Professional Documents
Culture Documents
INTRODUCTION
Before the establishment of banks, the financial activities were handled by money
lenders and individuals. At that time the interest rates were very high. Again there were
no security of public savings and no uniformity regarding loans. So as to overcome such
problems the organized banking sector was established, which was fully regulated by the
government. The organized banking sector works within the financial system to provide
loans, accept deposits and provide other services to their customers. The following
functions of the bank explain the need of the bank and its importance:
• To encourage public confidence in the working of the financial system, increase savings
speedily and efficiently.
• To set equal norms and conditions (i.e. rate of interest, period of lending etc) to all types
of customers.
RETAIL BANKING
Retail banking has immense opportunities in a growing economy like India. As the
growth story gets unfolded in india, retail banking is going to emerge a major driver.
Some of the key policy issues relevant to the retail banking sector are : financial inclusion
, responsible lending, and access to finance, long term savings, financial capability,
consumer protection, regulation and financial crime prevention.
ADVANTAGES
RESOURCE SIDE
o Retail deposits are stable and constitute core deposits.
o They are interest insensitive and less bargaining for additional interest.
o Effective customer relationship management with the retail customers built a strong
customer base.
o Retail banking increases the subsidiary business of the banks.
ASSETS SIDE
o Retail banking results in better yield and improved bottom line for a bank.
o Improves lifestyle and fulfils aspirations of the people through affordable credit.
o Diversified portfolio due to huge customer base enables bank to reduce their
dependence on few or single borrower
o Banks can earn good profits by providing non fund based or fee based services without
deploying their funds.
DISADVANTAGES
o Designing own and new financial products is very costly and time consuming for the
bank.
o Customers now-a-days prefer net banking to branch banking. The banks that are slow
in introducing technology-based products, are finding it difficult to retain the customers
who wish to opt for net banking.
o Customers are attracted towards other financial products like mutual funds etc.
o Though banks are investing heavily in technology, they are not able to exploit the same
to the full extent.
o Long term loans like housing loan due to its long repayment term in the absence of
proper follow-up, can become NPAs.
The Indian players are bullish on the retail business and this is not totally
unfounded. As the face of the Indian consumer is changing, that is reflected in a change
in the urban household income pattern, the direct fallout of such change is on the
consumption pattern and hence on the banking habits of Indians, which is now skewed
towards retail products.
Following changing consumer demographics have led to the need for expansion of retail
banking activities in India.
Retail banking has immense opportunities in a growing economy like India. As the
growth story gets unfolded in India, retail banking is going to emerge a major driver.
How does the world view us? I have already referred to the BRIC Report talking India as
an economic superpower. A. T. Kearney, a global management consulting firm, recently
identified India as the "second most attractive retail destination" of 30 emergent markets.
The rise of the Indian middle class is an important contributory factor in this regard.
The percentage of middle to high income Indian households is expected to continue
rising. The younger population not only wields increasing purchasing power, but as far as
acquiring personal debt is concerned, they are perhaps more comfortable than previous
generations. Improving consumer purchasing power, coupled with more liberal attitudes
toward personal debt, is contributing to India's retail banking segment.
The combination of the above factors promises substantial growth in the retail
sector, which at present is in the nascent stage. Due to bundling of services and delivery
channels, the areas of potential conflicts of interest tend to increase in universal banks
and financial conglomerates. Some of the key policy issues relevant to the retail banking
sector are: financial inclusion, responsible lending, access to finance, long-term savings,
financial capability, consumer protection, regulation and financial crime prevention.
CHAPTER: 2
REVIEW OF LITERATURE
A number of researches have been conducted on net banking and its adoption,
development and its perils. Due to shortage of time and resources, a review of all the past
researches done could not be mentioned in this research project. So, a snapshot of some
of the reviews have been presented.
