New Trends In Banks

EXECUTIVE SUMMARY
There has been a tremendous change in the banking sector and these changes include phone
banking, online banking, ATM, bancassurance, mutual funds etc. There was a time when banks used
to perform only the basic functions but today the scenario is not the same. There is an increasing
competition in this field and banks are aiming to offer more and more products and services to their
customers. This change has led to convenience and customers are at ease. This change is possible
because of the trust which the people have in banks.
Indeed technological and regulatory changes have had such an impact on the banking industry that a
good case can be made for saying that they are the most important changes to have occurred in the
industry, apart from ones that are directly due to the changing nature of society itself. The precise
nature of the impact technology has had on the banking industry since the early !"#$s is difficult to
assess, because the intimacy of the relationship between the industry and its technology means that
it is impossible to separate the two. Technology is a much part of the banking industry today as the
ship$s engine is the part of the ship. And, like the ship$s engine, technology drives the whole thing
forward.
New Trends In Banks
BANKS INTRODUCTION
A bank is an institution that provides financial service, particularly taking deposits and e%tending
credit.
&urrently the term bank is generally understood as an institution that holds a banking license.
Banking licenses are granted by bank regulatory authorities and provide rights to conduct the most
fundamental banking services such as accepting deposits and making loans. There are also financial
institutions that provide certain banking services without meeting the legal definition of a bank, a so
called non'banking financial company.
The start of banks ( the only banks which appeared earlier) '
*une +, "#,) The Bank of &alcutta established.
*anuary +, "#!) redesignated as Bank of Bengal.
April -, ".#) Bank of Bombay established.
*uly , "./) Bank of Madras established.
",) 0aper &urrency Act passed.
*anuary +1, !+) all three banks amalgamated to form Imperial Bank of India.
*uly , !--) 2tate Bank of India formed3 becomes the first Indian bank to be nationalised.
!-!) 2tate Bank of India 42ubsidiary Banks5 Act passed, enabling the 2tate Bank of India
to take over eight former 2tate'associated banks as its subsidiaries.
New Trends In Banks
Banks have a long history, and have influenced economies and politics for centuries.
The word bank is derived from the Italian banca, which is derived from 6erman language and
means bench. The terms bankrupt and 7broke7 are similarly derived from banca rotta, which refers
to an out'of'business bank, having its bench physically broken. Money lenders in Northern Italy
originally did business in open areas, or big open rooms, with each lender working from his own
bench or table.
Traditionally, a bank generates profits from transaction fees on financial services and from the
interest it charges for lending. In recent history, with historically low interest rates limiting banks8
ability to earn money by lending deposited funds, much of a bank8s income is provided by overdraft
fees and riskier investments.
Services typically offere !y !a"#s earlier
Although the type of services offered by a bank depends upon the type of bank and the country,
services provided usually include)
Taking deposits from their customers and issuing checking and savings accounts to
individuals and businesses
9%tending loans to individuals and businesses
&ashing che:ues
;acilitating money transactions such as wire transfers and cashiers checks
Issuing credit cards, ATM, and debit cards
2toring valuables, particularly in a safe deposit bo%
New Trends In Banks
Tre"s i" !a"#i"$
India adopted a socialistic model of development with centrali<ed plans for
implementing the ob=ectives of balanced growth. ;or this purpose, banks were
nationalised to ensure that the flow of credit followed the pattern re:uired for economic
growth.
Nationalisation of banks led to the e%pansion of the banking network in the
country with the banks recording a multifold growth in the mobili<ation and deployment
of finance. >owever, with the growth of the network, there also arose concerns over the
efficacy of such directed credit and the cost of operations in conducting banking in the
public sector.
In line with the liberali<ation of the Indian economy in the !!#s, the financial sector
was also liberali<ed in order to allow greater competition leading to efficiency in the
banking system.
This has led to developments such as)
' the entry of new private sector banks.
' greater leeway to foreign banks in operating in the country and
' gradual sale of government e:uity in 02? Banks
4without ceding government control5
Apart from the increasing competition, the banking sector in the country is currently in the throes of
change being impacted by events such as economic recession leading to rising N0As and problems
of achieving capital ade:uacy. This has made banks e%tremely cautious about lending to industry
4especially to the small and medium enterprises5 restricting the growth of a number of these
enterprises.
New Trends In Banks
%atest tre"s i" !a"#i"$
Banks today have moved towards universal banking. Banks today include investment services in
addition to services related to savings and loans.
&'U"iversal Ba"#i"$
The concept of universal banking refers to the provision of most or all financial services under a
single, largely unified banking structure. ;inancial activities may include)
Intermediation
Trading of financial instruments, foreign e%change, and their derivatives
?nderwriting new debt and e:uity issues
Brokerage
&orporate advisory services, including mergers and ac:uisitions advice
Investment management
Insurance
>olding e:uity of non'financial firms in the bank$s portfolio.
?niversal banking can be divided in four parts)
5 The fully integrated universal bank) supplies the complete range of financial services from
one institutional entity.
+5 The partially integrated financial conglomerate) able to supply the services listed above, but
several of these 4for e%ample, mortgage banking, leasing, and insurance5 are provided
through wholly (owned or partially owned subsidiaries.
/5 The bank subsidiary structure) the bank focuses essentially on commercial banking and
other functions, including investment banking and insurance, which are carried out through
legally separate subsidiaries of the bank.
New Trends In Banks
.5 The bank holding company structure) a financial holding company owns both banking 4and
in some countries, non banking5 subsidiaries that are legally separate and individually
capitali<ed, in so far as financial activities other than @bankingA are permitted by law. The
holding company often owns non'financial firms, or the holding company itself may be an
industrial concern.
?niversal Banking includes not only services related to savings and loans but also investments.
>owever in practice the term 8universal banks8 refers to those banks that offer a wide range of
financial services, beyond commercial banking and investment banking, insurance etc. ?niversal
banking is a combination of commercial banking, investment banking and various other activities
including insurance. If speciali<ed banking is the one end universal banking is the other. This is
most common in 9uropean countries.
