Future of Retail Banking- Bhaskar Ghose, Managing Director,                    IndusInd Bank
Recent trends   Aggressive entry strategies of foreign    banks to Retail Segment   Customer retention initiatives by PS...
Recent trends contd…   Rapid penetration of Personal Computers,    Mobile phones and on-line Trading and    purchase opti...
Recent trends contd…   Customers’ preference to more and more    alternate channels for convenience   Fee based income f...
Recent trends contd…   Phenomenal rise in nuclear and dual income    families & enhanced spending power   Increasing lit...
Recent trends contd….   Growing consumerism   Fiscal incentives to Housing loans   Fastest economic growth over the dec...
Retail Liabilities   Banks continue to offer valued added Products    and Services for customer acquisition and    retent...
Retail Liabilities contd…..   Retail Banking customers are demanding more    and more features and product differentiatio...
Retail Liabilities contd…   Alternate delivery channels, channel integration    and single sign on expectation from custo...
Retail Liabilities -Future   Rate of growth of deposit may be affected by    other investment opportunities like Mutual  ...
Retail Credit   Retail Credit business shifted from Private    Money lenders to NBFCs and Banks in the last    decade   ...
Retail Credit contd….   Loan to GDP ratio is less than 40%, which is    only a fraction, compared to the developed    eco...
Retail Credit contd….   Banks overtake HFCs in Home Loans   Banks overtake NBFCs in Auto loans   The same trend would c...
Retail Credit contd….   Basel II implementation and necessity to have    stringent Risk Management systems would    exert...
Retail Credit contd….   Home Loan is expected to grow at 30%   Housing loan as % of GDP will touch 10%   Used Car finan...
Retail Credit contd….   Mix of Retail Credit is expected at –    Home Loan 49%, Auto loans 28%,    Personal loans 16% and...
Retail Credit contd….   Housing and Auto loans together, would    continue to contribute to the level of 18%   Other Ret...
Retail Credit contd….   Personal loan segment is also expected to grow    @ 20% with higher yield ranging from 12-16%   ...
Credit Card business   Credit Card issuance at 50% growth rate in    2004-05, compared to 36% growth during the    pervio...
Retail Credit - Challenges   Customer tendency to borrow more and repay    less may adversely affect the NPA levels in   ...
Retail Credit – Challenges    contd….   Liquidity mismatches may emerge as an issue   Slight change in economic scenario...
Retail Credit –Challenges    contd….   Lack of Credit information of Retail customers    from the Banking system   CIBIL...
Retail Credit –Challenges    contd….   Higher Loan-to-value ratio may emerge as a    problem during recession   Sale of ...
Future- for the Customer   Future of Retail Banking is for the    CUSTOMER   Pricing is determined by Customer   Compet...
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Imc bhaskar ghosh-indusindppt

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Imc bhaskar ghosh-indusindppt

