High-Tech Banking

THE EVOLUTION OF BANKING IN INDIA

Future

•Continued
Business complexity

retail focus
Presen •Need to
t push down
•Retail push per
•Complex transaction
Past products costs
•Multiple
•Simple channels
products •Challenge of
•Low volumes increasing
•Focus on volumes
high value Time
corporate
Changing business needs have constantly posed
business
challenges for the technology…
THE DEPLOYMENT OF TECHNOLOGY
 Automate the routine/transactions

THEN

 Move on to new ways of service delivery

THEN

 Move on to new ways of doing business

THE KEY AREAS OF APPLICATION OF
TECHNOLOGY
1) Transaction processing
Make the routine BUT NECESSARY work
Easier
Faster
Accurate
Cheaper

2) Product bundling/creation
Combine products in ways otherwise not
possible
3) Cost cutting
Normal transaction channel migration
Technology led delivery of products
THE KEY AREAS OF APPLICATION
OF TECHNOLOGY
 Rapid increase in customer base led to
proportionate growth in number of
transactions, creating a need to use
technology to improve productivity and
efficiency of processes.
1. Focused factory concept for
Transaction processes like account opening,
Processing cheque clearing etc.
Economies of scale
Control and consistency in
processes
Reduced load on branches
Improved turn around times
 TRANSACTION PROCESSING

 Automated cheque processing

 Imaging and document management
Technology  Automated deal matching system
Initiatives  Centralization of operations like
clearing

 Allows economies of scale

Advantages
Centralizati  Reduction in costs of running each
on branch
DELIVERY CHANNELS
Operations Branch Network Channels

ATMs

$
Internet

Pull
$
Push
Banking

Cheque Shops Call

Centers

$
M-banking

CPC $ Agents

B r a n c
2. PRODUCT CREATION AND BUNDING
Online Trading Account
The online trading account integrates
banking, broking and demat
accounts.
Key Features
 Low minimum balance with
plain vanilla SB features
 Facilitates investment in a
basket of products–MF, IPOs,
etc.
 No paperwork
 Complete information
 Shares can be bought/sold
immediately
KEY BENEFITS
 Convenience: Trading without the hassle of chasing
the brokers.
 Independence: No need to transfer money to broker’s
pool.
 Speed: Transaction reduces few clicks.
 Control: A comprehensive account for all the
investment needs.
 Rich Content: The trading site offers a rich content
and helps to take an informed decision.
 Settlements: They are no longer a problem.
3. TECHNOLOGY-LED DELIVERY OF PRODUCTS
Technology-led delivery

Call centers Internet

M-banking Banking ATMs

Credit / Loans -
Private
debit Home, car Deposits
banking
cards etc.
Young Stars /
Student Investments -
Savings
Banking Mutual funds,
GoI bonds account
Services
… with a strong focus on web-enabling of
all services
CHANNEL MIGRATION AS A TOOL FOR
COST CUTTING

 Migrating the customers to alternate channels

improves the quality and lowers the cost of service
delivery.

 The banks are getting consumers to use the right

channels for the right transactions and interactions.

 The alternate delivery channels are the biggest

growth drivers for the banks.
 EXTENDED REACH BY MULTI-CHANNEL
OFFERINGS

Multi-channel delivery
model
Phone
M- Banking
banking Interne
Branch
t ATM Banking
bankin
g

… with focus on migrating customers to

technology enabled delivery channels
 CHANNELS

 Electronic bill presentment and payment

 Online bill payment for shopping, travel and donation
Internet transactions
Banking  Funds transfer 24X7 facility
 Money to India for NRI customers
Services  All routine transactions regarding banking, cards,
loans and investment services

 Routine banking transactions like balance enquiry,

cash withdrawal, funds transfer, cheque book
Automatic requests etc.

