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Transcript of Stalin XIMB
Stalin MohapatraXIMB
ROAD MAP FOR DIGITAL BANKING
Executive SummaryOver the globe, banks are investigating approaches to change over to a more advanced plan of action. In this way, the progressions have not been excessively problematic, notwithstanding forceful new offerings from non-banks. Other than bit by bit diminishing paper-based associations, the essential center has been on improving the item suite with quality included administrations and accomplishing an incorporated channel experience.
Subsequently, the center has obviously moved to the clients. Not very many players have in a far-reaching way changed their inner associations or influence standards. Most clients still have a place with limbs, and in the back office the arrangement for being the focal client association facilitator has been meek. United IT frameworks have helped decrease cost yet don't indulge quick time-to-market and transforming. Notwithstanding this jumble for banks, the pace of progress is expanding: new engineering smart organizations are flooding the business with creative offers for monetary administrations, clients are getting to be more positive about utilizing the full scope of e-trade offerings, and even controllers are reshaping since a long time ago settled strategies to adjust to new ideas. A few locales are more progressive than others, and the timing of progress is tricky to anticipate, however banks are generally prompted in officially get ready today.
Digitization will get to be more problematic as quality chains break separated, particularly around client communication, item design and transaction handling. Getting up and go will oblige adaptable courses of action, new income models furnished with new items and administrations, and clearing social changes—all in sync with the nature. Digital Banking Readiness Index (Dibrix) might be utilized to guide this voyage. Stalin Mohapatra Xavier Institute of
Management Bhubaneswar 3
Hunt for the Lions. The ING Way.
Branch Banking v/s Digital Banking
Security Cost of Banking Interest Rates Resources beyond
Basic Banking Convenience
What do Customers Look for?
What Branch Banking(BB) Offers?
What Digital Banking(DB) Offers?
Human Contact Presence of ATMs Services provided Additional Services
Convenience Easy Monitoring Fast Turnaround Lower Overhead Better Rates Mobility and Transfers
According to a survey in USA in 2014:• 55% still believe BB is secured than DB.• 51% believe personal relationships are better
maintained in BB than in DB• 48% believe that issues are easily resolved in
BB• 35% believe that they receive advice and info
on services first in BB• Around 25% believe, BB is faster, more
convenient and saves time.
Rise of internet banks has increased the competition.
With both online and brick-and-mortar banks offering unique benefits and drawbacks, it isn’t wise to do banking exclusively with either option.
The best play may be to split banking between both in-store and online services and enjoy the conveniences and savings of internet banks while maintaining the customer service and personal relationships a physical branch can provide.Stalin Mohapatra Xavier Institute of
Management Bhubaneswar 4
Hunt for the Lions. The ING Way.
SWOT Analysis between Branch & Digital Banking
Branch Banking
Digital Banking
STRENTHGS
Economies of large scale operations
Provide better rates than branch banking
Lesser risk and greater capacity to mitigate risk
Rich customer resources
Banking facilities in backward areas
Superior technology providing unique products
OPPORTUNITIES
Spread branches to various untapped areas
Loan solution for small and medium enterprises
Ease the process of transactions with technology
Increased demand for financial products
Coming up with more ATMs with more facilities
Ability to have a larger customer base
Branch Banking
Digital Banking
WEAKNESSES
Problem of management and lack of initiatives
Compound talent shortage
Regional imbalances with monopolistic tendencies
Poor customer relationship management
Inefficient branches and adverse linkage effects
Security issues
THREATS
Mobile banking set to reduce banking branches
Law is relatively not sufficient as regulations change
Physical information and security threats
Uncertainty of banking industry
Cyber attacks on the core banking system
Availability of substitute products
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 5
Hunt for the Lions. The ING Way.
Model of Success for Digital Banking
Smart Management of Information: marshal online data and offer customers personalized attention
Act strategically: providing cohesive, cross-channel experience that customers need
ROI: it is high but cost of not adopting are steeper
Evaluate the options available properly and select the one which fits in the best
Roadmap is a pre-requisite which balances key customer values against the bank values.
