Sahana IFMR

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ING Hunt for Lions

Transcript of Sahana IFMR

  • 1. Banking Industry in India India to be 5th largest consumer economy with aggregateconsumption expected to grow to 1.53 trillion USD in 2025. [1] Middle class segment rising 80% of business controlled by Public Sector Banks In emerging markets, banking reaches about 37%of thepopulation, compared to a 50% penetration rate for mobilephones. [1] The Return on Equity for the banking sector has been around13% in the last four years with top performing banks having 18-20% as RoE. According to research by Reich and Sasser (HBR) 5% increase incustomer retention can increase profitability by 35% in bankingbuisiness, 50% in insurance buisinessSource: http://www.ibef.org/industry/banking-india.aspx

2. Industry Growth Drivers 3. Rural Banking in India Statistics state that only 37% of bank branches of ScheduledCommercial Banks are in rural areas with only around 40% ofthe population holding bank accounts. [2]Only 5% of the 600,000 villagehabitations in the country have acommercial bank branchOnly 40% of the population havebank accounts51.4% of nearly 89.3 million farm households do not haveaccess to any credit either from institutional or non-institutionalDebit card holders constitute only13% of the population and only 2%have a credit cardOnly 13% of farm households areavailing loans from the banks in theincome bracket of < Rs. 50,000.sources. 4. Online BankingCustomers access e-bankingservices using an intelligentelectronic device, such as apersonal computer, personaldigital assistant, automated tellermachine, Touch tonetelephone. Cost effective solution. Enables the bank to reach itscustomers on the net. Reduce rush at the counters ofthe bank. Enables the customers of thebank to access informationfrom anywhere and at anytime. Balance and transaction historysearch No more Queues Growth:EY:Banking on TechnologiesSource: Indian Research Journal- Ebanking : The Indian Scenario by Dr. Roshan Lal and Dr. Rajni Saluja 5. SWOT Branch Banking The banks financial positions grows ata rate of 20% every year which is amajor positive sign for any bank Traditional banking: higher trust Safety locker, Loans etc are preferred Strong History and loyalty Since 2009, RBI has increased CRRby 100 basis points Increased repo rate reverse repo rateby 50 points 11 times of late RBI allowed foreign banks to investup to 74% in Indian banking Government schemes are most oftenserviced only by govern banks Online Banking is preferred by Gen Y Robbery Expansion into rural areas Security Locker user rates areincreasing Small traders opt traditional Banking Fixed Operating Time Liquidity problems Customer has to visit the branch in person Slow pace of operations are timeconsuming Document management is challenging 6. SWOT Online Banking Competitive Advantage for economies ofscale India is currently 4th largest user of internet Internet banking users has increased from9% in 2003 to 50% in 2010 Access anywhere, anytime: There are nogeographical barriers. Personalized transaction report Security Poor technology infrastructure Ineffective risk measures Easy Access of internet banking account bywrong people through email ids When the server is down the whole processis handicapped Traditionalists do not appreciate change :IT Fatigue Expansion into rural areas Rising Middle Class Sector in India Rising population of Generation Ys theTech Savvy Youth Increased demand for financial products Incentives offered by emerging E-commerceand bill payments Retail Boom Technology leading to advanced productsand services RBI allowed foreign banks to investup to 74% in Indian banking Government schemes are most oftenserviced only by govern banks Security Breaches : Hackers, Safety ofpresent RSA algorithms etc. 7. Factors that influence customer behavior: Trust : Institutional Stability Customer Experience Fees and rates Word of mouth Security Product ownership and Satisfaction Customer Care Services ConvenienceCourtesy: EY Global Consumer Banking Survey (2014) 8. Customer Insights Based on Primary and Secondary research Security, face to faceinteraction, Safety, uncomfortable with technology are mainconcerns of the customer on digital banking. These concerns change with the demographics ( age,profession, education), geography of target sample. 