Corrocher (2002) in his study examined the drivers of the adoption of the Internet
banking, in order to understand its role with respect to the traditional banking
activity and to offer a comprehensive picture of the diffusion of such a technology
within the sector. In doing so, it analyses the role of firm-specific and non firm-
specific (technology, market, environment) characteristics in influencing the
decision to adopt the new technological platforms to perform on-line banking
transactions within the retail segment of the financial sector. The main purpose of
this paper is to investigate the relationship between the Internet banking and the
traditional banking activity, in order to understand if these two systems of financial
services delivery are perceived as substitutes or complements by the banks.
Singh & Malhotra (2004) in their study found that the tremendous advances in
technology and the aggressive infusion of information technology had brought in a
paradigm shift in banking operations. The purpose of this paper is to help fill
significant gaps in knowledge about the Internet banking landscape in India. The
paper presents data, drawn from a survey of commercial banks websites, on the
number of commercial banks that offer Internet banking and on the products and
services they offer.
Nandan et.al (2008) in his paper discusses the concept of internet banking,
perception of internet bank customers, non-customers and issues of major concern
in internet banking. The state of internet banking in india has been explored using
various concepts like e-banking continuum, and gap analysis related to the various
services and the security features offered. In order to have a clear and focussed
insight about the perceptions of users (and non-users) about internet banking a
survey was conducted. The findings of the survey provide valuable insights into
concern for security, reasons for lower penetration, and likeliness of adoption,
which have been used to make useful recommendations.
Mishra & kiranmai (2009) in their study found that information technology is
considered as the key driver for the changes taking place around the world.
According to heikki, the transformation from the traditional banking to e-banking
has been a 'leap' change. The evolution of e-banking started from the use of
automatic teller machines (atms) and telephone banking (tele-banking), direct bill
payment, electronic fund transfer and the revolutionary online banking. The future
of electronic banking would be more interactive i.e., tv banking. Finland is the first
country in the world to have taken a lead in e-banking. In india, icici bank initiated
e-banking services during 1997 under the brand name 'infinity'. It has been
forecasted that among all categories, online banking is the future of electronic
financial transactions. The rise in e-commerce and internet in enhancing online
security transformation and sensitive information has been the core reason for the
penetration of online banking in everyday life. The shift towards the involvement
of the customers in the financial service with the help of technology, especially
internet, has helped in reducing costs of financial institutions.
CHAPTER: 4
OVERVIEW OF ICICI BANK
ICICI Bank is one of the Big Four banks of India, along with State Bank of India,
Punjab National Bank and Bank of Baroda. The bank has subsidiaries in the United
Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong
Kong, Sri Lanka, Qatar and Dubai International Finance Centre; and representative
offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia
and Indonesia. The company's UK subsidiary has also established branches in Belgium
and Germany.
HISTORY
ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994. The
parent company was formed in 1955 as a joint-venture of the World Bank, India's public-
sector banks and public-sector insurance companies to provide project financing to Indian
industry. The bank was initially known as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank.
The parent company was later merged with the bank. ICICI Bank launched internet
banking operations in 1998.
In 2000, ICICI Bank became the first Indian bank to list on the New York Stock
Exchange with its five million American depository shares issue generating a demand
book 13 times the offer size.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal
Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The
merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the
High Court of Gujarat at Ahmedabad in March 2002 and by the High Court of Judicature
at Mumbai and the Reserve Bank of India in April 2002.
In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and
branches in some locations due to rumours of adverse financial position of ICICI Bank.
The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank
to dispel the rumours.
PRODUCTS
1. DEPOSITS
ICICI Bank offers wide variety of Deposit Products to suit our requirements.
Coupled with convenience of networked branches/ ATMs and facility of E-channels like
Internet and Mobile Banking, ICICI Bank brings banking at your doorstep.
Savings Account:
ICICI Bank offers a power packed Savings Account with a host of convenient
features and banking channels to transact through.
Fixed Deposits:
Safety, Flexibility, Liquidity and Returns!!!! A combination of
unbeatable features of the Fixed Deposit from ICICI Bank.
Recurring Deposits:
Through ICICI Bank Recurring Deposit you can invest small amounts of
money every month that ends up with a large saving on maturity. So you enjoy twin
advantages- affordability and higher earnings.