It is important how banks convert inefficient use of fixed assets and operating expenses into customer-centric experiences that contribute to revenue and cost reduction.
Traditional banking is facing its steepest challenge in over a generation. A tipping point has been reached with digital at its fulcrum.
Moving towards a customer-centric value model in banking
Preference for digital is now globally pervasive among banking customers
‘Digital’ has evolved from basic online banking to a broad, rich set of capabilities
Disrupting and catalyzing change in the banking ecosystem
A platform for innovation based services
Strategic partnerships will pave the way to success for banks
What’s leading to the Tipping Point?
Improvements in user-experience design through interactive and bringing data to life through rich visualizations.
Advances in mobile devices and networks, providing new services such as enhanced digital security and the ability to access the internet from anywhere
Rise of social media and collaboration tools, empowering customers and employees
Innovation in digital analytics and predictive models, driving deeper insight into customers’ behavior
New channel integration technologies, enabling a more seamless end-to-end experience for customers with their banks.
The New Digital set of Features has led to:
Online Banking Mobile Banking0
50
100
150106
63
851
People Using Online and Mobile Banking
YesNo
Results from the Survey
Hunt for the Lions. The ING Way.
Stalin Mohapatra Xavier Institute of Management Bhubaneswar
6
Why banks should invest for Digital Banking
Dig
ital S
trate
gy
Infrastructure Strategy
Data Strategy
Content Strategy
Business Process Strategy
Analytics Strategy
Social & Mobile Strategy
User Experience Strategy
7 Strategic Areas
Key Aspects of Changing Customer Behavior
Customers’ attitudes and behaviors are changing due to a number of factors.
Preference for digital is globally pervasive.
Generation Y, who are now at the point of choosing their primary financial services provider, cite digital as an important factor in this decision.
Digital itself, is evolving: the new set of disruptive features of the latest round of digital innovation is proof enough.
… expect more… trust their peers… are informed… have choices… have a voice
Generating Value from Digital
804
27
2
Purchasing a New Product from
Current Bank
New Bank
Online Provider
Provider not a Bank
New Customer Experience
Fair Price with transparency and comparability
Immediate, high quality interaction
Fast and Secure Processing
Rich Spectrum of products and services
Effective and Efficient Operating Model Lean channel
and organization structure
Streamlined governance and agile culture
Integrated IT infrastructure
Enhanced revenue model
Results from the Survey
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 7
Hunt for the Lions. The ING Way.
The Emerging Challenges to Banking Eco-System
Banking Incumbent
s
Access Holders & Networks
Digital Innovators
Defenders
Att
ackers
Large Retail Banks
RemittanceCard
Issuers Card Networks
Mobile Operators
Technology Firms
Handset Manufacturers
Personal Finance
Platforms
‘Defenders’: these are business sector occupants that have customarily controlled their sections in the saving money worth chain. While very nearly every one of them seek to move into the computerized pioneer space, few are prepared to do so without outside help (through securing or organizations). ‘Attackers’: these are new contestants who are attempting to wrest impart far from the officeholders by intermediating themselves into the worth chain. These incorporate built players in innovation and portable and in addition littler new businesses. We accept that while these players may have the capacity to secure positions on the quality chain, they will be unrealistic to relocate banks as the essential supplier of money related administrations.
Incumbents in emerging markets that have a large share of unbanked, or under-banked consumers can experience a threat from new players.
A strategic partnership between a bank and an innovator has the best chance of creating the winning combination to acquire and retain new customers, assuming banks act.
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 8
Hunt for the Lions. The ING Way.
