Post on 07-Oct-2015
RETAIL BANKING STRATEGIES FOR THE FUTUREMrs. Soundara KumarGM Personal BankingState Bank of India
Present ScenarioIndian retail banking has been showing phenomenal growth
In 2004-05, 42% of credit growth came from retail
Over the last 5 years CAGR has been over 35%
Retail credit levelcrossed Rs.189K Crore in 2004-05
Market has transformed into a buyers market from a sellers market
Comprises of multiple products, channels of distribution and multiple customer groups
Economy vs. Retail BankingRetail assets are just 22% of the total banking assets of India Contribution of retail loans to GDP:India 6%China15 %, Thailand 24%Taiwan 52% Indian population below 35 yrs of Age 70 % Reach of Formal Banking Channels 20-25% of Indian population Source: Cygnus Industry Insight
Market Share: Retail Loan - 2005
Drivers Of Retail Growth CHANGING CONSUMER DEMOGRAPHICSGrowing disposable incomesYoungest population in the worldIncreasing literacy levels Higher adaptability to technologyGrowing consumerismFiscal incentives for home loansChanging mindsets-willingness to borrow/lendDesire to improve lifestylesBanks vying for higher market share
Industrys response to the changeAny where, Any time BankingImproved processes/Bundled product offeringsFaster service/Reduced TATsCustomer specific products/offerings on a regular basisBank customer has replaced Branch customerFocus on understanding customer needs/ preferencesSegmentation/Differentiation of customersCustomer driven strategiesBuilding relationships
The accelerated retail growth has been on a historically low base
Penetration continues to be significantly low compared to global bench marks
Share of retail credit expected to grow from 22% to 36%
Retail credit expected to grow to Rs.575,000 crs by 2010 at an annual growth rate of 25%
Source: Cygnus industry insight Future Of Retail Banking
Future of Retail Banking Contd.Dramatic changes expected in the credit portfolio of Banks in the next 5 years
Housing will continue to be the biggest growth segment, followed by Auto loans
Banks need to expand and diversify by focussing on non urban segment as well as varied income and demographic groups
Rural areas offer tremendous potential too which needs to be exploited
Strategic prerequisites.Performance oriented leadership
Sophisticated marketing and sales
Efficient distribution channels
Process efficiency and ease of scalability
Superior credit policy, procedures and skills Source: Mckinsey
ChallengesSustaining Customer loyalty
NPA reduction & Fraud prevention
Avoiding Debt Trap for customers
Bringing Rural masses into mainstream banking
Strategies for FutureReaching to masses : Need to customizeCustomer segmentation/differentiation Data mining/CRM based campaignsProducts per customer/loyalty Promoting low risk retail lending products
Offer an array of products and financial advisory.
Strategies for Future Contd.Cost effective expansionRenewed emphasis on superior execution by front-line employeesGrow through Alliances:HospitalityEducationRetailersAutomobilesConsumer Durables Housing/Construction
Winning StrategyThe bank that best addresses and anticipates customers needs, delivers consistently higher quality service and connects to the customer via their channel of choice winsY.Y.Chin, OCBC Bank
Thank You !