Home Loans:
(a) Home Loan tenure upto 25 years
(b) Simplified Documentation
(c) Doorstep delivery of home loan papers
(d) Sanction approval without having selected a property.
(e) Free personal accident insurance (Terms & Conditions)
(f) Insurance options for your home loan at attractive premium
Personal Loans
(a) Key benefits of ICICI Bank Personal Loan:
(b) Loan upto 15 lakhs
(c) No security/guarantor required
(d) Faster Processing
Farm Equipment Loans:
(a) Comfortable repayment tenures from 1 year to 6 years
(b) Flexible repayment options in tandem with the farmer’s seasonal liquidity
(c) Financing farm equipments in over 381 locations soread across the country.
Business Installment Loans:
(a) Loans upto 25 lakhs
(b) No security/guarantor required
(c) Faster Processing
(d) Minimum Documentation
(e) Attractive Interest Rates
(f) 12-48 months repayment options
Farmer Finance:
Providing finance to the farmer for his various needs of inputs and consumption in the
form of crops loans, dairy loans and loans for allied activities to agriculture like irrigation
etc. For input needs and auto loans (two, three and four wheeler) and personal loans for
consumption needs. The customer can also avail of working capital term loan for setting
up a poultry project. Flexible repayment pattern and tenure to align to the cash flow of
the customers.
3. CARDS
Credit Card:
A credit card is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for them.
The issuer of the card creates a revolving account and grants a line of credit to the
consumer (or the user) from which the user can borrow money for payment to a merchant
or as a cash advance to the user.
A credit card is different from a charge card: a charge card requires the balance to be paid
in full each month. In contrast, credit cards allow the consumers a continuing balance of
debt, subject to interest being charged. A credit card also differs from a cash card, which
can be used like currency by the owner of the card. A credit card differs from a charge
card also in that a credit card typically involves a third-party entity that pays the seller
and is reimbursed by the buyer, whereas a charge card simply defers payment by the
buyer until a later date.
The credit card issuer would issued a credit card to a customer at the time or after
an account has been approved by the credit provider, which need not be the same entity
as the card issuer. The cardholders can then use it to make purchases at merchants
accepting that card. When a purchase is made, the cardholder agrees to pay the card
issuer. The cardholder indicates consent to pay by signing a receipt with a record of the
card details and indicating the amount to be paid or by entering a personal identification
number (PIN). Also, many merchants now accept verbal authorizations via telephone and
electronic authorization using the Internet, known as a card not present transaction
(CNP).
Electronic verification systems allow merchants to verify in a few seconds that the
card is valid and the cardholder has sufficient credit to cover the purchase, allowing the
verification to happen at time of purchase. The verification is performed using a credit
card payment terminal or point-of-sale (POS) system with a communications link to the
merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip
on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland,
and is implemented as an EMV card.
For card not present transactions where the card is not shown (e.g., e-commerce,
mail order, and telephone sales), merchants additionally verify that the customer is in
physical possession of the card and is the authorized user by asking for additional
information such as the security code printed on the back of the card, date of expiry, and
billing address.
Benefits to cardholder :
The main benefit to the cardholder is convenience. Compared to debit cards and
checks, a credit card allows small short-term loans to be quickly made to a cardholder
who need not calculate a balance remaining before every transaction, provided the total
charges do not exceed the maximum credit line for the card.
Many credit cards offer rewards and benefits packages, such as enhanced product
warranties at no cost, free loss/damage coverage on new purchases, various insurance
protections, for example, rental car insurance, common carrier accident protection, and
travel medical insurance. Credit cards can also offer reward points which may be
redeemed for cash, products, or airline tickets. Research has examined whether
competition among card networks may potentially make payment rewards too generous,
causing higher prices among merchants, thus actually impacting social welfare and its
distribution, a situation potentially warranting public policy interventions
Travel Card:
The Travel card is an inter-modal travel ticket for unlimited use on the London
Underground, London Over ground, Docklands Light Railway, Tram link, London Buses
and National Rail services in the Greater London area. Travel cards can be purchased for
a period of time varying from one day to a year, from Transport for London, National
Rail and their agents. Depending on where it is purchased, and the length of validity, a
Travel card is either printed on a paper ticket with a magnetic stripe or encoded onto a
reusable contactless electronic smart card, known as an Oyster card. The cost of a Travel
card is determined by the area it covers and, for this purpose, London is divided into a
number of fare zones. The Travel card season ticket for unlimited travel on London
Buses and the London Underground was launched on 22 May 1983 by London Transport.