?niversal banking has some advantages as well as disadvantages. The main advantage of universal
banking is that it results in greater economic efficiency in the form of lower cost, higher output and
better products. >owever larger the banks, the greater the effects of their failure on the system. Also
there is the fear that such institutions, by virtue of their sheer si<e, would gain monopoly power in
the market, which can have significant undesirable conse:uences for economic efficiency.
U"iversal !a"#i"$ i" I"ia
In India Bevelopment financial institutions 4B;Is5 and refinancing institutions 4C;Is5 were meeting
specific sectoral needs and also providing long'term resources at concessional terms, while the
commercial banks in general, by and large, confined themselves to the core banking functions of
accepting deposits and providing working capital finance to industry, trade and agriculture.
&onse:uent to the liberalisation and deregulation of financial sector, there has been blurring of
distinction between the commercial banking and investment banking.
Ceserve Bank of India constituted on Becember ", !!1, a Dorking 6roup under the &hairmanship
of 2hri 2.>. Ehan to bring about greater clarity in the respective roles of banks and financial
institutions for greater harmoni<ation of facilities and obligations. Also report of the &ommittee on
Banking 2ector Ceforms or Narasimham &ommittee 4N&5 has ma=or bearing on the issues
New Trends In Banks
considered by the Ehan Dorking 6roup.
The issue of universal banking resurfaced in Fear +###, when I&I&I gave a presentation to CBI to
discuss the time frame and possible options for transforming itself into an universal bank. Ceserve
Bank of India also spelt out to 0arliamentary 2tanding &ommittee on ;inance, its proposed policy
for universal banking, including a case'by'case approach towards allowing domestic financial
institutions to become universal banks.
Now CBI has asked ;Is, which are interested to convert itself into a universal bank, to submit their
plans for transition to a universal bank for consideration and further discussions. ;Is need to
formulate a road map for the transition path and strategy for smooth conversion into an universal
bank over a specified time frame. The plan should specifically provide for full compliance with
prudential norms as applicable to banks over the proposed period.
('Electro"ic !a"#i"$
In the wake of recent developments in information and communication technologies, ma=ority of
banking operations have been computeri<ed by most of the commercial banks, both in the private
and the public sectors especially in the last ten years and the process s still on for e%tension and
upgradation of computeri<ation of banks in India. The computeri<ation is done for front'office
operations involving interface with customers as well as back office operations involving internal
house keeping 4accounting and books balancing5, e%ternal accounting and settlement with other
branches and banksGinstitutions. 9lectronic banking provides a bou:uet of new channels like
internet banking, telephone banking, ATM banking ( which are different from the traditional Hbrick
and mortar$ branch banking and which have made possible Hanywhere and anytime banking$ and
contributed to speed, accuracy and confidentiality of customers$ transactions while enhancing
customers convenience. ;unds transfer3 che:ues clearing and collection of bills of e%change are also
done electronically with accuracy, speed and safety. Internal house keeping is done accurately and
much faster through programmed packagesGsoftware at the branch and also at centrali<ed platforms
involving several branches of a region or <one.
)'*lo!ali+atio" of !a"#i"$
New Trends In Banks
In addition to universal banking and electronic banking, globali<ation has emerged as a prime
mover in the Indian banking system. This has come about as a result of the policy of liberali<ation
and opening up of banking and other sectors pursued after !! in India. ;oreign banks that wish to
set up their officesGbranches in India have been granted licenses by CBI on liberal and on reciprocal
basis. Their business in India has increased manifold, due to scores of Multinational &orporations
setting up their manufacturingGtrading bases in India and also due to India$s increased foreign trade.
2imilarly, Indian banks are also opening their officesGbranches abroad, particularly in countries
whose banks have opened offices in India.
Ba"#s ,ave "o- c,a"$e t,eir approac, to-ars tec,"olo$y. pro/cts
a" t,e services offere !y t,e0'

Tec,"olo$y evelop0e"t
Banks have started using the latest technology to keep up with the competition. The advancement in
the technology has helped the banks to reduce the workload. There are so many activities, which are
taken over by machines. 9mployees are no more loaded with paper work.
Dith the advancement of technology and the birth of competition, banks are in the race of becoming
the best in the country. Dith an eye upon customer satisfaction policy they are providing best of the
best services with the minimum ha<ards.
New Trends In Banks
Banks like ABN AMCI introduced banking with a coffee. It made a tie'up with one of the best
coffee bar in the country, Barista and remained open till late evening for customers with a setup of a
coffee bar in the premises.
;ew banks have introduced world ATM card to make travelers across the globe more safe and
secure. Dhat else. Internet and 0hone Banking is the call of the day for banks.
1ro/cts a" services
.0>IN9 BANEIN6
Banking now a days is a phone call away.
0ick up the phone to access a host of Bank services, day or night. Fou can pay bills and transfer
funds and buy and sell open'end mutual funds.
+.INJIN9 BANEIN6
Inline banking 4or Internet banking5 is a term used for performing transactions, payments etc. over
the Internet through a bank, credit union or building society8s secure website. This allows customers
to do their banking outside of bank hours and from anywhere where Internet access is available. In
most cases a web browser such as Internet 9%plorer or Mo<illa ;irefo% is utili<ed and any normal
Internet connection is suitable. No special software or hardware is usually needed.
2eat/res
Inline banking usually offers such features as)
Bank statements, with the possibility to import data in a personal finance program such
as Kuicken or Microsoft Money
9lectronic bill payment
;unds transfer between a customer8s own checking and savings accounts, or to another
customer8s account
Investment purchase or sale
Joan applications and transactions, such as repayments
New Trends In Banks
Account aggregation to allow the customers to monitor all of their accounts in one place
whether they are with their main bank or with other institutions.
