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Retail Banking Reprt PDF
Retail Banking Reprt PDF
Dr. J. Sethuraman
Indian Overseas Bank,
Central Office, Chennai
For
Indian Institute of Banking and Finance, Mumbai
85
Contents
Chapter
Title
Page
No.
No.
1.
Acknowledgements .............................................................................................................................87
2.
3.
List of Abbreviations............................................................................................................................91
4.
Introduction .........................................................................................................................................93
5.
Global Scenario...................................................................................................................................94
6.
7.
Models...............................................................................................................................................104
8.
Strategies ..........................................................................................................................................112
9.
Performances....................................................................................................................................124
10.
Future................................................................................................................................................132
11.
12.
Bibliography ......................................................................................................................................141
86
Acknowledgements
I place on record, my sincere thanks to Indian Institute of Banking & Finance (IIBF), Mumbai and
Shri. R. Bhaskaran, Chief Executive Officer for selecting me to undertake this Research Study. I also thank
Dr. Tanushree Mazumdar, Deputy Director, IIBF for her support during the study.
I profusely thank my organization Indian Overseas Bank for permitting me to undertake this research.
I am also grateful to the General Managers and Retail Heads of the Public Sector Banks, Old Generation
Private Sector Banks, New Generation Private Sector Banks and Foreign Banks and their organizations for
participating in this study and for their meaningful contributions for the study.
87
88
89
90
List of Abbreviations
PSBs
OGPVSBs
NGPVSBs
FNBs
Foreign Banks
ATMs
ECS
EFT
SBU
HNI
PIN
KYC
ALPM
DSA
CRM
TPD
CASA
BCG
91
92
INTRODUCTION
a.
2.
3.
4.
Total
10
PSBs
OGPVSBs
1.
Large Size
2.
Medium Size
3.
Small Size
Total
NGPVSBs FNB
1
NGPVSBs
FNB
10
Sr. Geography
No.
PSBs
OGPVSBs
1.
East
2.
West
3.
South
Total
REVIEW OF LITERATURE
11
2
2
11
10
Section One
Models
Section Two
Strategies
Future
Articles
4.
Sample
Size
1.
b.
METHODOLOGY
4.
93
i.
Introduction
ii.
Global Scenario
iii.
Indian Scenario
iv.
Models
v.
Strategies
vi.
Performances
vii. Future
viii. Summary of Major Findings & Future Scenario
5.
Fierce
Banks
Prices
Banking
The average
Prices
The distribution
The pricing
The average
In a given
Although
The distribution of services among channels is another
Banks
A new
The banks
Among
The rise
Managing
Banks
Retail
All the
3.
The studies
100
Three
In the
With rising
As compared
In case
In addition
By 2010,
Current
In wealth
i.
2004
2005
2006
1.
Housing Loans
89449
134276
(50.5)
179165
(33.4)
2.
6256
3810
(-39.10)
4469
(17.3)
3.
6167
8405
(36.3)
12434
(47.9)
4.
Auto Loans
35043
61369
(75.1)
5.
87170
85077
(37.8)
118355
(39.1)
6.
189042
266611
(41.2)
375739
(40.9)
Despite
101
ii.
2.
2004
2005
2006
864271
1125056
(27.9)
1473723
(31.0)
23.7
25.5
21.9
2004
2005
58.4%
60.7%
Current
Deposits
Savings
Deposits
Term
Deposits
94452
317934
506622
107836
406335
569053
45.9
83.6
51.3
Household Sector
2004 - Percentage
2005 - Percentage
48.2
86.1
52.2
14.2
27.8
12.3
Contribution in
Incremental Deposits
8.2
53.8
38
ATMs
Numbers
10128
11019
21147
52.1%
28.9%
Year
Retail Electronic
(ECS, EFT)
Card Based
(Credit Card,
Debit Card)
Total
Volume
Value
Volume
Value
Volume
Value
(in
000s)
(in
Rs.
Crs)
(in
000s)
(in
Rs.
Crs)
(in
000s)
(in
Rs.
Crs)
2004-05
579
77702
3615
77267
4194
154969
2005-06
832
106559
10453
236994
11286
343593
103
MODELS
4.1
BUSINESS MODELS
4.1.1
In new
Among
In case
Public
104
Most of
In case
In foreign
4.1.4
(ii)
105
Most of
In almost
In OGPVSBs
In OGPVSBs
In NGPVSBs,
In NGPVSBs,
In foreign
4.2
PRODUCT MODELS
106
Almost
Not all
Almost
Other than
products / services.
