Keywords:
BAL – BALANCE
SMS – SHORT MESSAGING SERVICE
ICFAI – INSTITUTE OF CHARTERED FINANCIAL ANALYST OF INDIA
ICICI – INVESTMENT CREDIT AND INVESTMENT CORPORATION OF INDIA
FOOTFALL – NUMBER OF CUSTOMER VISITING A BANKING BRANCH PER DAY
ABSTRACT:
The following project was done to reduce the footfall at ICICI bank Branch Solapur. The bank was facing problem in providing quality service to the customers. The Footfall was 600 per day. As a result, the employee was continuously engaged in serving them and it was affecting their efficiency levels and finally it showed on the productivity of the branch. The branch was not succeeding in increasing their deposits as well as the revenues by providing value-added services, cross-selling of other related products, etc.
The assignment was given to the students at ICFAI National College. The students analyzed the queries of the customers visiting the branch. Mostly they were related with finding the balance on their account, the status of the cheque, mini-statement, etc. It was observed that customers were not aware of other channels like Mobile banking, Phone-banking, Internet banking, etc.
So the solution was to create awareness about the above channels. The advantages of the above channel are it saves cost as well as the time of customers. For e.g. to know the latest balance o account, a customer can type IBAL and send SMS to 57676 and get the balance on mobile in fraction of a second by paying a nominal charge of around Rs.3 per SMS. Similarly other services like status of a cheque, last 3 transactions etc. can be chequed.
For availing the above facilities the customers have to register themselves for mobile banking. Internet Banking is provided free of cost. The customer can not only check balance on Account, Status of Cheque but he can order online transfer of funds, make payments etc. Also he can print the statement as and when required. The above transactions will hardly cost 20 paisa per transactions to the service providing bank.
Also to upgrade the services customers can call the customer care centre and avail the services. It is of great help especially when one losses his ATM card. The card access can be blocked immediately by calling and informing the customer care Department.
Wit the availability of such value added services the need is the customers should educate themselves and use the facilities based on their comfort and compatibility level with the modern techniques. Often the new modern technology is available but the problem lies in not using it. It has to do with the mindset of people. We need to respond to the changes and understand the need of the hour.
So the solution was to create awareness and educate the Customers about the Mobile, Phone and NET Banking Channels. The method adopted was telecalling the existing customers of the ICICI Branch, Solapur.
Total Customers Called = 94
Overview
To meet the expectations and win the hearts of the customers the banks should innovate by developing a diverse range of retail banking products and servicing
Banking strategies are presently undergoing various transformations, as the overall scenario has
changed over the last couple of years. Till the recent past, most of the banks had adopted fierce cost cutting measures to sustain their competitiveness. This strategy however has become obsolete in the new light of immense growth opportunities for banking industry. Most bankers are now confident about their high performance in terms of organic growth and in realising high returns. Any bank’s growth strategy now evolves around customer satisfaction. Improved customer relationship management can only lead to fulfillment of long-term, as well as, short-term objectives of the bankers. This requires, efficient and accurate customer database management and development of well-trained sales force to develop and sustain long-term profitable customer relationship. Banks are upgrading themselves on the technological front to become more competent
Lower costs remained an important driver for profitability. The buoyancy of revenues varied across business lines. During the first half of current decade, banks focused on cost cutting around the globe. But now these banks are concentrating on growth. For achieving the revenue growth, these banks are focusing on more value from existing clients. In mature markets, excluding mergers, 80% of future revenue is expected to come from existing clients, and only 20% from new client acquisition. Banks are generating more value from existing customers by raising prices, expanding product lines, or increasing their share of wallet. Relationship banking approach is very critical in meeting this goal
An international Retail Banking Survey supports the above trend
Recent retail banking global survey conducted by the Cap Gemini, shows that around 72% of the
surveyed banks in mature markets are expecting their profit growth from an increase in revenue.
Only 28% of the retail banks are still focusing on cost cutting. These banks expect 65% revenue
growth from the existing clients. Only 21% of the revenue growth is expected from new client
acquisition. As the price increases for the existing product and services, they expect a 14% of revenue growth.
Changing Demographic profile drives the growth
India is a young nation today. At present more than 70 % of the population is less than 35 years old. At this prime age there needs are galloping due to changing lifestyle. What is heartening that their increasing personal income raises the loan repayment ability thereby loan entitlement. These all are making our banking honchos go gaga about the explosive retail growth which was not thought of even 4-5 years ago
Changing consumer Demographics
• Increasingly wealthy and growing middle-class disposable incomes
• The youngest population in the world
• Increasing literacy levels
• Higher adaptability to technology
• Urbanization is a long lasting trend
• Growing consumerism
• Fiscal incentives for housing loan
• Fastest economics growth over the decade
• Higher growth in service sector
• Growing competition among the banks
Players’ Response aggressively to the changing environment
• Only traditional saving and credit Products.
