59492477-Prabhat-Project-Report-RETAIL-BANKING.pdf

A DISSERTATION REPORT

On

RETAIL BANKING STRATEGIES

INVERTIS INSTITUTE OF MANAGEMENT, BAREILLY

2011

DECLARATION

I, PRABHAT KUMAR do hereby declare that the Dissertation report titled:

“RETAIL BANKING STRATEGIES”

Is a genuine research work undertaken by me and it has not been published anywhere earlier.

It has been completed under the guidance of Mrs. Rachna Sexena (Faculty), IIMS Bareilly.

Date:

Place:

(PRABHAT KUMAR)

ACKNOWLEDGEMENT

Every work requires a diligent effort not only on the part of the person directly involved in

the successful completion of the work but also the ones who are willing to help and

guidance. In the same regards, I would like to thank my Faculty Guide, Mrs. Rachna

Sexena who has been a constant support in the working of the project.

Furthermore, I would like to express my gratitude to the employees of ICICI Bank who

helped me towards the successful completion of this dissertation and without whose help,

the completion of this report would not have been possible.

(PRABHAT KUMAR)

TABLE OF CONTENTS

Chapter 1: Introduction

Introduction to Retail Banking

Chapter 2: Objectives and Methodology

Chapter 3: Case- ICICI Bank

Distribution Strategies

Product centric Strategies

ICICI Branding

Chapter 4: Innovations by other banks

Savings Account

Home Loans

Credit Cards

Auto Loans

Chapter 5: Customer Preference Survey

Recommendations

Chapter 6: Conclusion

Chapter 7: Executive Summary

Chapter 8: References

Annexure: Question Savings Account

Home Loans

Credit Cards

Auto Loans

Chapter 5: Customer Preference Survey

Recommendations

Chapter 6: Conclusion

naire

INTRODUCTION

Retail Banking

Retail banking is typical mass-market banking where individual customers use local

branches of larger commercial banks. Services offered include: savings and checking

accounts, mortgages, personal loans, debit cards, credit cards, and so forth.

Before Internet era, consumers largely selected their banks based on how convenient the

location of bank’s branches was to their homes or offices. With the Advent of new

technologies in the business of bank, such as Internet banking and ATMs, now customers

can freely chose any bank for their transactions. Thus the customer base of banks has

increased, and so has the choices of customers for selecting the banks.

This is just the beginning of the story. Due to globalization a new generation of private

sector banks and many foreign banks have also entered the market and they have

brought with them several useful and innovative products. Due to forced competition,

public sector banks are also becoming more technology savvy and customer oriented.

GROWTH IN RETAIL BANKING

Bankers have been increasingly shifting focus to retail banking to increase profitability

and reduce delinquency rates. Customer shifting, cost pressure and increased

competition are some of the reasons for this shift in focus. Retailing is now favored

because of better norms, lesser asset quality problem and low NPA. Further it offers

many opportunities and potential for credit expansion.

The size of the retail market is Rs 50,000 crore which includes credit card spending of

Rs10,000 crore. The markets for the other goods are Housing loan at Rs 25,000 crore

(30% CAGR), Personal Loan at Rs 4000 crore (10-15% CAGR) and auto loans at

Rs75,000 crore (5% CAGR)

Moreover, Non-traditional competition, market consolidation, new technology, and the

proliferation of the Internet are changing the competitive landscape of the retail banking

industry. Today’ retail banking sector is characterized by following:

•Multiple products (deposits, credit cards, insurance, investments and

securities)

•Multiple channels of distribution (call center, branch, Internet and kiosk)

•Multiple customer groups (consumer, small business, and corporate)

Today, the customers have many expectations from bank such as

(i) Service at reduced cost

(ii) Service “Anytime Anywhere”

(iii) Personalized Service

With increased number of banks, products and services and practically nil switching

costs, customers are easily switching banks whenever they find better services and

products. Banks are finding it tough to get new customers and more importantly retain

existing customers.

According to a research by Reichheld and Sasser in the Harvard Business Review,

5% increase in customer retention can increase profitability by 35% in banking

business, 50% in insurance and brokerage, and 125% in the consumer credit card

market. Therefore banks are now stressing on retaining customers and increasing

market share.

What do the banks need ?

The banks now need to find out what to sell, whom to sell, when to sell, how to sell

and how to be different to increase profitability.

Banks need to differentiate themselves by adding value-added service, offerings and

building long-term relationships with their customers through more customized products,

enhanced value offerings, personalized services and increased accessibility. Banks also

need to identify customers and products that would be most profitable and target

customers with products that are most appropriate to their needs and serve the

customers with greater cost efficiency.