Teller  Features like airtime recharge for pre-paid mobile

phones, donations to temples/trusts
Machine
 ATMs for visually challenged customers
CHANNELS
 SMS alerts for salary credit, account
getting credited/debited, cheque
bounce
Mobile
Banking  SMS alerts for credit card due date
reminders, approaching credit limit
reminders
 Customer contacted through voice, e-
mail, correspondence, video
conferencing
Call
Centre  Wide range of solution offerings to
customer right from balance enquiry to
execution of banking transactions like
funds transfer, bill payment over phone
 CHANNEL MIGRATION – SUSTAINED EMPHASIS
Call
Internet
ATM Centre
2%
15% 5%

Branch
78% Internet
12%
2000 Branch
30%

Call Centre
12%

ATM
46% 2004
FUNCTIONS OF CHANNELS
 Functions that channels must perform
 Sales
 Transactions

 What are the various activities under

 Sales?
 Transactions?
THE ACTIVITIES UNDER SALES
 Pre–sale
 Lead generation
 Lead follow up
 Account opening

 Post–sale
 Cross sell
 Relationship deepening
THE ACTIVITIES UNDER TRANSACTIONS
 Cash payment/withdrawal
 Request for Demand Draft/Pay Order
 Account opening/closure/transfer
 Investment Consultancy
 Balance Enquiry/last few transactions
 Statement of Account
 Cheque Book Request
 Cheque Status Enquiry
 Demat Queries
 Standing Instructions
 Fixed deposit renewal/closure/opening
 Address Change
 Stop Payment
 Cheque Deposit
 Funds Transfer
 Balance/Interest Certificates
 Others
 TYPES OF CHANNELS

Predominantly Predominantly
Human Technology

 Where do these belong?

 Branchs
 Mobile banking
 Home services
 Internet banking
 ATMs
 Call centres
Let us do a SWOT of each channel….
 Strengths Weaknesses
 Personal touch  Requires high manpower
 Personalized information  High infrastructure cost
 Facilitates complex  Restricted timings
banking activities  Limited accessibility
 Customer retention  Time consuming
 Deepening of relationships
 Brand visibility
 Inculcates loyalty in
customers
 Perceived as a trusted
advisor Opportunities Threats
 Financial advisor  Increasing cost of
 Facilitates channel transactions in the branch
migration
 Effective cross selling

The Branch Channel….

 Strengths Weaknesses
 Cost effective  Cost of set up
 Better reach  Limited cash dispensing ability
 Brand visibility  Lack of human interface
 Round-the-clock availability  Waiting time is not eliminated
 Quicker transactions completely
 Networked to centralized
database enabling online
updating
 Adds a fillip to bank’s
customer base
Opportunities Threats
 Platform for cross selling  Security concerns
 Value added services like  Lower brand loyalty
donations, mobile phone
prepaid recharging
 Shared ATMs to reduce cost
and to maximize reach
 Mobile ATMs to reach remotely
located customers
The ATM Channel….
 Strengths
 Lowest cost per transaction
 Wide outreach
 Minimum physical
infrastructure
 Round-the-clock availability
 Convenience banking
 Account integration for single
-relationship view
 Waiting time eliminated
 Information gateway
Opportunities
 Platform for cross selling
 Value added services like
ticket reservations
 Virtual banking
The Internet Channel….
Weaknesses
 All transactions not possible
 Slow adopters of internet
banking
 Lack of human interface
 Poor penetration of internet in
India
Threats
 Security concerns
 Lack of strong trust
environment
 Perceived notion that internet
is not a safe place to conduct
financial transactions
 Not accessible to masses
 Strengths
 Cost effective and accessible
 Most of the banks offer
24x7x365 days service
 Convenience banking
 Economies of scale
 Self banking through IVR
 Single point of contact for
multiple products
 Supports complaint resolution
Opportunities
 Campaign and cross selling
opportunities
 Accessibility across locations
 Deepening of relationships
 Acquisition of new customers
The Phone Channel….
Weaknesses
 Cost of set up
 Limited transactions
 Communication barrier
 High AHT (Actual Handling
Time)
Threats
 Communication gap
 Customer perception of
incurring cost while
transacting