There are a growing number of banks that operate e%clusively online. Because these online banks
have low costs compared to traditional banks they can offer high interest rates.
Sec/rity
0rotection through single password authentication, as is the case in most secure Internet shopping
sites, is not considered secure enough for personal online banking applications in some countries.
Inline banking user interfaces are secure sites 4generally employing the https protocol5 and traffic
of all information ' including the password ' is encrypted, making it ne%t to impossible for a third
party to obtain or modify information after it is sent. >owever, encryption alone does not rule out
the possibility of hackers gaining access to vulnerable home 0&s and intercepting the password as it
is typed in 4key logging5. There is also the danger of password cracking and physical theft of
passwords written down by careless users.
Many online banking services therefore impose a second layer of security. 2trategies vary, but a
common method is the use of transaction numbers, or TANs, which are essentially single use
passwords. Another strategy is the use of two passwords, only random parts of which are entered at
the start of every online banking session. This is however slightly less secure than the TAN
alternative and more inconvenient for the user. A third option, used in many 9uropean countries and
currently being trailed in the ?E is providing customers with security token devices capable of
generating single use passwords uni:ue to the customer8s token 4this is called two'factor
authentication or +;A5. Another option is using digital certificates, which digitally sign or
authenticate the transactions, by linking them to the physical device 4e.g. computer, mobile phone,
etc5. Dhile most online banking in the ?nited 2tates still uses single password protection, the ;BI&
has issued regulations re:uiring that banks implement more secure authentication mechanisms by
the end of the year +##,.
Banks in many 9uropean countries 4including the 2candinavian countries, The Netherlands, Austria
and Belgium5 are offering online banking for e'commerce payments directly from customer to
merchants.
New Trends In Banks
2ra/
2ome customers avoid online banking, as they perceive it as being too vulnerable to fraud. The
security measures employed by most banks are never ##L safe, but in practice the number of
fraud victims due to online banking is very small. Indeed, conventional banking practices may be
more prone to abuse by fraudsters than online banking. &redit card fraud, signature forgery and
identity theft are far more widespread 7offline7 crimes than malicious hacking. Bank transactions
are generally traceable and criminal penalties for bank fraud are high. Inline banking can be more
insecure if users are careless, gullible or computer illiterate.
/.ATM



New Trends In Banks
An automated teller machine or automatic teller machine 4ATM5 4also called cash machine,
cashpoint, ATM 2crip to &ash machine, 7hole in the wall7, 7bank machine7 or 7ABM7, 7autoteller7
or guichet5 is an electronic computeri<ed telecommunications device that allows a bank8s customers
to directly use a secure method of communication to access their bank accounts, order or make cash
withdrawals and check their account balances without the need for a human bank teller 4or cashier
in the ?E5. 2ome ATMs allow withdrawals funded by clerical staff in retail merchant locations. The
clerical staff are not considered bank tellers. Many ATMs also allow people to deposit cash or
che:ues, transfer money between their bank accounts, top up their mobile phones8 pre'paid accounts
or even buy postage stamps.
The ATM industry is an evolving one which has seen radical and business'changing events occur
fre:uently in its first three decades. >ere8s our attempt to look into the crystal ball of ATMs of the
future, with the help of some of the most forward'thinking minds involved in ATMs.
..&redit cards
A creit car system is a type of retail transaction settlement and credit system, named after the
small plastic card issued to users of the system. A credit card is different from a debit card in which,
during every transaction, the money from the users8s account is removed. But in case of credit card,
issuer lends money to the consumer 4or the user5. It is also different from a charge card 4though this
name is sometimes used by the public to describe credit cards5, that re:uire the balance to be paid in
full each month. In contrast, a credit card allows the consumer to 8revolve8 their balance, at the cost
of having interest charged.
-.Bebit cards
A e!it car is a card which physically resembles a credit card, and, like a credit card, is used as an
alternative to cash when making purchases. >owever, when purchases are made with a debit card,
the funds are withdrawn directly from the purchaser8s currentGchecking or savings account at a bank
or credit union.
,. &he:ue &ards
New Trends In Banks
It is a card given to the customer by the bank that he must show when writes a che:ue which
promises that a bank will pay out the money written on the che:ue. ?nder Hche:ue cards Hsystem,
the card holder is given a card and a che:ue book. >e has to use the che:ues, while purchases are
made and the trader gets guaranteed payment. The customer does not get free credit, he has to keep
sufficient balance in his account or the bank will provide overdraft upto a specified limit, of course
on interest payment basis.
1.&harge &ards
A small usually plastic provided by an organi<ation with which one may buy goods from
various shops, etc. The full amount owed must then be paid on demand. in credit cards , the card
holders get credit or loan for payment of periodical bills when sufficient balance is not available
in their accounts . In a charge card such credit facility is not available .the periodical bill amount is
paid off by charging it to customers$ account. A fee is also payable by the card holder to the card
issuing institution.
".2mart &ards
Dith the use of credit cards, we may avail of credit facility on our purchase of goods or services
from approved sales outlets. A smart card enables the cardholder to perform various other banking
functions apart from credit purchases. ;or an e%ample, with, smart cards, we can draw cash from
ATMs3 we can verify entries in our accounts, etc. This is possible because the card has an integrated
circuit with microprocessor chip embedded in the card for identification purposes. The card can also
perform calculations and maintain records. The credit card customers are typically e%tended an
unsecured credit for at least /# days. Beyond this period, the bank charges interest on outstanding
bills. >owever, some cardholders may prefer to pay off their dues before the free credit period.
2uch cardholders are called convenience users.
!.BIJJ 0AFM9NT2
Save ti0e a" 0o"ey -it, pay0e"t services offere !y !a"#s
New Trends In Banks
It8s easy to pay your bills with their help. 2ome banks have agreements with over ,## companies for
payment services. 0ayments can be made easily and conveniently over the internet, on the phone, at
any branch or by using an ATM.
