The document discusses the banking industry in India. It notes that India is projected to become the 5th largest consumer economy by 2025. The banking industry in India is dominated by public sector banks, though private sector and online banking are growing. The document outlines opportunities and challenges in rural banking, online banking, and branch banking. It discusses factors that influence customer behavior and provides a roadmap for differentiating offerings across customer segments and delivery channels to improve the customer experience.

2. Banking Industry in India
◦ India to be 5th largest consumer economy with aggregate
consumption 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 the
population, compared to a 50% penetration rate for mobile
phones. [1]
◦ The Return on Equity for the banking sector has been around
13% in the last four years with top performing banks having 18-
20% as RoE.
◦ According to research by Reich and Sasser (HBR) 5% increase in
customer retention can increase profitability by 35% in banking
buisiness, 50% in insurance buisiness
Source: http://www.ibef.org/industry/banking-india.aspx

3. Industry Growth Drivers

4. Rural Banking in India
 Statistics state that only 37% of bank branches of Scheduled
Commercial Banks are in rural areas with only around 40% of
the population holding bank accounts. [2]
Only 5% of the 600,000 village
habitations in the country have a
commercial bank branch
Only 40% of the population have
bank accounts
51.4% of nearly 89.3 million farm households do not have
access to any credit either from institutional or non-institutional
Debit card holders constitute only
13% of the population and only 2%
have a credit card
Only 13% of farm households are
availing loans from the banks in the
income bracket of < Rs. 50,000.
sources.

5. Online Banking
Customers access e-banking
services using an intelligent
electronic device, such as a
personal computer, personal
digital assistant, automated teller
machine, Touch tone
telephone.
• Cost effective solution.
• Enables the bank to reach its
customers on the net.
• Reduce rush at the counters of
the bank.
• Enables the customers of the
bank to access information
from anywhere and at any
time.
• Balance and transaction history
search
• No more Queues
• Growth:
EY:Banking on Technologies
Source: Indian Research Journal- Ebanking : The Indian Scenario by Dr. Roshan Lal and Dr. Rajni Saluja

6. SWOT Branch Banking
• The banks financial positions grows at
a rate of 20% every year which is a
major positive sign for any bank
• Traditional banking: higher trust
• Safety locker, Loans etc are preferred
• Strong History and loyalty
• Since 2009, RBI has increased CRR
by 100 basis points
• Increased repo rate reverse repo rate
by 50 points – 11 times of late
• RBI allowed foreign banks to invest
up to 74% in Indian banking
• Government schemes are most often
serviced only by govern banks
• Online Banking is preferred by Gen Y
• Robbery
• Expansion into rural areas
• Security Locker user rates are
increasing
• Small traders opt traditional Banking
• Fixed Operating Time
• Liquidity problems
• Customer has to visit the branch in person
• Slow pace of operations are time
consuming
• Document management is challenging

7. SWOT Online Banking
• Competitive Advantage for economies of
scale
• India is currently 4th largest user of internet
• Internet banking users has increased from
9% in 2003 to 50% in 2010
• Access anywhere, anytime: There are no
geographical barriers.
• Personalized transaction report
• Security
• Poor technology infrastructure
• Ineffective risk measures
• Easy Access of internet banking account by
wrong people through email ids
• When the server is down the whole process
is handicapped
• Traditionalists do not appreciate change :
IT Fatigue
• Expansion into rural areas
• Rising Middle Class Sector in India
• Rising population of Generation Y’s the
Tech Savvy Youth
• Increased demand for financial products
• Incentives offered by emerging E-commerce
and bill payments
• Retail Boom
• Technology leading to advanced products
and services
• RBI allowed foreign banks to invest
up to 74% in Indian banking
• Government schemes are most often
serviced only by govern banks
• Security Breaches : Hackers, Safety of
present RSA algorithms etc.

8. Factors that influence customer behavior:
 Trust :
• Institutional Stability
• Customer Experience
• Fees and rates
• Word of mouth
• Security
 Product ownership and Satisfaction
 Customer Care Services
 Convenience
Courtesy: EY Global Consumer Banking Survey (2014)

9. Customer Insights
 Based on Primary and Secondary research Security, face to face
interaction, Safety, uncomfortable with technology are main
concerns of the customer on digital banking.
 These concerns change with the demographics ( age,
profession, education), geography of target sample.

