TOPIC: INNOVATION IN SERVICES PROVIDED BY BANKS IN RECENT TIMES

WHAT IS BANKING?
y TRADITIONAL DEFINITION - Banking can simply be

expressed as the business of keeping, lending, exchanging and issuing money. y Banking today is undergoing a radical transformation. y new products, new players, new channels

TRADITIONAL SERVICES PROVIDED

y ACCEPTING DEPOSITS y LENDING MONEY y CAPITAL RAISING(EQUITY, DEBT) y OVERDRAFT FACILITY y HOUSING FINANCE, MORTGAGE y DOMESTIC & INTERNATIONAL PAYMENTS

INNOVATION IN SERVICES
y E- BANKING y MOBILE BANKING y MICROFINANCE y BRANCH BANKING y ATM S y PLASTIC MONEY y INVESTMENT BANKING y CALL CENTER y MAIL BANKING, TELEPHONE BANKING, ETC

E-BANKING
y Involves delivery of banking products & services through internet y Offers services from minimal functionality ( level 1- access to deposit account data) to highly sophisticated services(level 4- investment, insurance and sale of additional products) y Only 50 banks offer internet banking services in India. y Internet sites offer only the basic services y Only 8% of these provide advanced facilities y Foreign & private banks are way ahead in terms of providing internet services.

ADVANTAGES & DISADVANTAGES

y Fast & convenient y Cost effective y 24 hour access y Personal attention to y Chances of forgery y Lengthy process of

customers y Profitable offers

starting an internet account y Difficult to solve problems & queries y Mismanagement of account due to 24 hour access

ATM
y ATM- AUTOMATED TELLER MACHINE y Computerized device that provides the clients of a

financial institution with access to financial transactions in public space without the need for a cashier, human clerk or bank teller. y customer is identified by inserting a plastic ATM card with a magnetic stripe. y Authentication is provided by the customer entering a personal identification number(PIN)

ADVANTAGES & DISADVANTAGES

y Access to bank A/C y Identity thieves y banks charge a fee for

whenever needed
y People can travel

withdrawals from ATMs that are not in their network.

anywhere without cash

PLASTIC MONEY
Plastic money is the alternative to the cash or

standard money Convenient to carry Plastic money includes: 1. credit cards, 2. debit cards, 3. smart cards, 4. bank cards etc.

CREDIT CARDS
y A credit card is a small plastic card issued to users

as a system of payment. y first and foremost a flexible payment tool accepted at 30 million locations worldwide which provides 24/7 access y It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services. y credit cards allow the consumers a continuing balance of debt, subject to interest being charged.

ADVANTAGES & DISADVANTAGES

y Offer free use of funds y more convenient to carry y Cost much more if you

than cash y Help you establish a good credit history y Give you incentives, such as reward points, that you can redeem.

don't pay on time. y Damage your credit rating if your payments are late y build up more debt than you can handle; y complicated terms and conditions;

DEBIT CARDS
y a plastic card that provides an alternative payment

method to cash when making purchases. Funds are withdrawn directly from either the bank account, or from the remaining balance on the card. y Also known as electronic check y Used widely for telephone and Internet purchases.

ADVANTAGES & DISADVANTAGES

y Obtaining it is easier y Record keeping is y y y y

than getting a credit card. y No need for personal info. during transaction y More readily accepted as compared to checks y Easy cash back

mandatory Convenience is not always guaranteed Hidden fees are everywhere Internet scams if your card is lost or stolen

MOBILE BANKING
y Mobile Banking refers to provision and availing of

banking and financial services with the help of mobile telecommunication devices. y Mobile Banking can be said to consist of three inter-related concepts: 1. Mobile Accounting 2. Mobile Brokerage 3. Mobile Financial Information Services

ADVANTAGES & DISADVANTAGES

y Helpful while travelling y Account notification y Account security(can be y security- what if mobile

checked from time to time) y Payment of bills

device is stolen y Compatibility- not available on every device y Cost -Network service charges are high

BRANCH BANKING
y The act of doing one's banking business at a

location that is separate from the bank's central business location. y In 1969, total number of branches in India were 8262 while today there are 82485 branches of banks all over India y The population per bank office has declined from 65000 people per branch to 14000 people approximately per branch today.

ADVANTAGES & DISADVANTAGES

y

y y y

Extensive reach to every state, district, etc. Easier for customers to access Easy funds transfer Small branches less expensive to operate

y Difficult to supervise so

many branches. y Increase in cost of maintenance due to increase in number of branches

INVESTMENT BANKING
y It involves assisting corporations and governments to

raise capital by underwriting and acting as the agent in the issuance of securities.

y There are two lines of business in investment

banking- sell side & buy side. y It helps in connecting the need for money with the source of money. y A company uses an investment bank as it is less costly and helps to sell the securities directly to the public.

y Investment management is the professional management of various securities (shares, bonds, etc.) and other assets (e.g., real estate), to meet specified investment goals for the benefit of investors. y The investment management division of an investment bank is divided into : (a) Private Wealth Management & (b) Private Client Services. y It helps in buying and selling of new securities by providing expertise to the customers. y It also performs the function of risk management for its investors which involves analyzing the market and credit risk.

MICROFINANCE
y It is the provision of financial services such as loans,

savings, insurance, and training to people living in poverty. y Main focus on those with greatest needs y Helped in reducing poverty y Helps in starting new business by giving small loans & hence promotes entrepreneurship

CONCLUSION
y Over the years, the Indian banking sector has seen

tremendous growth primarily because of the innovation in its services. y It has become globally competitive and diverse, aiming at higher productivity and efficiency. y The banking sector has improved manifolds in terms of Technology, Deregulation, Product & Services, Information Systems, Etc