3,at ca" yo/ pay t,ro/$, a Ba"#4
.Bills ' access nearly ,## companies with their services.

+.?tilities ' an easy way to manage household e%penses.

/.Income Ta% ' pay income ta% through a Bank8s ATM network.
5o- o yo/ pay4
Invoices from more than ## companies can be paid by internet banking. 0ayments can also be
scheduled for future dates.

At the branch ' bills can be paid at the branch counter service or you can take advantage of the
convenient 9%press Beposit Bo% service kept by some banks.

Iver the phone ' =ust call the 0hone Banking &enter.

ATM bill payment ' all you need to do is select 7other services7 on the machines and have your bills
handy.
#.INM92TM9NT2
M/t/al f/"s
If you want attractive returns and are prepared to take a higher risk ' one alternative is to invest in
mutual funds. The banks give you access to the funds +. hours a day with ATMs and 0hone service
and when you choose to sell ' you8ll get your money the ne%t day.
New Trends In Banks
Mutual funds can invest in many different kinds of securities. The most common are cash, stock,
and bonds, but there are hundreds of sub'categories. 2tock funds, for instance, can invest primarily
in the shares of a particular industry, such as technology or utilities. These are known as sector
funds. Bond funds can vary according to risk 4high yield or =unk bonds, investment'grade corporate
bonds5, type of issuers 4government agencies, corporations, or municipalities5, or maturity of the
bonds 4short or long term5. Both stock and bond funds can invest in primarily ?2 securities
4domestic funds5, both ?2 and foreign securities 4global funds5, or primarily foreign securities
4international funds5.
Most mutual funds8 investment portfolios are continually ad=usted under the supervision of a
professional manager, who forecasts the future performance of investments appropriate for the fund
and chooses the ones which he or she believes will most closely match the fund8s stated investment
ob=ective. A mutual fund is administered through a parent management company, which may hire or
fire fund managers.
Mutual funds are sub=ect to a special set of regulatory, accounting, and ta% rules. ?nlike most other
types of business entities, they are not ta%ed on their income as long as they distribute substantially
all of it to their shareholders. Also, the type of income they earn is often unchanged as it passes
through to the shareholders. Mutual fund distributions of ta%'free municipal bond income are also
ta%'free to the shareholder. Ta%able distributions can either be ordinary income or capital gains,
depending on how the fund earned it.
I"vesti"$ i" Bo"s
6overnment bonds and &orporate debentures provide a regular and reliable source of income and
it8s easy to invest through Banks. Fou can buy and sell government bonds or corporate debentures
through branches.
A government bond is a bond issued by a national government denominated in the country8s own
currency. Bonds issued by national governments in foreign currencies are normally referred to as
sovereign bonds. 6overnment bonds are usually referred to as risk'free bonds, because the
government can raise ta%es or simply print more money to redeem the bond at maturity.
A corporate debenture is a long'term debt instrument used by governments to obtain funds.
New Trends In Banks
.?NB9CDCIT9C
U"er-riti"$ refers to the process that a large financial service provider 4bank, insurer, investment
house5 uses to assess the process of providing access to their product like providing e:uity capital,
insurance or credit to a customer.
In banking, underwriting is the detailed credit analysis preceding the granting
of a loan, based on credit information furnished by the borrower, such as
employment history, salary, and financial statements; publicly available
information, such as the borrower's credit history, which is detailed in a credit
report; and the lender's evaluation of the borrower's credit needs and ability to
pay. Underwriting can also refer to the purchase of corporate bonds,
commercial paper, Government securities, municipal general obligation bonds
by a commercial bank or dealer bank for its own account, or for resale to
investors. Bank underwriting of corporate securities is carried out through
separate holding company affiliates, called securities affiliates, or ection !"
affiliates.
Guarantee the sale of stock and bond issues, trade for their own accounts,
make markets, and advise corporations on capital markets activities such as
mergers and ac#uisitions.
$!.%&'(I)I*G +,%I-,. -' /I&0
0erchant banks were traditionally banks which engaged in trade financing.
-he modern definition, however, refers to banks which provide capital to firms
in the form of shares rather than loans. Unlike (enture capital firms, they tend
not to invest in new companies.
$1.B,*+,U&,*+2
New Trends In Banks
Bancassurance is the term used to describe the sale of insurance products
in a bank. -he word is a combination of 3ban#ue or bank3 and 3assurance3
signifying that both banking and insurance is provided by the same corporate
entity. -he usage of the word picked up as banks and insurance companies
merged and banks sought to provide insurance, especially in markets that
have been liberalised recently. It is a controversial idea, and many feel it
gives banks too great a control over the financial industry.
Bancassurance your Trusted Service- insurance provided
by banks through their tie ups with insurance companies.
Bancassurance is the term used to describe the sale of insurance products
in a bank. -he word is a combination of 3ban#ue or bank3 and 3assurance3
signifying that both banking and insurance is provided by the same corporate
entity. -he usage of the word picked up as banks and insurance companies
merged and banks sought to provide insurance, especially in markets that
have been liberalised recently. It is a controversial idea, and many feel it
gives banks too great a control over the financial industry.
Banks gives you peace of mind with Bancassurance. &eceive coverage and
save money at the same time.
4ou can choose the right option which benefits you the most.
New Trends In Banks
Life Insurance o!icies
-hey are life insurance policies which give your family a financial stability.
-hey provide both protection from insurance policies and great savings plan
at the same time.
.ife insurance policies play a ma5or role for investments.
$6.+urrency 27change ervices
Great rates, great services
, customer can now buy or sell notes, travelers8 che#ues and drafts in all
ma5or currencies at selected branches. +hanging currency is fast and easy
using the currency booths and currency e7change machines.
-he banks today have competitive rates with efficient service.
$9.'nline Government -a7 %ayment
,n online government ta7 payment and filing service is available seven
days a week, !6 hours a day, using a financial institution's Internet site. It
enables participating financial institution customers to electronically submit
&- return cards and payments via the Internet. -his service is currently
offered by many financial institutions to customers who have an account
with them.
