Retail banking in india 2012 pdf

Low cost funds. Lowe risk and NPA perception. Builds customer base. Economic revival through increased production activity. Increases subsidiary business Improves lifestyle through affordable credit. A safe and convenient saving avenue. Innovative product development. Minimum marketing efforts in a demand- driven economy. Risk weight in certain segments like housing loan. The growth in the retail portfolio was lead by a double-digit growth in housing loans.

Auto loans also saw healthy growth. Meanwhile, the number of credit cards issued grew 10 per cent, from The private banks were the most aggressive in issuing more cards and their numbers improved from 9. The credit card transaction value witnessed a rise of Debit cards have been a more popular mode of electronic money than credit cards in India, according to the report.

The total number of debit cards increased from In order to target the product lines at the right customers, both present and prospective, it is imperative t hat an integrated view of the customers is available to the banks. The benefits flowing out of cross-selling and up-selling will remain a far cry in the absence of this vital input. In this regard, the customer data-bases available with most of the public sector banks remain far from being the level of satisfaction. In this context, what needs to be done is setting up of a robust data warehouse wherefrom meaningful data on customers, their preferences, their spending patterns, etc.

Cleansing of existing data is the first step in this direction. Public Sector Banks have a long way to go in this regard. Mechanization and Technology Issues Presently, Public Sector Banks are on their way to catch up with the technology much required for the success of retail banking efforts. Organizational Revamping Creation of a proper organization structure and business operating model which would facilitate easy work flow are the needs of the hour.

The need for building the organizational capacity needed to achieve the desired results cannot be over-stated. This would mean a strong commitment at all levels, intensive training of the rank and file, putting in place a proper incentive scheme, etc.

As a part of organizational alignment, there is the need for setting up of an effective corporate marketing division. Most of the public sectors banks have only publicity departments and not marketing set — up. The attention is to be diverted to vast data-base of customers lying with these banks still unexploited through marketing. Innovation of new products Product innovation continues to be yet another major challenge. Even though bank after is coming out with new products, not all are successful.

What is of crucial importance is the need to understand the difference between novelty and innovation? It is a well known management principle that those innovations which are not in tune with the strategic realities will not work.

The days of selling the products available in the shelves are gone. Banks need to innovate products suiting the needs and requirements of different types of customers. Revisiting the features of the existing products to continue to keep them on demand should not be lost sight of. Pricing mechanism The next challenge is to have appropriate pricing policies in place.

The industry today is witnessing a price war, which each bank wanting to have a larger slice of the cake of the market, without much of a scientific study into the cost of funds involved, margins, etc. The much-needed transparency in pricing is also missing, with many hidden charges. The situation cannot remain this way for long. This will be one issue that will be gaining importance in the near future.

Cross selling of products Cross selling enhances customer loyalty. As the number of products that a customer purchases from a bank increases, the change of losing that specific customer to a competitor decreases. It shall be borne in mind that retaining profitable customers decreases.

It shall be borne in mind that retaining profitable customers is five times cheaper than attracting new ones. Loyal customers increase the profitability of banks by way of price premiums and generation of referrals thus reducing the acquisitions costs. Human Resources Challenges There is no doubt that while technology and product innovation are vital, the soft issues concerning the human capital of the banks are far more vital.

The corporate initiatives need to focus on bringing around a front line revolution. Though the changes envisaged are seen at the front line. This would mean a lot of proactive steps on the part of bank managements which would include empowering staff at various levels, devising appropriate tools for performance measurement, bringing about a transformation in the mind-set, change from restrictive practices to total flexible work style and so on.

Focus on Rural Penetration As of now, action that is taking place on the retail front is by and large confined to metros and big cities. There is still a vast market available in rural India, which remains to be tapped. Multi National Corporations, as manufacturers and distributors, have already taken the lead in showing the way by coming out with exquisite products, packaging and promotion, keeping the rural customer in mind.

In particular, both Public Sector Banks and Regional Rural Banks, which have a strong rural presence, need to address the needs of rural customers in a big way.

This strategy alone will propel a retail growth that is envisaged as a key strategy for portfolio expansion by most of the banks. Hence, the concept of enhancing customer satisfaction is a pivotal point to attract more and more people to transact at a particular bank.

Nowadays, customers are becoming more and more demanding, thus forcing the bankers to evolve new strategies as well as new and innovative products to keep pace with the growing customer expectations.