In Foreign
In PSBs,
In OGPVSBs
In most
In NGPVSB,
In foreign
4.3
PROCESS MODELS
4.3.1
In OGPVSBs
In NGPVSBs,
108
In PSBs,
In one
NGPVSBs
In OGPVSBs
In NGPVSBs,
In almost
In one
Out of
In NGPVSB,
In foreign
109
4.3.4
In case
In NGPVSBs,
Foreign
In case
In case
Most of
4.4
PRICING MODELS
4.4.1
Though
In OGPVSBs
In Foreign
110
4.4.2
In addition
All PSBs
OGPVSBs
NGPVSBs
of foreign banks.
4.5
TECHNOLOGY MODELS
4.5.1
Most of
OGPVSBs
In NGPVSBs,
In foreign
4.4.3
In OGPVSBs,
In NGPVSBs,
4.5.2
Only one
In OGPVSBs,
In NGPVSBs,
In foreign
5.
STRATEGIES
5.1
PRODUCT STRATEGIES
5.1.1
Product
In NGPVSBs,
In foreign
5.2.2
Most of
Foreign
5.2.3
In NGPVSBs,
Foreign
In PSBs,
In OGPVSBs,
implemented.
the case of NGPVSBs, the strategies extend
beyond branches. Branches play only a limited role in
customer acquisition. DSAs play a very important role
in their strategies. A strategic mix of outsourced and in
house model is adopted. For sourcing customers for
some products, DSA strategy is used while for others,
banks' sales team is used. For example, customers for
liability products, card products are acquired through
DSAs, while customers for mortgage loan products
are acquired through banks' sales team. This is the
strategy followed by most of the private sector banks.
OGPVSBs
But in
In NGPVSBs,
113
Foreign
5.2.4
In the
Doorstep
In NGPVSBs,
In almost
Foreign
5.2.6
In NGPVSBs,
In foreign
5.2.5
In PSBs,
In PSBs,
In case
In case
In NGPVSBs,
Foreign
Foreign
5.2.7
5.2.8
115
In almost all PSBs, stand alone branch level data base
In NGPVSBs,
In foreign
In foreign
5.2.9
The promotional
In OGPVSBs
The situation
In almost
In OGPVSBs
followed.
Foreign
No separate
In PSBs,
The surprising
In OGPVSBs
In NGPVSBs,
of the NGPVSBs.
5.2.13 SERVICE QUALITY AUDIT FOR RETAIL
BANKING OPERATIONS
Confirmation of delivery of promise as against
prescriptions is ascertained only through the feed back
from the customers. Service Quality Audit help the banks
to take stock of the delivery promises and ascertain
their performance for initiating necessary service and
process re-engineering measures towards achieving
zero gap. Serious retail players should necessarily have
quality audit in place for retail banking efficacy. But for an
effective service quality audit, a policy should be in place.
Though
117
5.2.14 R E P U T A T I O N R I S K M E A S U R E M E N T
STRATEGIES FOR RETAIL BANKING
OPERATIONS
In foreign
None of
In OGPVSBs
In NGPVSBs,
5.2.15 R E P U T A T I O N R I S K M E A S U R E M E N T
FOLLOW UP STRATEGIES
The buck doesn't stop with just recognizing and
measuring reputation risk but to follow up effectively
with risk mitigation strategies. The starting point of
the mitigation stems from customers' feedback about
the service deficiencies and initiating suitable follow up
strategies. Follow up strategies include acknowledging
the individual customers and taking immediate corrective
responses. Another way is to respond to general and
specific gaps and initiate responses for specific business
lines. The third way is not to just respond but to adopt
a process re-engineering on areas that have become
prone to reputation risk.
As there
In OGPVSBs
prevailing.
In foreign
In OGPVSBs
In NGPVSBs,
Almost
In OGPVSBs,
In NGPVSBs,
In case
In case
119
In NGPVSBs,
surprisingly, no quantification is
reported even though it is stated that there is
improvement in business. The exact level of
improvement in business is either not measured
or not made available. If there is no structured
attempt to do an impact analysis, then it will give rise
to a situation where the ambassador is appointed
to give a general fillip to the brand and not focused
on targeted business improvements.
In most
In foreign
In today's
In OGPVSBs,
In NGPVSBs,
Foreign
120
Almost
OGPVSBs
also have distribution tie ups for life, nonlife and insurance space.
NGPVSBs
Foreign
In OGPVSBs
In NGPVSBs,
Almost
NGPVSBs
Foreign
In foreign
In PSBs,
121
NGPVSBs
In OGPVSBs,
In NGPVSBs,
In foreign
Foreign
In almost
In OGPVSBs,
In NGPVSBs,
In case
Most of
In OGPVSBs,
122
In some
In OGPVSBs,
In NGPVSBs,
Most of
In some
In OGPVSBs,
In NGPVSBs,
In foreign
NGPVSBs
123
In most
Mid size
on an average.