One Day Travel cards and validity on other transport modes were added from 1984
onwards. The introduction of the Travel card caused an increase in patronage and reduced
the number of tickets that needed to be purchased by passengers.
4. INVESTMENTS
Along with Deposit products and Loan offerings, ICICI Bank assists you to
manage your finances by providing various investment options such as:
5. DEMAT SERVICES
ICICI Bank Demat Services boasts of an ever-growing customer base of over 7 lacs
account holders. In their continuous endeavor to offer best of the class services to our
customers we offer the following features:
6. MOBILE BANKING
With ICICI Bank, banking is no longer what it used to be. ICICI Bank offers Mobile
Banking facility to all its Bank, Credit Card and Demat customers. ICICI Bank Mobile
Banking enables you to bank while being on the move.
7. NRI SERVICES
ONLINE MONEY TRANSFER facility available to NRIs worldwide through
www.money2India.com at the click of a button!
Benefits:
FREE Money transfers into accounts with over 30 banks in India
Demand Drafts issued and payable at over 1250 locations in India
ONLINE Tracking of the status of your funds
SUPERIOR Exchange rates
OFFLINE MONEY TRANSFER facility is also available across geographies
through
Our local branches and in association with partner banks/ exchange houses.
PRICE
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 by IBA.
The pricing policy of a bank is considered important for raising the number of
customers’ vis-à-vis the accretion of deposits. Also the quality of service provided has
direct relationship with the fees charged. Thus while deciding the price mix customer
services rank the top position.
The banking organizations are required to frame two- fold strategies. First, the
strategy is concerned with interest and fee charged and the second strategy is related to
the interest paid. Since both the strategies throw a vice- versa impact, it is important that
banks attempt to establish a correlation between two. It is essential that both the buyers as
well as the sellers have feeling of winning..
PLACE
This component of marketing mix is related to the offering of services. The services
are sold through the branches.
The 2 important decision making areas are: making available the promised services to
the ultimate users and selecting a suitable place for bank branches.
(a) The selection of a suitable place for the establishment of a branch is significant
with the view point of making place accessible.
(b) The safety and security provisions a Convenient to both the parties, such as the
users and the bankers
PROMOTION
PROCESS
Flow of activities:
all the major activities of ICICI banks follow RBI guidelines. There has to be
adherence to certain rules and principles in the banking operations. The activities have
been segregated into various departments accordingly.
Standardization:
ICICI 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:
In ICICI 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.
PHYSICAL EVIDENCES
Physical evidence is the material part of a service. Strictly speaking there are no
physical attributes to a service, so a consumer tends to rely on material cues. There are
many examples of physical evidence, including some of the following:
Internet/web pages
Paperwork
Brochures
Furnishings
Business cards
The physical evidences also include signage, reports, punch lines, other tangibles,
employee’s dress code etc.
Signage: each and every bank has its logo by which a person can identify the company.
Thus such signages are significant for creating visualization and corporate identity.
Financial reports: The Company’s financial reports are issued to the customers to
emphasis or credibility.
Tangibles: bank gives pens, writing pads to the internal customers. Even the passbooks,
cheque books, etc reduce the inherent intangibility of services.
Punch lines: punch lines or the corporate statement depict the philosophy and attitude of
the bank. Banks have influential punch lines to attract the customers.
Employee’s dress code: ICICI bank follows a dress code for their internal customers.
This helps the customers to feel the ease and comfort.
PEOPLE
Retail banks are facing greater challenges than ever before in executing their
customer management strategies. Intensifying competition, proliferating customer contact
channels, escalating attacks on customer information, rising customer expectations and
capitalizing on new market opportunities are at the top of every bank executive’s agenda.