Banks also need to find out the avenues for increased customer satisfaction, which leads

to increased customer loyalty. This may be explained better from two initiatives bank took

in the past:

1. Earlier what drove many bankers to invest in ATMs was the promise of reduced

branch cost, since customers would use them instead of a branch to transact

business. But what was discovered is that the financial impact of ATMs is a

marginal increase in fee income substantially offset by the cost of significant

increases in the number of customer transactions. The value proposition, however,

was a significant increase in that intangible called customer satisfaction. The

increase in customer satisfaction has translated to loyalty that resulted in higher

customer retention and growing franchise value.

2. Bankers invested in Internet banking, believing that the Internet was a lower-cost

delivery channel and a way to increase sales. Studies have now shown, however,

that the primary value of offering Internet banking services lies in the increased

retention of highly valued customer segments. Again customer satisfaction drives

the value proposition.

Thus, banks need to retain existing customers with enhanced personalized services and

products, which best suits their needs and satisfies them the most.

Potential for Retail in India: Is sky the limit?

The Indian players are bullish on the Retail business and this is not totally unfounded.

There are two main reasons behind this.

Firstly, it is now undeniable that the face of the Indian consumer is changing. This is

reflected in a change in the urban household income pattern. The direct fallout of such a

change will be the consumption patterns and hence the banking habits of Indians, which

will now be skewed towards Retail products.

At the same time, India compares pretty poorly with the other economies of the world

that are now becoming comparable in terms of spending patterns with the opening up of

our economy. For instance, while the total outstanding Retail loans in Taiwan is around

41% of GDP, the figure in India stands at less than 5%. The comparison with the West is

even more staggering. Another comparison that is natural when comparing Retail sectors

is the use of credit cards. Here also, the potential lies in the fact that of all the consumer

expenditure in India in 2001, less than 1% was through plastic, the corresponding US

figure standing at 18%.

But how competitive are the players?

The fact that the statistics reveal a huge potential also brings with it a threat that is true for

any sector of a country that is opening up. Just how competitive are our banks? Is the

threat of getting drubbed by foreign competition real? To analyze this, one needs to get

into the shoes of the foreign banks.

Going by international standards, a large portion of the Indian population is simply not

“bankable” – taking profitability into consideration. On the other hand, the financial

services market is highly over-leveraged in India.

Competition is fierce, particularly from local private banks such as HDFC and ICICI, in the

business of home, car and consumer loans.

There, precisely lie the pitfalls of such explosive growth. All banks are targeting the

fluffiest segment i.e. the upwardly mobile urban salaried class. Although the players are

spreading their operations into segments like self- employed and the semi-urban rich, it is

an open secret that the big city Indian yuppies form the most profitable segment. Over-

dependence on this segment is bound to bring in inflexibility in the business.

What about the foreign giants?

The foreign banks have identified this problem but there are certain systematic risks

involved in operating in the Retail market for them. These include regulatory restrictions

that prevent them from expanding their branch network. So these banks often take the

Direct Selling Agent (DSA) route whereby low-end jobs like sourcing or transaction

processing are outsourced to small regional layers. So now on, when you see a loan

mela or a road show showcasing the retail bouquet of an elite MNC giant, you know that a

significant commission earned out of any such booking gets ploughed back to our own

economy. Perhaps, one of the biggest impediments in foreign players leveraging the

Indian markets is the absence of positive credit bureaus.

In the west the risk profile can be easily mapped to things like SSNs and this information

can be publicly traded. PAN is a step in this direction but lot more work need to be done.

What has been a positive step towards this is a negative file sharing started by a

consortium of 11 banks. However, as a McKinsey study points out actual write-offs on

NPAs show a strong negative correlation with sharing of positive information. On top of

this, the spend-now-pay-later “credit culture” in India is just not picking up. A swift legal

procedure against consumers creating bad debt is virtually nonexistent.

Finally, the vast geographical and cultural diversity of the country makes credit policy

formulation a tough job and it simply cannot be dictated from a Wall Street or a Singapore

boardroom! All these add up to the unattractiveness of the Indian retail market to the

foreign players.

So over the past few years, in spite of the entry of MNCs in many industries, Retail

Banking has seen a flurry of panicky exits. Fewer than 40 remain in India and their share

of total bank assets currently 7.2% is falling. Those that remain might be thought to be

likely buyers of Indian banks.

Yet Citibank, HSBC and Standard Chartered—all in India for more than a century, and

with relatively large retail networks—seem to have no pressing need to acquire a local

bank.