Benefits of 'nline -a7 %ayments
+onvenience and &eliability : available !6 hours;day and < days;week.
,void late payment of ta7es by post:dating your payments.
New Trends In Banks
.ess paperwork : no che#ues or remittance forms re#uired.
$=.-rust ervices
, legal entity that can hold and manage assets for one or more
beneficiaries over time.
, bank can act as an agent for the trustee to invest funds according to
the directions of the trustee.
, bank can handle employee benefit programs, personal trusts and
estates, and corporate trusts. 2mployee benefit programs include profit
sharing plans, defined benefit plans, and defined contribution plans.
$<.I*-2&*,-I'*,. B,*>I*G
Indian banks have e7tended their activities beyond the national boundaries.
-he e7tension may take place in the form of borrowings as well as lending
and it may take place through official or private or commercial channel. In the
process of internationali?ation, the domestic financial institutions participate in
foreign financial markets and the foreign institutions participate in domestic
market to a significant e7tent. In other words, the domestic and foreign
financial markets get integrated and interlinked and the supply and demand
curves of funds assume a different character.
In India ,foreign e7change dealings of banks are = to < times, sometimes, 9"
times, their merchant base. )ay to day foreign e7change transaction in India
are handled by scheduled commercial banks who are authori?ed and
licensed dealers in foreign e7change.
New Trends In Banks
International lending
yndicated loans
.arge loans that enable borrowers to obtain large amounts of funds
and lenders can diversify their credit risk. .ead bank can earn fee income for
management services.
.etters of credit
Import letters of credit are issued by a bank in favor of a firm in most
cases. ,n e7port letter of credit is issued by a foreign bank to a firm in the
U..
.etters of credit
-he letter of credit is a document from a bank that says it will pay the e7porter
when the conditions in the letter are met.
In effect, the bank8s credit is substituted for the importer.
-he issuing bank pays the seller through the advising @payingA bank.
-he importer pays the issuing bank a fee for its services.
/oreign e7change markets
Interbank market of money center banks and ma5or foreign banks.
/oreign e7change brokers facilitate currency trading.
+redit risk associated with the counterparty @bank or brokerA failing to
meet its obligations.
Changes in normal sevices
New Trends In Banks
$.'%2*I*G ,++'U*-
, savings, current or fi7ed account now opens up a world of new products
and services : giving the customers access to your funds !6 hours a day, <
days a week.
Bith a savings or current account in place you can choose a ,-0 or )ebit
+ard for everyday access to your funds.
!..',*
*o matter what you need, there is a loan or a line of credit to give you the
borrowing power you want.
Home Loans?

4ou do not need to worry about the huge investments needed to purchase a
new home.
Personal Loans?
-oday banks also give personal loans and you can use this to renew your
furniture, finance an education or buy a new car.
Mortgage Work?
New Trends In Banks
4ou can be an informed borrower and find out how your mortgage works.
Bhat are the benefits and what are the interest rates.
1.B&,*+C2
4ou don8t have to travel far to en5oy a Bank8s fast and efficient service. Bith
the most e7tensive branch networks, officers are always close by to offer you
banking products and services that match your needs.
-he branches of a bank are connected to their computer mainframe via our
state:of:the:art electronic network. -his means a customer gets consistent
service with fast and efficient transactions at any branch.
+ertainly, it is true that, in general, customers use bank branches less and
less. 0any customers visit their bank only once a month or, even much less,
while some hardly bother going into the branch at all. 4et, while the demand
for branches is certainly reducing all the time, this does not mean that branch
banking is necessarily fated to disappear entirely, any more than the
increasing proliferation of mobile telephones mean that landline telephone will
disappear completely. It is possible though not certain that, 5ust as there will
always be people who need to use telephone @apart from anything else,
people may have lost or mislaid their mobile telephones or may have left
them at homeA, there will always be people who need to visit their branch.
/urthermore, branches remain comparatively popular to organi?ations with
corporate accounts @including small businessesA, mainly because businesses
like to be able to discuss things in person with a banker in a branch. ,lso,
New Trends In Banks
some older people @including some older, wealthier peopleA like to be able to
Dpop in8 to their branch. -here is a need for some good research about why
this isE if it is simply that older people are less adept with new style technology
than younger ones, then, of course, in time, by a natural process, the need for
branches will start to erode. Cowever, if, as may well be the case, older
people inherently feel more comfortable with being able to do their banking at
a physical branch, this may limit the e7tent to which banks can afford to get
rid of branches entirely, especially branches that cater to wealthy customers.

A NEW SECURITY DEVICE
ome banks have started with a new security device. -his device brings in
confidence in a customers mind while using internet banking.
Cow does the ecurity )evice workF -o log on to your account on Internet
Banking, you need to enter your e7isting username and password as usual,
followed by the uni#ue security code generated by the ecurity )evice.
-he ecurity )evice provides you an enhanced level of security as access to
your Internet Banking account is now based on a !:step authentication
processE
New Trends In Banks
ince the ecurity )evice is in your possession and the username and
password is known only to you, only you can access your account online.
imple to use and easy to carry, the ecurity )evice ensures you can access
your financial information online, in a completely secure environment.
The Modern Banking Syste
!Where does oney coe "ro#$
3If the debt which the banking companies owe be a blessing to anybody, it is
to themselves alone, who are reali?ing a solid interest of eight or ten per cent
on it. ,s to the public, these companies have banished all our gold and silver
medium, which, before their institution, we had without interest, which never
could have perished in our hands, and would have been our salvation now in
the hour of war; instead of which they have given us two hundred million of
froth and bubble, on which we are to pay them heavy interest, until it shall
vanish into air... Be are warranted, then, in affirming that this parody on the
principle of 'a public debt being a public blessing,' and its mutation into the
blessing of private instead of public debts, is as ridiculous as the original
principle itself. In both cases, the truth is, that capital may be produced by
industry, and accumulated by economy; but 5ugglers only will propose to
create it by legerdemain tricks with paper.3
New Trends In Banks
Bank Systes % Techno&ogy
September 20, 2004- an article
-he nine:year history of Beb:based online banking in the U.. has witnessed
a number of innovations, from Beb:based check imaging to inter:/I transfers
and beyond. But a number of these innovations first arrived in Beb banking
earlier than most reali?e. , gap persists between the introduction of Beb
banking features at one bank and the widespread awareness and adoption
among all banks. -his gap points to the broader market and consumer trends.