• Introduce new offerings every few years/months
• Customer belonged to a branch – Not to the Bank
• Customers were satisfied with one branch and restrictive timings
• Proximity to potential customers was the key competitive advantage
• No choice of channels
• Restricted timings
Now
• “Any where”, “any time” banking.
• More demanding and faster service
• Customer specific new offerings every week/day
• Customer belonged to a Bank – Not to the Branch
• Customer research: what does the customer want?
• Customer segment sales and profitability targets
• Customer convenience
• Strong relationships
Cut throat competition
More and More Banks will enter the payment card space especially in the credit cards segment. While debit card becomes a standard product offering with any saving account opening, the credit card is still a product which many banks are not showing active interest in providing to the customers. However, the trend is changing and industry will witness entry of multiple banks each year for the launch of credit cards. This will not only serve as a big boost to the industry but will also ensure that the customer gets the best of the card features and schemes
The personal consumption through credit cards is one of the lowest at 1 per cent in India compared to the World average of 8.6 per cent, Asia Pacific’s 6 per cent and even China’s 3 per cent. The country with its size and geography still faces challenges due to lack of infrastructure and spread of banking services in India. However, the technology can be a key driver to reach out to this vast unbanked population, and electronic payment systems can play a pioneer role. New products like low cost ATMs and low cost wireless point-of sale terminal can be used over wireless network to disburse cash at remote merchant locations; there will be no need of setting up relatively expensive infrastructure. A debit, prepaid or smartcard can also act as a mechanism to enable a customer access his funds or bank account
Full ATM outsourcing
A trend that is starting to gain attraction in the European and Asia-Pacific markets is that of
outsourcing part or all of the ATM value chain. We expect the same to take shape in India too. Some banks are already beginning to see the advantages of outsourcing, particularly on the maintenance / cash management / status monitoring side. ATM outsourcing activities will become feasible as players can set up a common ATM infrastructure and thereby gain from economies of scale. Smaller private and co-operative banks and banks with ATM branches in smaller cities where the volume of transactions is not very high will also gain from such initiatives
Technology Spend
The growth in retail banking is driven from two ends- one from the consumer end and another from Banks’ end. Stronger consumerism, growing purchasing power; general change in standard of living; etc have been the driving factors from the consumer end. Better spread management and better risk profiling techniques have been driving retail banking from Bankers end.
With the initiation of deregulation, now banking in India look for to modernize their IT
Infrastructures and foreign entrant banks plan aggressive entry strategies, especially in the segment of booming retail banking.
Aiming to increase productivity and cost competence, retail banking technology is obviously getting enough attention. Retail banking technology covers a wide range of applications, including the core or back office processing systems that form the basis of retail banking services. Indian retail banks have been extensively using Information and Communication technologies for their operations like central accounting, customer information management, transaction-processing and importantly, for numerous customer-facing solutions. Besides there are supporting or ancillary solutions such as security and compliance in addition to the “middleware” that banks use to link their customer-facing applications to their core systems.
The major business focus of the IT savvy retail banks is in providing products and services to the
customers through a diversified base of channels – bank branches, ATMs, e-banking, e-branch,
mobile-banking, SMS-banking, etc. In India, the business growth is driving technology spending in the retail banking segment. Indian retail banks are looking to move beyond their branch-centric
distribution models. Extending ATMs networks, advancing online and phone banking, and
rationalizing branch infrastructure are all on the cards
Spread of ATMs- Primary concern for banks
Largest bank in Indian arena, SBI, invested Rs4.6 billion to computerize its branches – its largest single item of capital expenditure. Largest private sector player, ICICI’s yearly technology spending is about Rs69m, or 10 per cent of that of a foreign bank with a similar number of customers. ICICI’s technology bill over the past five years is about Rs7.85 billion. Total ATMs available as on March 2006 were 21147. All nationalized banks together covers 33.9% of all ATMs available on the country as they have advantage of already set up branches Strength of New private banks reflects of comparison of offsite ATMs as they cover 35% of total offsite ATMs. Foreign banks are still in the initial stage and have to go a far to be comparable on terms of number of ATMs in the country as they occupy lowest no. of ATMs
Internet banking – emergence of new era in personal banking
Though online purchasing and money transfer is a new concept for retail banking, services like real time balance statement, online money transfer to demat accounts, online bill payments, mobile prepaid refilling, and online tax payments can form an important aspect for personal banking. Many of private and nationalized banks have adopted the concept of net banking to attract more customers
Role of Associations
Global associations like VISA and MasterCard have taken special initiative to promote usage. VISA started acceptance program in 20 tier II towns in India. The member banks were given huge incentives to increase acceptance and usage in these cities. A good amount of publicity was generated leading to an overall increase in awareness and card usage. Such programs marked a welcome change in the Indian card industry signalling the maturity of the industry and assuring the high stakes involved to make the industry grow
Outlook
As India’s economy matures with excellent performance in terms of GDP and other parameters like per capita income, balance of payments, inflation and financial market, consumer spending is all set to increase by many folds. This growth would definitely fuel the growth of credit card lending. The application of modern technology, which has created cash-free culture, is one of the major factors that will drive the credit card business in India.
