Group No. 8:
Vijay Jain (60)
Yamini Kalra (65)
Renu Pathak (68)
Shakti Tandon (70)
 Overview of Banking Industry
 Commerce Story
 Key Leanings from the case
 Product Differentiation
 Employee Training and Its Impact
 Brand Building Strategies
 Customer Satisfaction and Value
 Individual Assignments
 Retail banks offered commodity Products i.e.
Deposit and Loan Products
 Two important trends in the industry :
 1) Push to increase the “cross sell” of products
 2) Growing Revenues from fees customers paid for
certain transactions and functionality
 Customer Satisfaction with banking industry had
been quite low
 Customers selected their bank for variety of
reasons such as proximity of a local branch, large
ATM networks
OVERVIEW …contd.
 Front line employees in retail banks were
often selected for their ability to perform
repeated tasks, interact with customers and
their willingness to accept low wages
 Compliance with Processes and Product
attributes were paramount in the industry
Commerce Story
 Commerce Bank was very different from other
banks in the industry
 They compare themselves with a retailer more
than a traditional bank
 Their service delivery system is based on
guidelines and standards for their products,
branches and employees, and focused on
customer centric programs
 Services were based on personal contact, with
branches opening longer on working days and
modified hours on the weekend
 Product differentiation in service industry
 Importance of customer satisfaction and
 Employee training and its impact on service
 Brand building strategies in service industry
Product Differentiation
 Instead of several products they offered just a
few and replaced high interest rates with
extraordinary friendly service
 They also had a big branch network and
generated deposit growth rate on a store

Employee Training and Its
 Internal system of cultural training and incentives
 WOW!ing customers included awards,
commendations and compensation, as well as
intense training and education
 Mystery shopping, the WOW shops, was a
significant component of performance
 Leagues were organized whereby branches in
different regions might compete against each
other for the most impeccable service report
Brand Building Strategies
 Building every branch itself and didn’t go
through mergers and acquisitions because of
cultural differences and brand weakening
 High service quality standards
 Customers as fans
 Drive through window for faster service
 10- minute role
 Spent a lot of money on big promotional
activities and giveaways
 Wow terminology to measure service excellence
Customer Satisfaction and
 In 2001, cumulative deposit growth rate in the
united states was 5% while Commerce deposits
alone grew by almost 40% and households grew
by 20%
 Commerce model was to give the best of every
channel what customers used
 The big-bank sees a customer as a cost, not a
revenue generator
 3% - wanted the highest rate while 62% picked a
bank for service, convenience, etc.. Commerce
targeted this 62% while others focused on 3%
What Sets Commerce Apart
Mr. C
Dr. Wow
Can ≠ May
Kill the
IVRS  Person
Retired Part
Hot Dog Fire
Juggler on Fire
 How far we go ?
Banking Innovations Abroad
 Netting Clearing Houses

 Bundling of services  one stop shop for all financial needs

 ATMs

 Direct Debit  Pay Monthly Bills

 Global Banks

 Online Banking - anytime

 Cash withdrawal at Retail Counters

 Mobile Banking – Apps world – Anytime / Anywhere

Banking Innovations - India
 Adoption of Global Innovations

 Drop Boxes

 Utility Payments

 Door Step Services – Cash, Drafts, New Accounts, Cheque Books

 Welcome Kit - ICICI

 High Interest on SB accounts – Kotak Mahindra / Yes bank

 Gold Deposits

 Any ATM Withdrawals

 SMS Alerts
Futuristic Perspective
 What Business I am in?
 Deposits?
 Loans?
 Payments?
 Risk Management?
 Financial Intermediaries?
 Can someone else do this?
 Retail outlets?
 100% Virtual bank?
 Insurance?
 Why customers deposit?
 Interest?
 Safety?
 Convenience?
 What customers want?
 EMI  AMI (Adaptive % )?
 Spending Pattern analysis and
AI based Advice
 Inflation Linked Rates
 Technology Trends?
 Bit Coins ?
 Big data?
 Social Banking?

Co-Creation – Current Examples
 Branch network optimization (number and size
of branches), reviewing network architecture (i.e.
hub and spoke model)
 Basic multichannel integration, alignment of
channels and integrated governance processes
for real-time banking
 Proactive and reactive management
interaction based on customer needs
 Operational customer segmentation driven by
a needs based offering structure
 Sales force effectiveness powered by consistent
sales behaviors and tools
 Simple and clear communication with
 Performance management (new customer-
oriented metrics) and tailored compensation
Future Possibilities

Global Banking: Value Chain
Value Chain: Cyclic
Global Banking: Stakeholders
Global Banking: Coalitions
Coalitions Explained
Stake Holder Engagement?
 External vs Internal
 How much power
 Govt. vs Employee
 Supplier vs. Customer
 Allies or Opponent
 +ve Collaboration or –ve advertising
 Management Strategy
 Marketing
 Communications
 Media
Engaging with Stakeholders
 The long-term success of our bank depends on our ability to gain and
maintain the trust of our stakeholders.
 Banking business works on the basis of trust.
 One of the ways we inspire trust in our stakeholders is by knowing what they
expect from us and how their expectations are changing.
 We therefore regularly engage in a dialogue with clients, shareholders,
employees, regulators and NGOs, as well as other groups of stakeholders.
 We gain an understanding of their needs and interests through discussions
and by conducting surveys or participating in events, as well as through our
involvement in initiatives, forums and associations. Individual groups of
stakeholders have different – and sometimes conflicting – interests and
consequently have their own specific expectations of us as a bank.
 By exchanging our views with these stakeholders, we gain a more detailed
understanding of our responsibilities in our core business of banking, as well
as our responsibilities toward our employees, society and the environment.
At the same time, this dialogue enables us to identify potential issues at an
early stage, offer our perspective and help to develop solutions to current
challenges wherever possible.

Strategic & Regulatory
 Strategic challenges:
 Private banking industry professionals need to reinvent themselves in
order to reinforce themselves as a leading pole in private banking
 Retail bankers also have to face a growing competition from abroad
as well as from non-traditional institutions. Asset management and
investor services institutions need to prepare themselves for
significant changes in infrastructures, regulatory frameworks and
their competitive landscape.

 Industry regulatory challenges
 The constant evolution of local and international regulations is a
major driving force in the banking and securities industry.
 The likely introduction of Basel III standards, as an example, will have a
major impact on the way institutions run their business. There is likely
to be an increased focus on capital efficiency. Implementing all these
rules can be an issue, yet the real challenge is more about optimising
your regulatory investments than merely complying.

Operational Efficiency
 Industry operational efficiency challenges

 To appropriately address strategic and regulatory
challenges, impeccable execution is a must. Constantly
improving operational efficiency has to be high on the
agenda of bankers. Now more than ever, institutions have to
optimise their processes, control their cost structure, and
explore new operating models using all the tools now at their

 Analysing the opportunity to mutualise operations or IT
systems across entities or geographies, outsourcing non core
activities, improving risk management frameworks and
tools… these are some of the areas where financial
institutions can find the levers to reach excellence.