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Recent trends
Aggressive entry strategies of foreign banks to Retail Segment Customer retention initiatives by PSU Banks Aggressive price-war on Retail Credit
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
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
Phenomenal rise in nuclear and dual income families & enhanced spending power Increasing literacy levels Higher adaptability to technology banking
Growing consumerism Fiscal incentives to Housing loans Fastest economic growth over the decade
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
Retail Liabilities
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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
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
Banks overtake HFCs in Home Loans Banks overtake NBFCs in Auto loans The same trend would continue for next few years
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
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
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
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
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