In looking for ways to drive growth, banks need to evaluate their customer management
strategy.
BENEFITS OF A CRM SOLUTION
Faced with these numerous and varied trends, retail banks are reshaping the way
they must interact with their customers. A fully integrated, enterprisewide CRM platform
ensures banks have the core capabilities to take full advantage of their customer
relationships and capitalize on these market dynamics, rather than losing out because of
them.
For example, a customer makes a large withdrawal from his or her account. This
may signal that the customer is switching funds to another bank. Or the customer may be
buying a house, a boat, or paying college tuition, in which case there are clear
opportunities to sell additional products or investments. The identification and treatment
of this customer should reflect his or her lifetime value. CRM-driven techniques will help
retain customers and can migrate mere “account holders” into loyal, long-term, profitable
customers.
IMPROVING DISTRIBUTION AND CHANNEL MANAGEMENT
To win profitable customers and build longterm relationships with them, banks need
to have the right insight, products and services for the right customer at the lowest
possible cost. From call centers to Web sites, every one of a bank’s multiple channels
must be scalable, flexible, low-cost and fully integrated with all the other channels. This
is the only way to consolidate customer information and provide consistent treatment
across the enterprise. Each of the bank’s channels must also be able to accommodate
change and adapt to future trends in the marketplace.
ICICI has transformed itself into a technology intensive financial services group in
the last decade. To achieve its long term goal of being in a position to practice One-to-
One marketing. ICICI has taken a series of initiatives. As 0part of the plans, it is
implementing various projects to establish world-class CEM practices which would
provide0 an integrated view of its customers to everyone in the organization. The paper
discusses some of the lessons learnt while implementing these projects.
INTRODUCTION
ICICI set up as a Development bank over four decades ago to provide products and
services for the corporate segment, diversified into retail segment of the financial markets
in the early 1990s. In the last decade it has transformed itself to a technology intensive
financial services group. The first such move came in the mid-nineties when ICICI raised
debt from the retail market. Since then, ICICI has been increasing its reach to this
segment in terms of resources mobilization, and by offering quality investor services
through ICICI Infotech services, its subsidiary. In 1994, it established ICICI Bank as a
commercial bank that is flexible, in addition to the bank, the retail initiative include
(a) Prudential ICICI AMC- a tie up with the prudential Group of UK for its foray into
the mutual funds business.
(b) ICICI Personal finance services (PFS) – to offer retail assets products like home
finance, automobile finance, durables finance ets.
(c) ICICI Capital services – to services retail liability products like bonds and
deposits.
ICICI has ambitious plans for its retail business initiatives. The retail strategy
revolves around intensive deployment of technology. Information technology will help
reduce cost of service, increase customer retention, help in cross-selling and up-selling
while improving process of efficiencies. Electronic channels including internet, ATMs,
call centers, contact centers, desktops, kiosks, mobiles and other hand held devices will
perform financial activities while ensuring that customer has multiple options for access
and transaction.
The group has adopted a ‘click and brick’ strategy to leverage the power of
electronic channels and physical presence to ensure rapid product delivery, fulfillment of
financial deals and documentation.
The CRM software applications will not only facilitate the coordination of multiple
business functions but also coordinate multiple channels of communication with the
customer-face to face, call center, ATM web, telephone, kiosks, bank , branch, sales
associates, etc. – so as to enable ICICI carry out cradle-to-grave customer management
more efficiently. I
CUSTOMER PEOPLE
STRATEGY INTELLIGENCE
PROCESS AUTOMATION
ORGANIZATIO
DATA
N
TECHNOLOGY
IMPLEMENTING CRM
The CRM Business Transformation Map below shows the various aspects of that
change. There are five inter-related areas. These include:
1. Business Focus
2. Organizational structure
3. Business Metrics
4. Marketing Focus
5. Technology
BUSINESS FOCUS
PRODUCT SALES CHANNEL MARKETING SERVICES CUSTOMER
ORGANISATIONAL STRUCTURE
BUSINESS METRICS
MARKETING FOCUS
MASS SALES MARKETING INTEGRATED SEGMENT CUSTOMER
ADVERTISING PROMOTION CAMPAIGNS MARKETING SPECIFIC REALTIONSHIP
TECHNOLOGY
TRANSACTIO DATA DATA DATA DATA CUSTOMER
N MAINTAINANCE ACCESS WAREHOUSE TOUCH POINT
PROCESSING
The key to building the CRM action plan was in understanding where the
organization stood relative to each of the five aspects of change. Interviews with key
individuals throughout the organization helped identify different initiatives that have been
launched, al focused on CRM. While all of these initiatives may have merit, failure to
address the total business transformation requirements can lead to very short - lived
success.