Digital Banking’s Multi-Dimensional AttributesKey Partners1. Digital
Partners2. Merchants3. Payment
Networks4. Telecom
Companies5. Technology
Partners6. Logistic
Partners
Key Activities1. Payments2. Lending3. Deposits
Key Resources4. Capital5. Sales
Channel6. Branches7. Employees8. Sales
Brokers (Lending)
Value Propositions1. Convenien
ce2. Self
Service3. Trust4. Liquidity
Customer Relationship1. Customer
Lifetime Value
2. Improve customer engagement
3. Loyalty4. Repeat
transactions
Customer Segment1. Convenien
ce2. Self
Service3. Trust4. Liquidity
Cost Structure: 1. Credit Pricing2. Cost of
compliance3. Cost of capital4. Broker Fees
Revenue Structure: 1. Subscription2. Merchant funded
offers3. Free channel
services
Stalin Mohapatra Xavier Institute of Management Bhubaneswar
9
Hunt for the Lions. The ING Way.
Major Factors Influencing the Shape of Digital Banking Programs
Revenue ModelsPartnership &
Acquisition ModesChannels
Smaller Banks: a mobile channel strategy would best suit their purpose
Larger Banks: a diversity of branch designs, kiosks, smart ATMs, digital recognition technology, video and enhanced personal banking tools and offices
Can offer digital services directly or partner with or acquire small companies to gain digital capabilities and processes
New entrants lack legacy costs that burden banks and can tempt clients with convenient mobile apps.
E-commerce business models build on the potential for generating multiple transactions from individual customers
Focuses on interactions and loyalty that serve to maximize customer lifetime value
Other Factors Influencing the Shape of Digital Banking Programs
Processes for sales, customer acquisition and customer service
Customer experience with automation, self-service and assisted service
Product pricing and design and cost structure supporting them
Stalin Mohapatra Xavier Institute of Management Bhubaneswar
10
Hunt for the Lions. The ING Way.
Digital Banking Enterprise Roadmap
Marketing & SalesCustomer Onboarding &
Account OpeningServicing
Cross-channel marketing and sales enablement
Cross-channel collaboration and sales force enablement
Cross-channel customer, 360-degree, lead and insight
capture and delivery
Insight driven origination
Cross channel application management
Status tracking, status reporting and customer
communications
Customer experience management
Personalization and self-service
Cross-channel service management
Cross-channel Process, Case and Data Management
Multi-mode Channel ListenersAnalytics Modeling and
Insight Delivery Reports and Dashboard
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 11
Hunt for the Lions. The ING Way.
Digital Banking Enterprise Roadmap
Digital Organization Structure Long term goals with incremental gains Take business centric view and drive
technology as an enabler Prioritize business processes and functions
for digitization based on relevant dimensions
It is important to balance priorities among all the capability layers: devices, channels and downstream/upstream systems
While it is important to focus on core capabilities directly responsible for exploiting the digital consumer, it is essential to strengthen certain foundation capabilities for digitization to be successful
Balance priorities among key functions of origination, marketing, servicing, payments, etc. Combine capabilities where required (marketing and origination, servicing and cross sell, etc.)
Use technology proofing judiciously if the technology is already established and adapted in the industry
Digital banking breaks through organizational barriers. It compels banks to rethink organizational constructs, as well as revenue and profitability recognition across the enterprise
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 12
Hunt for the Lions. The ING Way.
Products Offered by ING Vysya
Bank
Savings AccountCurrent AccountDemat
AccountTerm
Deposits
• Fixed Deposits• Tax Advantage
Deposits• Cumulative
DepositsCredit Cards
Debit Cards
Salary Accounts
Forex services
• Multi Currency Cards• Remittance• Currency NotesLockers
Institutional Accounts
• Current Account• Savings Account
Borrow
Home Loan
Personal Loan
Gold Loan
Loan Against Properties
Loan Against Securities
Invest
Wealth Management
General Insurance
Exide Life Insurance
Qualified Foreign Investor
ING Fortune Trade
Way Forward in Digital Banking Model
Digital Channel Management: Banks have to invest in technologies in going more digital with their channel capabilities, to ensure seamless and personalized customer experience.