  1. 1. Future of Retail Banking- Bhaskar Ghose, Managing Director, IndusInd Bank
  2. 2. Recent trends Aggressive entry strategies of foreign banks to Retail Segment Customer retention initiatives by PSU Banks Aggressive price-war on Retail Credit
  3. 3. Recent trends contd… Rapid penetration of Personal Computers, Mobile phones and on-line Trading and purchase options encouraged increased usage of technology banking Booming economy and continuous per capita income will further push the living standards of people
  4. 4. Recent trends contd… Customers’ preference to more and more alternate channels for convenience Fee based income from remittance is shrinking due to RTGS and other technology initiatives Higher short term interest and flatter yield curves
  5. 5. Recent trends contd… Phenomenal rise in nuclear and dual income families & enhanced spending power Increasing literacy levels Higher adaptability to technology banking
  6. 6. Recent trends contd…. Growing consumerism Fiscal incentives to Housing loans Fastest economic growth over the decade
  7. 7. Retail Liabilities Banks continue to offer valued added Products and Services for customer acquisition and retention Retail Banking technology is gaining its importance due to the continued demand Customer Relationship Management (CRM) is going to be a mandatory requirement for banks to leverage the existing relationship
  8. 8. Retail Liabilities contd….. Retail Banking customers are demanding more and more features and product differentiation More and more Retail customers in the age group of 20-35 with high saving potential Future of Retail Liabilities would be from Tier II & Tier III locations
  9. 9. Retail Liabilities contd… Alternate delivery channels, channel integration and single sign on expectation from customers Branch Banking channels are going to be business expansion channel than Transaction processing centre More and more customers are moving out of the Branch Banking channel to other alternate delivery channels
  10. 10. Retail Liabilities -Future Rate of growth of deposit may be affected by other investment opportunities like Mutual Funds and Bonds Banks may prefer to have sharing arrangements Smart Card/Stored value card would gain importance
  11. 11. Retail Credit Retail Credit business shifted from Private Money lenders to NBFCs and Banks in the last decade Now, the shift is from NBFC s to Banks In future, the shift is expected from inefficient Banks to Banks with set processes and quick delivery systems
  12. 12. Retail Credit contd…. Loan to GDP ratio is less than 40%, which is only a fraction, compared to the developed economy Every Bank has enough opportunities to perform without unhealthy competition Business potential in Semi urban and Rural areas are very high, which is yet to be explored
  13. 13. Retail Credit contd…. Banks overtake HFCs in Home Loans Banks overtake NBFCs in Auto loans The same trend would continue for next few years
  14. 14. Retail Credit contd…. Basel II implementation and necessity to have stringent Risk Management systems would exert pressure on Retail lending in future Banks with well defined systems and procedures would emerge as leaders in Retail Credit
  15. 15. Retail Credit contd…. Home Loan is expected to grow at 30% Housing loan as % of GDP will touch 10% Used Car finance is growing over 20% rate and is expected to continue
  16. 16. Retail Credit contd…. Mix of Retail Credit is expected at – Home Loan 49%, Auto loans 28%, Personal loans 16% and Consumer durables 7% Educational loans which are at a low ebb also expected to grow at 20% in the coming years
  17. 17. Retail Credit contd…. Housing and Auto loans together, would continue to contribute to the level of 18% Other Retail advances would move from 8 to 13% Agricultural segment is expected maintain the 10% level
  18. 18. Retail Credit contd…. Personal loan segment is also expected to grow @ 20% with higher yield ranging from 12-16% Gross Retail Advances would move to over 40% of total advances in the next 5 years
  19. 19. Credit Card business Credit Card issuance at 50% growth rate in 2004-05, compared to 36% growth during the pervious year Credit Card growth is estimated at CAGR of 20% Draft guidelines on Credit Card operations would affect the Credit Card growth Single overall limit for Credit Cards would ensure lower delinquency rate under the segment
  20. 20. Retail Credit - Challenges Customer tendency to borrow more and repay less may adversely affect the NPA levels in future Future delinquency rates are not properly factored in fixing the Retail credit pricing by few banks Increased risk weight of Consumer Credit
  21. 21. Retail Credit – Challenges contd…. Liquidity mismatches may emerge as an issue Slight change in economic scenario may affect the whole system Existing Retail scoring models may not predict impact of mild recession
  22. 22. Retail Credit –Challenges contd…. Lack of Credit information of Retail customers from the Banking system CIBIL is addressing the issue only to a certain extent No system to eliminate multiple finances, including Personal Loans Higher level of NPA from Personal Loans
  23. 23. Retail Credit –Challenges contd…. Higher Loan-to-value ratio may emerge as a problem during recession Sale of assets without any control from the bank in the case of Consumer Credit Growing incidents of frauds and cyber crimes
  24. 24. Future- for the Customer Future of Retail Banking is for the CUSTOMER Pricing is determined by Customer Competition among Banks would ensure him better service at cheaper rate Customer would be able to discount his future earnings as Retail Credit for his higher standard of living
  25. 25. Thank You

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