Growth of the entrepreneurial and self-employed population across India, owing to wealth creation opportunities, would boost the card culture in the country. Both the Indian consumer market and consumer are moving up. Pay and salary hikes of working professionals as par with global standard, phenomenal rise in nuclear and dual income families, enhanced spending power and increasing appetite for consumer goods are factors which will provide further impetus to the card business. Rapid penetration of personal computers and cellular phones, the proliferation of electronic banking channels coupled with the predicted rise in shopping over Internet via cards and the setting up of a credit bureau in the future would boost the credit card business. This business segment will contribute more to the banks’ bottom-line
Conclusion
There is a need of constant innovation in retail banking. In bracing for tomorrow, a paradigm
shift in bank financing through innovative products and mechanisms involving constant up-gradation and revalidation of the banks’ internal systems and processes is called for. Banks now need to use retail as a growth trigger. This requires product development and differentiation, innovation and business process reengineering, micro-planning, marketing, prudent pricing, customization, technological upgradation, home / electronic / mobile banking, cost reduction and cross-selling.
While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting. How far the retail banking is able to lead the growth of the banking industry in future would depend upon the capacity building of the banks to meet the challenges and make use of the opportunities profitably.
However, the kind of technology used and the efficiency of operations would provide the much
needed competitive edge for success in retail banking business. Furthermore, in all these customers’ interest is of paramount importance. The banking sector in India is demonstrating this and I do hope they would continue to chart in this traded path
Today, the Indian banking sector has become a one-stop shop for various financial services and the
future of retail banking sector looks very promising. In order to reach global standards, Indian banks
have been innovating continuously, thinking “out-of-the-box”, and diversifying into various segments
via expansion of branches, tie-ups with other industry players, and adding additional financial
services. Key features like easy accessibility; anywhere anytime banking, increased use of technology
and rapid introduction of innovative customized products to meet consumer demands have changed
the banking scenario in the country. While retail banking offers excellent opportunities for growth, it poses significant challenges as well. Further, with the increasing competition across the industry and with the changing consumer trends, there is a need for constant innovation in retail banking with product differentiation, customization and technological upgradation.
THE FUTURE
Refocus customer relationships through technology and innovation
In the next few decades, the retail banking industry will be forced to adapt to rapidly changing
customer expectations. Customer diversity and individualism will pervade buying behaviour, and how customers perceive value will change as a result of pronounced shifts in demographics and value systems. Population growth will increase the relative numbers of both the oldest and youngest
customer segments, posing significant new challenges and opportunities for banks. While older
customers tend to require more high-touch service and are generally more loyal, youthful customers
are fickle, technology savvy, and highly inclined to research and negotiate the best deals. And across
all age groups, long-standing life stage patterns are becoming more unpredictable. People are
marrying later, divorcing more, having second families, and starting second and third careers. These
changes are leading to unprecedented diversity in the financial needs of households. Customers’
decision patterns will become more complex. Value-oriented buying, based on the price-quality
dynamics, is becoming increasingly influenced by personal views and the desire to express those
views outwardly. Customers will demand low prices for basic goods but pay premiums for products
and services that matter more to them personally
Difficulty Faced
- Limited Resource ( Single Telephone Line at the branch )
Conclusion
- “ICICI bank has Mastered the Art of repairing a running Bus “
- 100% Cost Reduction by Channel Migration
- Pioneer in other Channels of Banking
- Innovative in Service Sector
- Easy to Understand Machine operation