Stalin XIMB

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Stalin Mohapatra XIMB

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ING Hunt for Lions

Transcript of Stalin XIMB

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Stalin MohapatraXIMB

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ROAD MAP FOR DIGITAL BANKING

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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.

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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.

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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

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