No incentivisation
NGPVSBs
In NGPVSBs,
In foreign
banks.
6.1
LIABILITY PRODUCTS
6.1.1
CURRENT DEPOSITS
The percentage
Most of
In OGPVSBs,
In NGPVSBs,
In case
6. PERFORMANCES
6. CUSTOMER BASE
Customer base is the basis on which the retail
banking operations are centered. It definitely depends
on the size of the bank and the objective of the banks
will be always to systematically expand the customer
base so that the retail banking opportunities get
manifold. The advantage is that a retail banking
opportunity is available from every customer in the
customer universe of the bank.
average.
6.1.2
SAVINGS DEPOSITS
In PSBs,
124
In OGPVSBs,
TERM DEPOSITS
The percentage
In most
In OGPVSBs,
ASSET PRODUCTS
In OGPVSBs,
In NGPVSBs,
125
6.2.1
HOUSING LOANS
In most
In some
In one
In NGPVSBs,
6.2.3
Only a
In one
In NGPVSBs,
NGPVSBs
6.2.2
6.2.4
AUTO LOANS
In mid-sized
126
In one
In NGPVSBs,
6.2.5
In some
In PSBs,
In one
In OGPVSBs
In NGPVSBs,
6.3
6.3.1
Only a
127
NGPVSBs
6.3.2
Most of
The number
In NGPVSBs,
In PSBs,
In NGPVSBs
NGPVSBs
6.3.4
In some
IN NGPVSBs,
6.3.5
Mobile
128
In OGPVSBs,
In NGPVSBs,
6.3.6
NGPVSBs
route.
6.3.8
None of
In most
Though
In NGPVSBs,
NGPVSBs
Some PSBs
6.3.7
129
Foreign
Only a
In one
NGPVSBs
NGPVSBs
Among
Only very
NGPVSBs
Sale of
The premium
130
In OGPVSBs,
Insurance
Not relevant
Most of the PSBs are not in this space. Only two banks
The performance
In OGPVSBs,
Only some
In PSBs,
NGPVSBs
131
PSBs
Almost
FUTURE
But OGPVSBs
NGPVSBs
Most
Most of
NGPVSBs
OGPVSBs
NGPVSBs
132
Most of
Some PSBs
NGPVSBs
8.
8.1 MODELS
Business
NGPVSBs
All PSBs
OGPVSBs
SUMMARY OF FINDINGS
The implementation
NGPVSBs
In the
133
The approach
The business
In the
Product
In case
Process
The fundamental
Pricing
The background
8.2
STRATEGIES
Customer
Technology
135
The customer
The delivery
The promotional
Almost
Doorstep
No separate
None of
Almost
Customer
Co-branding
Third Party
136
The sales
Some
In most
Mutual
8.3
The percentage
PERFORMANCES
Customer
CASA
All banks
137
In the
In auto
Third party
The percentage
In debit
Proprietary
8.4
FUTURE
The future
Other remote
Another
The following
140
Bibliography
1.
REPORTS
Sr.
Topic
No.
1.
CapGemini Consulting
3.
CapGemini Consulting
4.
5.
6.
8.
9.
10.
12.
13.
Financial System
14.
and Technology
15.
2.
JOURNALS
Sr.
Topic
1.
2.
3.
No.
Banks 2005-06
4.
5.
6.
Banking Perspectives
9.
10.
11.
Future of Marketing
3.
ARTICLES
Sr.
Topic
Challenges
No.
1.
3.
4.
5.
6.
Ranjana Jagdish
142
Sr.
Topic
No.
9.
11.
12.
14.
15.
Sales Campaigns
Robert E. Grasing
17.
18.
Retail Banking
143
Parameters
PSB 1
PSB 2
PSB 3
PSB 4
PSB 5
PSB 6
15.5
15
16.5
17.5
10.5
29
15.61
20
23
20
13.4
18.92
3.1
3.1.a
25
25
50
50
N.A
60
3.1.b
3.5
10.5
N.A
10
3.2
3.2.a
25
15
50
50
N.A
40
3.2.b
N.A
3.3
3.3.a
50
37.5
50
50
N.A
25
3.3.b
N.A
Parameters
Life
Non - Life
No.
1.
Mutual
Total
Funds
Average Premium (in Rs.) per mobilisation
10000
2.
3.
4.
5.
6.
144
5000
10000
15
7.5
2.5
1500
375
250
15000000
3750000
2500000
2.125 Crs.
22.5 Crs
5.625 Crs
3.75 Crs
31.875 Crs.