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 buyers market
from a sellers 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

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

Industrys 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%
industry insight

Source: Cygnus

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
Efficient
Process

distribution channels

efficiency and ease of scalability

Superior

skills

marketing and sales

credit policy, procedures and

Source: Mckinsey

Challenges
Sustaining
NPA

Customer loyalty

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
Housing/Construction

Durables

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 !