10. Road Map
Customer
Segment
RURAL TOWNS URBAN
Segment
Need
• Security Lockers
• Credit Information
• Financial Guide
• Loans with low interest
• Women empowerment schemes
• Insurance
• Loans
• Credit Information
• Retail banking
• Ecommerce
• Real Estate:
investment
assistance
• Various other
schemes
• Immediate payments
• Payroll assistance for
multinationals
• Tools to track financial
health
• Online trading
assistance apps
• Elderly generation:
Retirement plans
Differentiate
d Offerings
• Fund IT related farming
techniques Eg. State Bank of
Mysore funded IT dairy farming
• Online Management of Dairy
farms, Poultry farms etc.
• “Virtual Banker” : Offer online
product guide using video
conferencing services.
• Kisan Cards, Mobile SMS alerts
• Integrated wallet
systems
• Locality based
services
• Bill payments
• Micro Business
accounts
• Tax Calculator :
Assistance
• Security: Anti Money
Laundering Systems
• Ecommerce discount
coupons
• Online management tools
for records, transaction
pattern, Bill payments
• Online service request for
door to door
loan/insurance assistance
Delivery
Devices
• Increase ATMs
• Bill Payments through ATM:
Internet banking in ATM
• Virtual Banker tools (used by
Dutsche Bank)
• “Kisan Sabah’s” to increase
Awareness among farmers about
online banking (Village panchayat,,
Friends Club, Rotract associations
etc.)
• Virtual
CFO/Bookkeeper
services
• Online calculators/
• Virtual Safe deposits
• Premium cards
memberships for small
organizations
• Retirement plan online
calculators and service
guides

11. Road Map
 Virtual banker” is a collaboration tool that allows video
conferencing services between consumers in branches and
remote bank advisors.
 E.g. Nykredit(Denmark) implemented the remote personal advisors in June 2012 to meet the
needs face to face interaction resulting in customer satisfaction has increased by 7.5% over
the past year, while employee satisfaction has also increased by 8.5%. ROI has also seen an
improvement 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 the
nearest retail store by GPS enabled mobile app which scans for
nearest 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 “Pocket
money account”
 Brand Ambassador programs for students as to market the brand
image and provide customer insights on Digital marketing over
social networking sites

12. Road Map
 Improving functional coverage.
 Improving usability experience.
 Analyzing customers for their behavior and banking habits.
 Analyzing customer’s profile and providing customized
offerings.
 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 Urban
area/Rural area.
 “Online part time agents” for life insurance, loans etc : target
students, housewives looking for part time job, rural area talents
etc.

13. Product Comparison
 Extensive marketing required for ING Vysya Bank
 HDFC/Axis bank etc offers discount coupons on online bill
payment, ecommerce etc.
 Payback points on credit, debit cards
 Personalized customer need based loans
 Some banks offer assistance in online trading (Demat
account)
 Few top banks have a separate unit taking care of loan and
insurance sector
 Zero processing fee advertised well in top banks online sites
 Calculators, Track your application number etc. offered as
online services by top banks.
 “Religious offerings” can be included by ING Vysya bank
 Virtual Tutor can be incorporated.

14. Summary
 The growth story of the Indian banking industry showcases vast
opportunity, and it is imperative to appreciate the attractiveness of
this sector.
 Today’s internet banking is speedily achieving the status of being
an independent channel generating revenue.
 Efforts of improving usability, presentation, functional coverage,
enhancing supply chain components, extending transaction
coverage for entire cycle or across geographies are relentless.
 However improving customer experience uniformly across various
channel; customer education and participation, customer profiling,
enhancing customer relationship are vital in the growth of this
channel.
 Multiple parameters such as Functional and Transactional coverage
customer centricity, Prospecting and leading conversion, Channel
oversight, Organization support to channel, Multi-Channel
servicing etc must be considered.

15. 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