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Retail banking pres


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Retail banking pres

  1. 1. Retail Banking – Issues and Prospects Aditi Sachdev S-3 Anand Vijay S-6 Dinesh Kumar S-20 VS Arun Kumar S-66 Vikram Razdan S-68
  2. 2. What is Retail Banking <ul><li>Services offered by banks and other financial institutions directly to the consumers constitute retail banking, e.g. </li></ul><ul><li>Savings and current accounts </li></ul><ul><li>Home loans </li></ul><ul><li>Car and consumer durables loans </li></ul><ul><li>Personal loans </li></ul><ul><li>Credit / debit cards </li></ul><ul><li>Depository services </li></ul>
  3. 3. Present Scenario <ul><li>Indian retail banking has been showing phenomenal growth (30%) </li></ul><ul><li>Face of Indian consumer is changing – banking habits that are more skewed towards retail products </li></ul><ul><li>Retail loans are approx. 6% of the GDP, figure much lower than developed nations </li></ul><ul><li>Market has transformed into a ‘buyer’s market’ from a ‘seller’s market’ </li></ul><ul><li>Comprises of multiple products, channels of distribution and multiple customer groups </li></ul>
  4. 4. Economy vs. Retail Banking <ul><li>Retail assets are just 22% of the total banking assets of India </li></ul><ul><li>Contribution of retail loans to GDP: </li></ul><ul><li>India 6% China 15 %, </li></ul><ul><li>Thailand 24% Taiwan 52% </li></ul><ul><li>Indian population below 35 yrs of Age – 70 % </li></ul><ul><li>Reach of Formal Banking Channels – 20-25% of Indian population </li></ul><ul><li>Source: Cygnus Industry Insight </li></ul>
  5. 5. Market Share: Retail Loan
  6. 6. Drivers Of Retail Growth <ul><li>CHANGING CONSUMER DEMOGRAPHICS </li></ul><ul><li>Growing disposable incomes </li></ul><ul><li>Youngest population in the world </li></ul><ul><li>Increasing literacy levels </li></ul><ul><li>Higher adaptability to technology </li></ul><ul><li>Growing consumerism </li></ul><ul><li>Fiscal incentives for home loans </li></ul><ul><li>Changing mindsets-willingness to borrow/lend </li></ul><ul><li>Desire to improve lifestyles </li></ul><ul><li>Banks vying for higher market share </li></ul>
  7. 7. Industry’s response to the change <ul><li>“ Any where”, “Any time” Banking </li></ul><ul><li>Improved processes/Bundled product offerings </li></ul><ul><li>Faster service/Reduced TATs </li></ul><ul><li>Customer specific products/offerings on a regular basis </li></ul><ul><li>‘ Bank’ customer has replaced ‘Branch’ customer </li></ul><ul><li>Focus on understanding customer needs/ preferences </li></ul><ul><li>Segmentation/Differentiation of customers </li></ul><ul><li>Customer driven strategies </li></ul><ul><li>Building relationships </li></ul>
  8. 8. Comparison of IT enablement* * As per data in Sept 2009
  9. 9. Comparison of IT enablement*…contd * As per data in Sept 2009
  10. 10. IT and Security <ul><li>Anti-money laundering </li></ul><ul><li>Fraud prevention </li></ul><ul><li>Market surveillance </li></ul><ul><li>Employee fraud detection </li></ul>
  11. 11. Anti-money laundering software <ul><li>Currency Transaction Reporting (CTR) systems, which deal with large cash transaction reporting requirements (Rs 10 lacs and above in India, $10,000 and over in the U.S.) </li></ul><ul><li>Customer identity management systems which check various negative lists and represent an initial and ongoing part of Know your customer (KYC) requirements </li></ul><ul><li>Transaction monitoring systems, which focus on identification of suspicious patterns of transactions which may result in the filing of Suspicious Activity Reports (SARs). Identification of suspicious (as opposed to normal) transactions is part of the KYC requirements. </li></ul>
  12. 12. Fight against AML <ul><li>The various software packages are capable of name analysis, rule-based systems, statistical and profiling engines, neural networks, link analysis, peer group analysis, and time sequence matching. </li></ul><ul><li>There are specific solutions that offer case-based account documentation acceptance and rectification, as well as automatic risk scoring of the customer taking account of country, business, entity, product, transaction risks that can be reviewed intelligently </li></ul><ul><li>Portals to share knowledge and e-learning for training and awareness </li></ul><ul><li>Unusual activity on an account may trigger a call from the card issuer to make sure it has not been misused. </li></ul>