The next step in the planning process was a Gap Analysis. This analysis essentially
and specifically describes the gaps. In addition to the more obvious gaps, this analysis
helped identify the CRM organizational holes:
(A) Retail banking will remain the dominant source of revenue for banks
worldwide through 2015. In 2006, the retail banking business accounted for 1.22
trillion proud in revenues, Or about 57% of the global banking revenue pool of
2.15 trillion euro.
Fourteen banking groups earned retail revenues in excess of 10 billion pound in
2006, with five groups bringing in more than 25 billion euro each. Even for most
of the top ten banking titans, retail business is still a critical revenue source –
representing an average of 37 percent of total revenues.
By 2015, the share of global retail- banking revenues generated collectively in the
top five European Countries and in the united states- which are all mature markets-
will have shrunk by an estimated 5 Percent, with matching collective gains in
strongly growing markets in Asia-pacific and the middle east.
Vast numbers of “unbanked” consumers in emerging markets-what we call the
next billion will take up banking relationships over the next generation. If such
consumers in china, India and Brazil were to generate 50 percent of the revenues
currently provided by “banked”, low income customers in these countries, the
amount of total new revenues produced by 2015 in these markets could be above
20 billion euro-the bulk likely coming from china.
(B) Competition in the global retail banking industry will become increasingly
intense, drivers by the continuing deregulation and opening of international
markets, the opening regionalization and globalization of the industry, the
expansion of direct and online banking, and rising customer expectations.
The well known trend towards direct and online banking will change the
nature of industry significantly in terms of channel usage. The trend will
gain momentum as adoption rates across all age groups increase and as more
young people-who have raised using the internet-reach bankable age. The
dynamic will inevitably lead to a further decline in the importance of bank
branches for some sale activities, although branches will remain critical for
customer acquisition and advice-intensive products.
The transparency of the online world and the ability of sophisticated
customers to compare offers and price positions will push the pendulum of
power in the retail banking industry increasingly towards the customers,
thus further pressurizing the competitive landscape.
(C) The grip of margin pressure will continue to tighten. From 2001 to 2006, the
banks in our benchmarking survey showed average margin decline in their retail
segments of about 21 percents.
Many attackers’ poses highly cost efficient and scalable business models
that allow them to offer cheaper prices on a sustained basis. This fact along
with the ongoing shift towards online and direct banking will lead the
industry towards a new structural equilibrium at lower margin and cost
levels.
In some markets, attacking players have already taken sizable share from
incumbents that have reluctant to fight proactively on the price front. This
trend will gain momentum as more new competitors enter the fray.
Incumbents will either have to offer commodity products for certain
segments at competitive prices or accept loss of market share.
A key result of heavy price competition and its expansion into a wide range
of products is that revenue pools will grow at a lower rate in many major
markets over the next five years. This will make necessary for banks to
drive down their cost growth in order to keep cost-to-income ratios and
profitability.
(D) Tougher competition and tighter pressure on margins and costs woll
encourage increasing merger and acquisition (M&A) activity, especially in
mature markets with low growth rates.
Cross border mergers should be seen having two, three or more phases to
allow sufficient time for factors such as platform, scale and market
dominance to come into play and for all potential synergies to materialize.
(E) The winning business models of the future have been taking shape in recent
years and will continue to evolve. These models are exemplified by six general
types of retail banks: global titans and regional expansionists, domestic
champions, retail-oriented attackers, direct banks, specialists, and trading up
players.