Inter:/I transfers :: the ability for a customer to transfer money to an account
that the customer holds at another institution :: have been a hot topic at large
banks for over a year. But inter:/I transfers have been a staple of many
community banking offerings for more than eight years. -he underlying
technology is used routinely in offline transactions, so it is not surprising that
inter:/I transfers appeared so early in the development of Beb banking. But
most community and regional banks still don:t offer the feature. 0oreover,
there is a gap of at least seven years between its first appearance and the
,ugust !""1 launch of inter:/I transfers at +itibank 'nline :: its first
appearance in a top $" retail bank:s consumer offering. Bhat e7plains this
slow rolloutF
'ne hindrance was the argument offered by a number of traditional banks
that by launching inter:/I transfers, the bank would lose funds, as customers
New Trends In Banks
will move money to other institutions that pay higher interest. -his argument,
dubious at first, has over time become essentially moot. 'ver the last several
years, online brokers and Internet:centric banks such as 2G-rade Bank
launched inter:/I transfers. -hese are institutions whose customers faced the
greatest challenges in depositing money and institutions that are offering
seductive returns on deposits and investments. -he customer who wants to
transfer money to an account at one of these institutions has, by construction,
access to inter:/I transfers at these institutions. -he bank isn8t stopping the
flow of funds by not offering the service itself.
,nother gap persisted between the launch of Beb:based check imaging for
consumers at some Internet:centric and community banks and the wider
adoption of this service, especially among large banks. Beb:based check
imaging for retail customers first arrived in $HH9. But, when the legacy
Bachovia bank, once the $9th largest retail bank, launched check imaging in
!""", it was the largest retail bank at that point to launch check imaging.
*ow, check imaging is the rule rather than the e7ception. ,ll medium:si?e and
large banks that are currently the e7ception now are launching check imaging
themselves.
, number of forces combined to take check imaging from a feature confined
for years to Internet:centric banks and select community banks to a necessity
for large banks. /irst, digital check image capture is re#uired for Beb:based
check imaging to be feasible, but many banks did not capture digital images
when Beb banking first rolled out. econd, the proportion of customers using
Beb banking was small enough at a number of banks that the benefits were
not worth the cost of systems re:engineering needed to bring images to the
Beb.
Bith the natural progression of systems and the growth in the number of
online bankers, check imaging became a popular initiative. -he advent of
+heck !$ legislation encouraged these developments, but before the law was
New Trends In Banks
even enacted, let alone in effect, more than half of the top $" banks offered
consumers online check imaging.
-he rise in !""" of account aggregation and its fall in later years, and the
failure of wireless banking to catch on, confirmed a truth of Beb bankingE
-here is little to no first mover advantage in online banking, even for the
largest banks. Instead, it is often useful to wait for another bank to prove out a
speculative idea, such as the notion that customers will adopt wireless
banking when they have yet to adopt other wireless services.
But the debunking of the first:mover myth would be the wrong lesson to learn
from the slow rollout of inter:/I transfers and check imaging. Banks that
offered check imaging early on received uniformly strong, positive feedback
from customers on the feature. Bith inter:/I transfers, the benefits to Internet:
centric banks such as 2G-rade Bank is clear, but even community banks that
rolled out inter:/I transfers tended to stick with it in the early years, unlike
wireless, aggregation, news tickers and third:party brokerage partnerships.
4et, other banks were very slow to adopt either service.
&ather, the lesson is that the different technologies, customer bases and
business goals of two banks can result in an innovation that makes sense for
one bank long before it makes sense for another bank. ,s your banks
systems, customers and goals change, old ideas make new sense. -he ne7t
enhancement you should consider for your Beb banking offering may not be
the one that all the other banks are considering right now, but an earlier
innovation that you should now reconsider.
Top ten banking groups in the world ranked by assets
'igures in U(S( do&&ars) and as at end*+,,-
. UBS . /)011 2i&&ion
+. Citigrou3 . /)-4- 2i&&ion
New Trends In Banks
/. Mi5uho 'inancia& 6rou3 . /)+78 2i&&ion
.. 9SBC 9o&dings . /)+:: 2i&&ion
-. Credit Agrico&e . /)+-1 2i&&ion
,. BN; ;ari2as . /)+1- 2i&&ion
1. <;Morgan Chase % Co( . /)/0: 2i&&ion
". Deutsche Bank . /)/-- 2i&&ion
!. Roya& Bank o" Scot&and . /)//7 2i&&ion
#. Bank o" Aerica . /)//, 2i&&ion
Top ten bank holding companies in the world ranked by profit
'igures in U(S( do&&ars) and as +,,1
. Citigrou3 . +/ 2i&&ion
+. Bank o" Aerica . /0 2i&&ion
/. 9SBC . /, 2i&&ion
.. Roya& Bank o" Scot&and . 4 2i&&ion
-. We&&s 'argo . : 2i&&ion
,. <; Morgan Chase . : 2i&&ion
1. UBS A6 . 8 2i&&ion
". Wacho=ia . 0 2i&&ion
!. Morgan Stan&ey . 0 2i&&ion
#. Merri&& >ynch . - 2i&&ion
Top ten banks in the world ranked by market capitalisation
'igures in U(S( do&&ars) and as at +8 <u&y +,,8
. Citigrou3 . +10 2i&&ion
+. Bank o" Aerica . +1, 2i&&ion
New Trends In Banks
/. 9SBC . +,, 2i&&ion
.. <;Morgan Chase . /0, 2i&&ion
-. Mitsu2ishi U'< . /-0 2i&&ion
,. We&&s 'argo . /+, 2i&&ion
1. UBS . //, 2i&&ion
". Roya& Bank o" Scot&and . /,, 2i&&ion
!. China Construction Bank . /,, 2i&&ion
#. Mi5uho . 70 2i&&ion
'uture o" 2anks
Banks will have to change dramatically from today's traditional institutions if
they want to survive in the networked world. -hey are currently introducing
Internet banking to try to keep customers, but the move to digital electronic
cash, held perhaps by the customer or an independent third party, will mean
that the cash can be #uite separate from the transaction agent. +ash does
not need to be stored in a bank if records in secured databases anywhere
can be digitally signed and authenticated. -he customer may hold it on his
own computer, or in a cyberspace vault elsewhere. Bith digital signatures
and high network security, advanced software will put the customer firmly in
control with access to any facility or service anywhere.