9. Road MapCustomerSegmentRURAL TOWNS URBANSegmentNeed Security Lockers Credit Information Financial Guide Loans with low interest Women empowerment schemes Insurance Loans Credit Information Retail banking Ecommerce Real Estate:investmentassistance Various otherschemes Immediate payments Payroll assistance formultinationals Tools to track financialhealth Online tradingassistance apps Elderly generation:Retirement plansDifferentiated Offerings Fund IT related farmingtechniques Eg. State Bank ofMysore funded IT dairy farming Online Management of Dairyfarms, Poultry farms etc. Virtual Banker : Offer onlineproduct guide using videoconferencing services. Kisan Cards, Mobile SMS alerts Integrated walletsystems Locality basedservices Bill payments Micro Businessaccounts Tax Calculator :Assistance Security: Anti MoneyLaundering Systems Ecommerce discountcoupons Online management toolsfor records, transactionpattern, Bill payments Online service request fordoor to doorloan/insurance assistanceDeliveryDevices Increase ATMs Bill Payments through ATM:Internet banking in ATM Virtual Banker tools (used byDutsche Bank) Kisan Sabahs to increaseAwareness among farmers aboutonline banking (Village panchayat,,Friends Club, Rotract associationsetc.) VirtualCFO/Bookkeeperservices Online calculators/ Virtual Safe deposits Premium cardsmemberships for smallorganizations Retirement plan onlinecalculators and serviceguides 10. Road Map Virtual banker is a collaboration tool that allows videoconferencing services between consumers in branches andremote bank advisors. E.g. Nykredit(Denmark) implemented the remote personal advisors in June 2012 to meet theneeds face to face interaction resulting in customer satisfaction has increased by 7.5% overthe past year, while employee satisfaction has also increased by 8.5%. ROI has also seen animprovement at an increase of 5% due to Direct Banking.[7] Extensive connection with customers through : Mobile apps,Facebook, Twitter (Social Media) Retail Purchase assistance : Messages about new offers in thenearest retail store by GPS enabled mobile app which scans fornearest marts and discount coupons offered by ING Vysya cards Collaboration with travel agencies. (Make my trip, red bus,KSRTC etc) Student plans: Online banking offers for students Pocketmoney account Brand Ambassador programs for students as to market the brandimage and provide customer insights on Digital marketing oversocial networking sites 11. Road Map Improving functional coverage. Improving usability experience. Analyzing customers for their behavior and banking habits. Analyzing customers profile and providing customizedofferings. Creating customer specific promotional schemes. Enhancing intra-channel and inter-channel customer experience. Providing value-additions over internet banking. Design products based on need of the life stage e.g age,profession etc. Kitty party fund schemes/Chit fund: Home Makers of Urbanarea/Rural area. Online part time agents for life insurance, loans etc : targetstudents, housewives looking for part time job, rural area talentsetc. 12. Product Comparison Extensive marketing required for ING Vysya Bank HDFC/Axis bank etc offers discount coupons on online billpayment, ecommerce etc. Payback points on credit, debit cards Personalized customer need based loans Some banks offer assistance in online trading (Demataccount) Few top banks have a separate unit taking care of loan andinsurance sector Zero processing fee advertised well in top banks online sites Calculators, Track your application number etc. offered asonline services by top banks. Religious offerings can be included by ING Vysya bank Virtual Tutor can be incorporated. 13. Summary The growth story of the Indian banking industry showcases vastopportunity, and it is imperative to appreciate the attractiveness ofthis sector. Todays internet banking is speedily achieving the status of beingan independent channel generating revenue. Efforts of improving usability, presentation, functional coverage,enhancing supply chain components, extending transactioncoverage for entire cycle or across geographies are relentless. However improving customer experience uniformly across variouschannel; customer education and participation, customer profiling,enhancing customer relationship are vital in the growth of thischannel. Multiple parameters such as Functional and Transactional coveragecustomer centricity, Prospecting and leading conversion, Channeloversight, Organization support to channel, Multi-Channelservicing etc must be considered. 14. Bibliography[1] Banking Opportunities: Entry Strategy and the Road Ahead by PricewaterhouseCoopers (PwC) Pvt Ltd.[2] Research paper on Retail banking in India Challenges and opportunities by Dr. Dinesh B. Raghuwanshi[3] http://www.ey.com/Publication/vwLUAssets/EY_-_Global_Consumer_Banking_Survey_2014/$FILE/EY-Global-Consumer-Banking-Survey-2014.pdf[4] Deutsche Bank Research on Digital Economy and Structural Change :http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000196129.pdf[5] http://www.computerweekly.com/news/2240207464/Technology-and-innovation-in-European-banks[6] http://www.scienceandnature.org/IJEMS-Vol2(1)-Jan2011/IJEMS_V2(1)5.pdf : Kisan Credit Cards[7] http://www.computerweekly.com/news/2240207464/Technology-and-innovation-in-European-banks[8] http://www.capgemini.com/resource-file-access/resource/pdf/Digital_Transformation__A_Road-Map_for_Billion-Dollar_Organizations.pdf[9] PRIMARY RESEARCH : Used Survey Monkey and word of mouth.https://www.surveymonkey.com/s/QWMC3DR