Building Culture.

Learning

And

Development

Solutions

That

Continuously Enhance Employee Value, High Performance

• • • • • • • 2.

Credible And Transparent Performance Management Process Robust Rewards And Recognition Strategy Strong technology, Well capitalized Total Deposits Rs 1,61,694 million Net Advances Rs 124,031 million Net NPA 0.33% Capital Adequacy Ratio 16.6%

WEAKNESS
• • • •

Less wide network Not in every state Less promotional activity Unknown brand

3. OPPORTUNITY

Very wide market
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• •

Other activity(insurance, stock broking, mutulfund) Wide scope in rural area

4. THREAT

Very high competition Private bank market (ICICI Bank, HDFC bank), In public sector (BOB, PNB)

Government Policy

• Other better Saving, investment option available (like Insurance, Mutulfund, Real-estate, Gold) • Capital Market slow-down • Rising Rates

SWOT ANALYSIS OF KOTAK MAHINDRA BANK
1.STRENGTHS:
• Capital markets franchise • Professional management • Strong technology • Well capitalized • Construction equipment financing business • Comprehensive cash management system
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• Capturing supply chain businesses
• • • •

NPA is at 1.30% Total Deposits Rs 15,645 crore Net Advances Rs 16,625 crore Capital Adequacy Ratio 16%

2.WEAKNESS:
• Wholesale Funding Costs • Latecomers • Less Promotional Activities 3. OPPORTUNITIES: • Low loan and retail penetration • Stressed Asset Business • Plans to invest Rs. 120 crores over three years for infrastructure, technology and personnel

4. THREATS: • Capital Market slow-down • Competition • Rising Rates • Other better Saving, investment option available (like Insurance, Mutulfund, Real-estate, Gold)

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• Government Rules And Regulation

APPENDIX
• Website • Newspaper • Magazine • Annual Report

*******************************

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