Interactive Marketing: Digital channels and digital presence to be exploited for marketing products
Platform Models: Players provisioning platforms for transactions, commerce (e.g. payment) and other value-added services (e.g. loyalty) are likely to incur significant one-time technology spends
Analytics: Any digital consumer from any generation can be a prospect, there will be a large amount of info generated about the consumer profile, interests, behavior, expressions, feedback and actions
Digital Device Applications: Need to have custom device applications to differentiate from competitorsStalin Mohapatra Xavier Institute of
Management Bhubaneswar 13
Hunt for the Lions. The ING Way.
Cross-Comparison between Products Offered by Banks in IndiaIf deposit amount is 50,000 INR for 1 year in FD, then returns
for different banks:
ING Vysya
Axis HDFC ICICI SBI53500
54000
54500
55000545005445054375
5387554125
Amount Paid After 1 Year
Amount Paid After 1 Year
If house loan amount is 25,00,000 INR and loan tenure
is 20 years, then EMI is:
ING V
ysya
Axis
Stan
dard
Cha
rt...
Tata
Cap
ital
SBI
22000
24000
26000
28000
24375
27093
2429124375 24375
EMI
EMI
Comparison of Personal Loan interest rates for different
salary groups
ING Vysya
ICICI HDFC0.00%
5.00%
10.00%
15.00%
20.00%
Interest Rates
Salary above 75K Salary 50K-75K
Salary 35K-50K
As we can se that ING Vysya is doing pretty well when it comes to offering interest rates to customers across verticals. Similarly in other products, ING Vysya is not far behind from its competitors in the private sector as well as public sector banks. So with digitizing the banking system, ING can really take forward this advantage of having great offerings for its customers.
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 14
Hunt for the Lions. The ING Way.
Survey Results on Perception towards Digital Banking
71317
3 4
Age Group
18-25 Years 26-33 Years34-41 Years 42-48 Years49 Years and Above
2 34
777
Type of Service
Govt Service Private Service
Business Others
0
60
120
0 10 1 6
98
1
Use of Social Media
Tech not needed
Wait 6 months
Family guides
me
Latest Tech
0
20
4017
3518
41
Attitude towards New technology
0
68.16 9.34 8.09 6.88 7.41 7.19 8.18
Average Score out of 10 for 116 respondents
We observe from the survey that people are generally inclined towards new technology and people below 40 are quite excited about digital banking. India will be a country with average age of 25 years in near future; hence this should be taken forward keeping future in mind.
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 15
Hunt for the Lions. The ING Way.
Conclusion BFS establishments need to advance an all encompassing Digital Consumer Strategy that
visualizes key separating abilities and a change guide determined by key execution pointers and business profits.
They ought to begin with evaluating techniques that effect the client (straightforwardly or by implication) - changing and re-characterizing them if fundamental, building linkages over the association and computerized channels and making an association that is centered around the client and not the channel.
For administering the activities, the center ought to be on cross-utilitarian joint effort with overall characterized governing rules set up. For result advancement, they have to make tenacious purchase v/s fabricate decisions.
Reference:1. [2], [3], [4] comScore Research (December 2011); Top 10 Need-to-knows about Social Networking and Where it’s Headed 2. http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats#m-banking 3. http://www.cognizant.com/InsightsWhitepapers/The-Value-of-Signal- and-the-Cost-of-Noise-The-New-Economics-of-Meaning-Making.pdf. 4. http://www.bankingmyway.com/save/savings/online-banks-v-traditional-banks5. http://www.bankingtech.com/56242/the-irresistible-rise-of-digital-banking/6. http://www.pwc.com/en_GX/gx/banking-capital-markets/publications/assets/pdf/pwc-new-digital-tipping-point.pdf
Stalin Mohapatra Xavier Institute of Management Bhubaneswar 16
Hunt for the Lions. The ING Way.