  13. 13. Fraud prevention <ul><li>Deposit Fraud - Monitors account activity detecting suspicious deposits; covers multi-channel check deposit monitoring and deposit coverage whether from new or existing accounts; </li></ul><ul><li>ATM and Debit Card Fraud - Provides high-performance fraud detection for ATM and debit cards; Monitoring multiple channels including PIN POS swiped, Internet, ATM, Signature POS keyed/swiped; </li></ul><ul><li>Payments Fraud - Monitors ACH, wire, and external debit transactions to detect fraudulent activity. </li></ul>
  14. 14. Market Surveillance <ul><li>Helps financial firms to minimize trading risk and improve transparencies and automate procedures. </li></ul><ul><li>Ensures compliance with the regulatory. </li></ul><ul><li>Deals can be checked near real-time on a post-trade basis, assuring that no illegal or unwanted transactions pass unnoticed. </li></ul>
  15. 15. Employee fraud detection <ul><li>High-risk employee – certain employees impose a higher risk than others, for instance employees that have been on the job less than five months. </li></ul><ul><li>Unusual employee activity – based on the number of times the Customer Information System (CIS) has been accessed by a single employee to inquire the details of a customer account. </li></ul><ul><li>In a call center, the number of account inquiries per employee substantially exceeds the number of customer calls received; The number of account inquiries per employee substantially exceeds the number of transactions entered. </li></ul>
  16. 16. <ul><li>The accelerated retail growth has been on a historically low base </li></ul><ul><li>Penetration continues to be significantly low compared to global bench marks </li></ul><ul><li>Share of retail credit expected to grow from 22% to 36% </li></ul><ul><li>Retail credit expected to grow to Rs.600,000 crs by 2011 at an annual growth rate of 25% </li></ul><ul><li>Source: Cygnus industry insight </li></ul>Future Of Retail Banking
  17. 17. Future of Retail Banking Contd …. <ul><li>Dramatic changes expected in the credit portfolio of Banks in the next 5 years </li></ul><ul><li>Housing will continue to be the biggest growth segment, followed by Auto loans </li></ul><ul><li>Banks need to expand and diversify by focussing on non urban segment as well as varied income and demographic groups </li></ul><ul><li>Rural areas offer tremendous potential too which needs to be exploited </li></ul>
  18. 18. Strategic prerequisites…. <ul><li>Performance oriented leadership </li></ul><ul><li>Sophisticated marketing and sales </li></ul><ul><li>Efficient distribution channels </li></ul><ul><li>Process efficiency and ease of scalability </li></ul><ul><li>Superior credit policy, procedures and skills </li></ul><ul><li>Source: Mckinsey </li></ul>
  19. 19. Challenges <ul><li>Sustaining Customer loyalty </li></ul><ul><li>NPA reduction & Fraud prevention </li></ul><ul><li>Avoiding Debt Trap for customers </li></ul><ul><li>Bringing Rural masses into mainstream banking </li></ul>
  20. 20. Strategies for Future… <ul><li>Reaching to masses : Need to customize </li></ul><ul><li>Customer segmentation/differentiation </li></ul><ul><li>Data mining/CRM based campaigns </li></ul><ul><li>Products per customer/loyalty </li></ul><ul><li>Promoting low risk retail lending products </li></ul><ul><li>Offer an array of products and financial advisory. </li></ul>
  21. 21. Strategies for Future… Contd. <ul><li>Cost effective expansion </li></ul><ul><li>Renewed emphasis on superior execution by front-line employees </li></ul><ul><li>Grow through Alliances: </li></ul><ul><ul><ul><li>Hospitality Education </li></ul></ul></ul><ul><ul><ul><li>Retailers Automobiles </li></ul></ul></ul><ul><ul><ul><li>Consumer Durables Housing/Construction </li></ul></ul></ul>
  22. 22. <ul><li>The bank that best addresses and anticipates customers needs, delivers consistently higher quality service and connects to the customer via their channel of choice wins </li></ul><ul><li>Y.Y.Chin, OCBC Bank </li></ul>Winning Strategy
  23. 23. Thank You !