Measuring Effectiveness of Retail Banking in Public Banks and Private banks

Presented By:

Nikhil Patni PGDM (2009-2011)

COMPANY PROFILE

• Axis Bank was the first of the new private banks to have begun operations in 1994, after the Government of India allowed new private banks to be established. The Bank was promoted jointly by the Administrator of the specified undertaking of:

1. UTI: Rs.100 crore

2. LIC: Rs. 7.5 crore

3. GIC: Rs. 6.0 crore

(Four subsidiaries of GIC contributing Rs. 1.5 crore each)

(a) National Insurance Company Ltd.

(b) The New India Assurance Company Ltd.

(c) The Oriental Insurance Company Ltd.

(d) United India Insurance Company Ltd.

Company : Vision and Core Values

Vision:

To be the preferred financial solutions provider excelling in customer delivery through insight, empowered employees and smart use of technology.

Core Values: Customer Centricity Transparency Teamwork Ownership Ethics

The Bank today is capitalized to the extent of Rs. 359.76 crores with the public holding (other than promoters) at 57.79%.

The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The Bank has a very wide network of more than 853 branches and Extension Counters (as on 30th June 2009). The Bank has a network of over 3723 ATMs (as on 30th June 2009) providing 24 hrs a day banking convenience to its customers. This is one of the largest ATM networks in the country.

Meaning Of Retail Banking

“Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so”

Characteristics

Today’s retail banking sector is characterized

by three main basic characteristics:

-Multiple products (deposits, credit cards,

insurance, investments and securities);

-Multiple channels of distribution (call

centre, branch, Internet and kiosk); and

-Multiple customer groups (consumer,

small business, and corporate).

Retail Banking Products and servicesCore Services Facilitating Services Supporting Services

Payment services

Current Account and Saving Account

Loan Product:•Consumer Loan

•Hosing Loan

•Personal Loan

Insurance Products:

•Life Insurance

•Cash

•Foreign Services

•Traveller cheque

•DD/Bankers cheque

•ATM Card

•Instruction to customer for Making Payment

•Inter Branch Transfer of Funds

•Payment at door step

•Internet Services

•Telephone Banking

•Credit Card

•Debit Card

•Services to Senior Citizen

•Conversion of Excess Balance to Time

•Delivery of Loan

•Interest Loan Option

•Flexibility in Paying Loan

•Legal Services of Documentation

Imperative: New Business InitiativesThe new business initiatives coupled with changing customer profiles are being partly addressed by technology enabled support infrastructure in banks. To successfully implement its business strategy, banks will need to conduct an organization restructuring initiative to ensure seamless conduct of multiple business processes for every business unit

Customer RelationshipManagement

InfrastructureSupport

Product / Service

Development

• Changing customer profiles

• Increasing demands by customers for varied services

• Higher expectations of service quality especially for ‘anytime, anywhere’ banking

• Increased focus on retail banking

• Tie-ups with financial institutions to market third party products

• Foray into merchant banking

• Technology upgradation triggering the need for redesigned processes

• Increase effectiveness of the HR function

Key Banking Key Banking Technology AspectsTechnology Aspects

Cost• Cutting Cost through Integration• Better Information Management

Risk Management Complexities•Easier Risk Identification•Easier to Assess Risks

Customer• Reaching Customers Faster• Managing Diverse Needs

Competition• Competitive Edge in

its Strategic Group

“The winners will be those institutions that tie their technology to their strategies in order to meet their challenges.”

Performance & Evaluation• Better Metrics to Benchmark

Against• Objective Evaluation Process

Technology- leads the Winning Combination

Initiatives Taken as Winning Strategies

Optimal HR deploymentOptimal HR deployment

Slashing ExpensesSlashing Expenses

Total QualityManagementTotal QualityManagement

Product StructuringProduct Structuring

Initiating continuous improvement

Initiating continuous improvementAttempting Culture

ChangeAttempting Culture

Change

Research Methodology

Data Collection :

1. Primary Data via Structured Questionnaire

2. Secondary Data via Records/Reports of various Banks

Sample Size : 1. 100 customer (of Axis Bank)

2. 100 customer (of Bank of Rajasthan)

Analysis and Findings

1. HANDLING OF CUSTOMER GRIEVENANCES (COMPLAINTS)

AXIS BANK BANK OF RAJASTHAN

2. SPEED, ACCURACY AND PROMPTNESS IN TRANSACTIONS.

AXIS BANK BANK OF RAJASTHAN

3.NUMBER OF PRODUCTS AND SERVICES OFFERED.

AXIS BANK BANK OF RAJASTHAN

4. TIMING OF BANK

AXIS BANK BANK OF RAJASTHAN

OBSERVATIONS

Public sector banks have large branch network and the large customer base, but it is the use of technology that will enable PSBs to build on their strengths.

There is a large inadequate supervision and regulation in public sector inadequate supervision and regulation in public sector bank.bank.

Private sector banks have less job security and lending rate is more as Private sector banks have less job security and lending rate is more as compare to PSBs. compare to PSBs.

Hidden charges are much more in private sector banks as compare toHidden charges are much more in private sector banks as compare to

public sector banks.public sector banks.

SUGGESTIONS

PSBs need to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organizational performance ethic. The last, i.e., strengthening human capital will be the single biggest challenge.

New private banks could reach the next level of their growth in the Indian banking sector by continuing to innovate and develop differentiated business models to profitably serve segments like the rural/low income and affluent/ HNI segments; actively adopting acquisitions as a means to grow and reaching the next level of performance in their service platforms. Attracting, developing and retaining more leadership capacity would be key to achieving this and would pose the biggest challenge .

CONCLUSION

There is nothing bad with the public sector banks, the difference is in the policies. Because of loopholes in the policies people uses banks for their personal cause. Private sector banks boost the Indian economy as their efficiency is much more than the Public sector banks.

Thank You