In fact, no one need hold cash at all, or even move it around. +ash is 5ust bits
today, already electronic records. In the future, it will be an increasingly
blurred entity, mi7ing credit, reputation, information, and simply promises into
e7changeable tokens. ,ny corporation or reputable individual may easily
capture the bank's role of keeping track of the credit. It is 5ust one service
among many that may leave the bank.
,s the world becomes increasingly networked, the customer could thus retain
complete control of the cash and its use, and could buy banking services on a
transaction:by:transaction basis.
New Trends In Banks
-he key is fle7ibility; none of these services need be fi7ed any more. Banks
will not compete on overall package, but on every aspect of service. Borse
still @for the banksA, some of their competitors will be 5ust freeware agents.
-he whole of the finance industry will fragment. -he banks that survive will
almost by definition be very adaptable. ervices will continue and be added
to, but not by the rigid structures of today. urviving banks should be able to
compete for a share of the future market as well as anyone. -hey certainly
have a head start in many of the re#uired skills, and have the advantage of
customer lethargy when it comes to changing to potentially better suppliers.
0any of their customers will still value tradition and will not wish to use the
better and cheaper facilities available on the network. o as always, it looks
like there will be a balance.
/irstly, with large numbers of customers moving to the network for their
banking services, banks must either cater for this market or become a niche
operator, perhaps speciali?ing in tradition, human service and even nostalgia.
0ost banks however will adapt well to network e7istence and will either be
entirely network based, or maintain a high street presence to complement
their network presence.
,ny serious discussion of the future of the retail banking industry eventually
raises a basic #uestionE will future customers still need banksF -he answer, it
turns out, depends on banks themselves. Bith technology and non:bank
businesses providing new options for safeguarding and managing their
finances, customers will continue to depend on banks only as long as banks
can provide service and value that cannot be found anywhere else.
New Trends In Banks
-here are already signs that customers are #uestioning the ability of banks to
look out for their financial well:being. ,s a result, banks have begun to rethink
what, where and how they serve an increasingly informed and demanding
customer base. ,t the same time, a confluence of industry developments,
including consolidation, regulation, industry speciali?ation, changing
workforce needs and new technologies are putting additional pressure on
banks8 operating models and raising #uestions about traditional strategies for
growth and value creation.
o, what will the future look likeF Cow will banks continue to grow revenues
and remain profitableF Bhat will it take to create and maintain advantage in
this highly competitive industryF -he future will re#uire superior efficiency and
operational e7cellence from all banks, while industry leadership will be
attained by those institutions most adept at harnessing product, service and
process innovation to anticipate and meet customer needs. Ultimately, banks
will have to focus on their core strengthsIthose activities in which they e7cel
Iand partner with best:in:class specialists for everything elseE achieving
more by doing less.
-hrough market research and interviews with industry e7ecutives, the IB0
Institute for Business (alue identified five ma5or industry trends that will
impact the retail banking industryE
+ustomers redefine the rules of the game
Universal banks and ultra:focused niche players thrive
+hanging workforce composition dictates new approaches
&egulatory burdens intensify
New Trends In Banks
-echnology improves ine7orably.
In this emerging environment, innovation will take many forms, including
advances in products and services, markets, operational processes,
customer intimacy, and new channel and diversification strategies. But
innovation will not be possible, nor will it have the desired impact, unless
banks create the re#uisite conditions for innovation development. -here are
four strategic imperatives banks must follow to cultivate innovation and
position themselves for sustainable growthE
/ocus on core strengths and partner for everything else
'ptimi?e the potential of each customer relationship
Carness the potential of the workforce through effective performance
management
&ecogni?e that technology will be a critical element of success.
By !"$9, the results of two prominent competitive forces will be clearly visibleE
a 3middle s#uee?e3 of traditional banks, and the emergence of far greater
numbers of industry specialists and non:bank banksIeach with distinct
competitive growth strategies.
Winning through specialization
,s competitive forces intensify, it is clear that banks will have to become far
more responsive to changing market conditions and emerging competitive
threats, not to mention a more empowered customer base. -hey will need to
take dramatic steps to redefine their business models to assemble the best
New Trends In Banks
capabilities in the market J becoming speciali?ed enterprises that focus on
critical, differentiating business components within the firm. *on:core tasks
should be distributed to e7ternal specialists that can provide functionality in
open, fle7ible ways. ,s the open networked economy allows banks to strike
alliances #uickly with nimble service providers, capital will be freed up for
ongoing reinvestment in strategic capabilities. Ultimately, banks can benefit
tremendously from the industry parado7E achieving more by doing less
ANNEXURE
5 Dhat makes your Bank different from the other banks in the marketN
+5 Dhat are the New trends followed by your BankN
/5 >ow does your Bank keep up to the latest technologyN Boes the bank have any
tie ups with software companiesN
.5 Dhat are the new products and services offered by your BankN
-5 >ow does the bank maintain customer relationshipN
,5 9%plain (your Mutual funds and the improvements made.