Now, it has become a challenging and tough job for the bankers to retain the existing customer-base and also to win new customers to its fold. As sustaining in the banking business is becoming tough, bankers have to make their customers happy to achieve their targets. So, to make the customers happy, the bankers have to first understand the wants and needs of the customers. In order to achieve this task, banks have to prepare projects based on the priorities for each segment of customers being classified into mid-value customers, high-net-worth customer etc.

Indeed, segmentation has become an important aspect in innovating a new service product. Information received through this feedback can serve as roadmap to serve and increase the number of delighted customers. Determining delight There are two distinct types of attributes: those that maintain satisfaction and those that create delight.

Though satisfaction maintaining attributed tend to be core attributes, yet delight creating attributes are really the relationship building factors in the business world. For example, no amount of chocolates offered by a bank as gift can offset the displeasure created by mistakenly bouncing the cheque of a valued customer.

Collaborative Marketing Collaborative marketing is about identifying services that the customers would be interested in and then creating an opportunity for providing some of these services at a discount rate or sometimes just as incentives.

It is a win-win situation for all entities and more beneficial to the banks as it will strengthen customer satisfaction. Proactive Marketing Proactive marketing is defined a identifying customer needs before they are saddled with information from different sources. In other words, the concept is about clearly informing the customers about a new service which may be required by them without waiting for those customers to discover it on their own. In the old world format of business, each business entity managed a separate list of customers and data was rarely shared across the bank.

However, in a digitally enabled environment, the entire bank can maintain a common repository of customer data and tag them for all relationships that a customer has with the entire bank. This allows the organization to get a view of its entire customer base. Single Window Service This may be defined as the ability to recognize a customer as a single entity across the various services that a bank may render to hi. India prepared for the IT revolution that impacted the banking sector.

It created a need for Private sector banks as well as Public Sector Banks to adopt core banking system. It led to organized and comprehensive computerization of operations of banks.

Later on India witnessed the adoption of modern payments systems, securities settlement, electronic funds transfer, cheque truncation system, ATMs and many other modern methods of banking. The growth of IT and its remarkable application to banking has greatly facilitated the growth and development of retail banking in India to a large extent.

At the time of introduction of banking sector reforms, public sector banks were slightly ahead as they had a wide network of physical branches in urban and rural areas. With a view to compete with public sector banks, private banks and foreign banks adopted IT as a tool in their expansion drive. The success rate in retail banking is measured with the volume of customer base and IT has allowed banks to reach and serve a huge number of customers in a short time and reduce the cost of banking transactions.

IT has allowed the integration of ATMs, mobile banking and internet banking such that banking transactions are reflected regardless of any medium of convenience used by customers. The induction of modern banking technology has caused a dramatic transformation in the functioning and operation of retail banks. The banks have used these technologies to best of their advantage to reach out to clients, to know customer behaviour, increase productivity, increase sales and manage money.

This a form of bank account that can be opened by customers, providing services like depositing money and obtaining interest on it. Other terms used to refer this form of bank account include checking account, transaction account and demand deposit account. An account holder can make frequent transactions through it. These plastic cards can be used to make payments without the need of carrying cash with you.

In case of credit card one can make payment on credit with a promise to pay the bank the amount which is spent. Banks lend money to their customers and loans in India through retail banks include home loans, auto loans for new or used vehicles, education loans, business loans etc.

As stated earlier, banking industry has gone through a major revolution in the last few years. With the rise in competition, the IT revolution, the emergence of Fintech and non-financial services, and evolving customer expectations has called for adoption of new strategies and techniques from banks.

Banks are progressing towards the path of digital transformation that promises better customer experience, lower operating costs, and reduced costs for banking transactions. Meanwhile, internet and mobile banking are the rapidly emerging trends in this sector. Use of AI and voice assistants to provide personalized and contextualized services are technologically forward innovations and it is expected to change the face of banking systems.

With biometric technology and KYC, system expect more secure banking system. Ashish M. Shaji has done his graduation in law BA. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects. Paytm, an Indian brand and one of the largest digital currency platforms announced that it will The introduction of ATMs has caused a considerable change in the way we deal with our day to da The banking industry has undergone significant changes in the last few years with digital trans Request A Call Back.

Development of Retail Banking in India.