The first five categories of players have clearly outperformed the pack or
showed the strongest improvements in recent years. They have an average
advantage in their cost-to-income ratio of 10 percentage points, an average
ROE advantage of 10 percentage points, and a revenue growth rate more
than twice that of most other banks. They also dare to invest in organic
growth and in acquisitions their top line growth allowing cost growth three
times as high as that of most other players .
Between 2001 to 2006, direct banks and retail oriented attackers showed
the sharpest revenue growth of the six groups, with a CAGR above 20
percent, and at the same time achieved significant improvements in cost-to-
income ratios. Nonetheless, despite direct banks strong influence on overall
industry margins and channel strategies, the largest share of direct and
online banking will remain with multi channel banks. All models will show
a stronger online profile going forward, and some interesting new
combinations may evolve as new players arrive on the scene.
(F) Over the next ten years, traditional incumbents will find themselves more
engaged than ever on Several fronts.
Incumbents will also need to make direct and online banking a stronger part
of their multi channel strategies and upgrade their skills in online customer
acquisition and loyalty management. Winners Will learn quickly from other
industries and will transfer recipes for success to retail banking.
Any serious discussion of the future of the retail banking industry eventually raises
a basic question: will future customers still need retail banks? The answer, it turns out,
depends on banks themselves. With technology and nonbank 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.
There are already signs that customers are questioning the ability of banks to look
out for their financial wellbeing. Only 36 percent of consumers believe what banks tell
them, according to a Forrester survey
1. A separate survey also indicates that over 60 percent of U.S. households conduct their
own research before buying financial services products.
2. As a result, banks have begun to rethink what, where and how they serve an
increasingly informed and demanding customer base.
Ultimately, to deliver on these imperatives, banks will have to focus on their core
strengths those activities in which they excel – and partner with best-in-class specialists
for everything else: achieving more by doing less. On the surface, the competitive
landscape of the retail banking industry in 2015 will not look much different than it does
today.
Mergers and acquisitions will likely have reduced the total number of banks,
especially mid-tier regional banks, and industry specialists and non-bank banks will play
a more prominent role. But most of today’s players, including universal banks,
community banks, industry specialist banks and non-bank banks, will still be vying to
differentiate themselves in a crowded marketplace. However, traditional approaches to
creating value through growth and efficiency will no longer be enough. Advantages
gained through acquisition, new market entry and reconfigured product offerings will be
fleeting at best, while partnering and outsourcing will make efficiency a basic
requirement for all.
Large players will generate higher aggregate profits by reaping the benefits of super
scale, while niche players will aggressively pursue the most desirable customers by
addressing their needs in distinct ways – those in the middle will get squeezed.
An older and increasingly mobile and diverse workforce will raise management
complexity and require flexible approaches to compensation.
Banks will need to realign skills and set the right performance metrics to motivate a
changing workforce to continuously pursue innovation.
Recognize that technology will be a critical element of success –
Retail banking in india has fast emerged as one of the major drivers of the overall
banking industry and has witnessed enormous growth in the recent past. The retail
banking Report encompasses extensive study & analysis of this rapidly growing
sector. It primarily covers analysis of the present status, current trends, major
issues & challenges in the growth of the retail banking sector.
The life of the banker, we should really write of the financial services provider has
become much more complex. Customers have now been segmented, the product
range has vastly expanded as well as the distribution channels. This figure goes
back to 1996. Today in 2008 one can really state that this is not the future of the
banking industry but the present state of affairs. For many consumers, the bank
management and the staff, the branch was literally and figuratively “the bank
”.This is changing at great pace as the economics of electronics distribution
systems, when compared with branch based systems, are compelling. There is an
obvious need, in the financial industry, to enhance exiting or construct new
electronic distribution systems while shrinking the branch environment.
BIBLOGRAPHY
BOOK:
Customer Relationship Management
Website :
www.icicibank.com
www.thebanker.com
www.shartermpapers.com
www.wikipedia.com
www.scribd.com
www.managementparadise.com