15 >ow does the trading website of your Bank operateN
"5 >ow is the branch managedN
!5 &an you give me some general information about this branchN
New Trends In Banks
RE1ORT ON BANKS VISITED
T5E COSMOS CO6O1ERATIVE BANK %TD
MA%AD 7EAST8 BRANC5
There are three types of banks)
&o'operative Bank
Nationali<ed Bank
0rivatised Bank
&osmos Bank is &o'operative Bank. It is ## year old 0une based branch.It is a Multi'state
2cheduled Bank. Ither banks are having centrali<ed solution that they have taken up. This bank
have taken up new trends such as 2M2 facility, Internet Banking, 0hone Banking, etc. This bank is
having a tie'ups with ;INA&J9 &IM0ANF 4IN;I2F25 as an software company. There is no
difficulty to any customer. There is customer friendly relationship with every customer.There is no
Mutual ;und. The branch is managed in two shifts. 2taff is managed on 2aturday and 2unday also.
Total ! staff are working. Bue to modern technology there are no e%tra staff re:uired.The Branches
are situated at Maharashtra, Andhra 0radesh, Baroda, 6u=arat4Ahemadabad5, Earnataka, Madhya
0radesh and Mumbai.The trading websites of this bank is www.cosmosbank.com
Interviewed by person Mr. Mayuresh
4Manager5
New Trends In Banks
AB5YUDAYA CO6O1ERATIVE BANK %TD
MA%AD 7EAST8 BRANC5
Abhyudaya Bank is dealing with small traders. All their branches are in rural areas and interior
areas. This bank is dealing with mass'banking. The new trends followed by this bank are ATM,
CT62 4Ceal Time 6ross 2ettlement5, ;ranking Machine 4since year5, N;T 4National ;und
Transfer5. The CT62 is above ,##,## and N;B is below ,##,###. This bank has started core
banking from Mumbai to 0une. This bank has tie up with IN6 Myasa for Insurance. They had
started a new product called Abhyudaya 6old 6rowth 2cheme for fi%ed deposit on -
th
*uly, +##1
and which was opened till month in which rate of interest was #.-L. They achieved a good
feedback from the customers and there was a tremendous response from the customers and they had
achieved lots of deposits. This bank has personali<ed customer relation. They are giving 0hone
banking service to any customer for any clearing che:ues. They inform the customer at the same
day for clearance. They attend immediately to customers call. Two managers Mr. *ayant 2hetty and
Mr.2.2 Cane manage the Branch. There are .# staff members. The branches are at Badar Branch
4D5, >ill Coad Branch 4Bandra5, Eher Nagar Branch 4Bandra5 and many more. The trading website
of bank to operate is www.abhyudayabank.com

Interviewed by person Mr.*ayant2hetty
42enior Manager5
New Trends In Banks
1UN9AB NATIONA% BANK
MA%AD 7EAST8 BRANC5
This Branch is empowered to render value added services)
Multicity che:ues.
&onnected with +,## net worked branches.
Bebit card which can be used over +-,### ATM.
Banking from your homeG office through Internet Banking.
;acility of Inter bank Transfer through CT62 online.
9arning interest on your current account.
Inline trading in stock market with Bepository services.
Beposit of your ta%es online.
Ibtaining life G non'life insurance cover.
This Bank is having tie up with IN;I2F2. There are +# staff members working. The trading
website to operate on this bank is www.pnb.co.in
Intervie
New Trends In Banks
BIB%IO*RA15Y
BIIE2
5 Banking theory and practice ( 2rivastava.0.E
>imalaya publishing house
+5 Banking products and services ( Indian trust of banking and finance
Ta%mann publication 0vt. Jtd.
/5 Modern Trends in 6lobal Banking Bevelopment ' Miatcheslav M.&.
.5 Banking and financial services in India ( 2obti, Cenu
-5 Cecent Trends In Indian Banking ( &. M. &houdary
D9B2IT92
5 www.google.com
+5 www.wikipedia.org
New Trends In Banks
DEC%ARATION
I, Miss ANEITA .C. 6AJA of 2hri &hinai &ollege of &ommerce and 9conomics
T.F.B.B.I. 42emester M5, hereby declare that I have completed this pro=ect on N9D
TC9NB2 IN BANE2 in the academic year +##1 ( +##". The information submitted
is true and original to the best of knowledge.
42ignature of student5
OOOOOOOOOOOOOOOOOOOO
New Trends In Banks
CERTI2ICATE
I, Miss MINITA 0IM0J9 hereby certify that Miss ANEITA .C. 6AJA
of T. F. B. B. I. 42emester M5 has completed the pro=ect on N9D TC9NB2 IN
BANE2 in the academic year +##, ( +##1. The information submitted is true and
original to the best of my knowledge.
42ignature of 42ignature of
0ro=ect 6uide5 0rincipal of college5
OOOOOOOOOOOOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOOOOOO
New Trends In Banks
ACKNO3%ED*EMENT
I sincerely thank the ?niversity for introducing a degree course in B.&om for
Banking P Insurance. This has given us an opening to gain knowledge on the insights
of the Banking P Insurance industry. A special thanks to our esteemed coordinator
0rofessor MINITA 0IM0J9 for being a guide in the right sense of the word and
motivating me during the pro=ect. I would also like to thank the librarian of 2hri
&hinai &ollege of &ommerce and 9conomics who helped me out in finding out
various books on the topic. It would be my pleasure to thank Mr.*ayant 2hetty, who is
the senior manager of Abhyudaya &o'op bank, Malad Branch, Mr. Mayuresh, who is
manager of &osmos Bank, Malad Branch and Miss.Nayna 2hah, who is &ustomer
&are Ifficer of 0un=ab National Bank, Malad Branch for giving me all the support.
This pro=ect was highly educational and a great learning e%perience.