Established foreign banks have preferred to take over customers or businesses from

other

foreign banks that want to leave. Thus HSBC, in recent years, has acquired customers

from France's BNP, Germany's Deutsche Bank and Japan's Bank of Tokyo-Mitsubishi.

ABN Amro took over Bank of America's retail business.

So all for the keeping then?

This will perhaps be the most wrongful inference that can be drawn from the above. We

just cannot afford to look inwards and repeat the mistakes that were the side effects of the

nationalization of the Banking System. A growing market can never be an alibi for lack of

innovation. Indian banks have shown little or no interest in innovative tailor-made

products. They have often tried to copy process designs that have been tested, albeit

successfully, in the West.

Each economic culture has its own traits and one who successfully adapts those to the

business is the eventual winner. A case in point is the successful implementation of

micro-credit networks in Bangladesh. Positioning a bank as a tech-savvy financial vendor

in a country where Internet penetration is an abysmal 1.65% can only add to the over-

leveraging as pointed out earlier. The focus of the sector should remain in

macroeconomic wealth creation and not increasing the per capita indebtedness that will

do little but add to the NPA burden. Retail Banking in India has to be developed in the

Indian way, notwithstanding the long queues in front of the teller counter in the SBI Joka

branch.

NEW PRIVATE BANKS: STRATEGY PAYING OFF

In the words of Chanda Kochchar, Executive Director, ICICI Bank “ Fast growth in retail is

not because of sheer passion for numbers, Rather, it’s the result of strategic thinking.”

•Push retail growth by upping market shares and tapping new customers.

•Lower credit risk by tighter controls and better analysis

•Leverage balance sheet strength and strong corporate relationships

•Follow the customer worldwide and build scalable model for global rollout.

I. PUSH RETAIL GROWTH BY UPPING MARKET SHARES AND

TAPPING NEW CUSTOMERS.

The key dimensions of ICICI’s retail strategy for increasing its market share are:

•Innovative products

•Parity pricing

•Customer convenience through a vast range of delivery channels.

•Operational efficiencies, strong processes and customer focus.

•Cross-selling of the entire range of credit and investment products and banking

services to existing customers is a critical aspect of our retail strategy.

Since initial investments are high in Retail, fast growth and thereby economies of scale

help ICICI make profits much earlier. And today, the bank’s incremental retail business is

30% the size of the industry and its operating costs are said to be among the lowest.

While the distribution network enables the bank to add numbers, stringent credit practices

help control quality and robust back office and use of technology help improve

efficiencies.

OPERATIONAL EFFICIENCIES

If the bank is adding 10,000 new customers everyday and if a customer does 70 to 75

transactions per year, then the bank must run an assembly- line like operation to process

transactions. Incredibly ICICI actually does it.

Hub And Spoke Model

ICICI employs a hub-and-spoke model to improve its operational efficiencies. It has set up

a centralized back office and 18 regional back offices (so called “factories” by the bank) to

do account opening, mailing of account statements, issuing of credit cards and ATM

cards, cheque books etc.

For instance, to process more than one crore cheques a month, which the bank does, the

cheques are scanned at the regional hubs. That helps speed up the process without

adding more employees.

Impressively the bank’s team actually studies assembly line operations and shopfloor

operations of manufacturing companies like Ford and Hyundai Motor to improve the

turnaround time.

Standardization Of Processes

In ICICI bank, although distribution is decentralized, risk control is centralized. Credit is

separate from sales, which means while the sales team is responsible for getting new

business, it is the credit team working on the central credit policy, which approves or

rejects customer acquisitions.

In case of mortgages, there is a structured field investigation process to check on the

legal documents and property valuation. All that helps to keep a close watch on retail

credit quality and explains why the bank’s retail net NPA is 0.75%.

Since the processes are standardized, they are not just scalable but also replicated

across functions. For instance, earlier when a customer applied to open an account, a

three- week waiting period was involved. IN that time, his cheque book, ATM card and pin

number would arrive in seven separate envelopes, because the process was manual.

Adopting a “straight through” processing system lowered the waiting time to five days and

reduced the mail load to one envelope. Starting a few months ago, customers are now

given a pre-printed welcome kit when they open an account and the cards are activated

the next day.

Besides, every quarter, the bank projects the increase in customer base and transactions

for the next quarter and accordingly increases its backoffice bandwidth.

CUSTOMER SERVICE STRATEGY

ICICI has the special account called “Value Added Savings Account:. Under this, if the

customer has more than Rs10,000 balance in his savings bank account that excess will

be transferred to Value Added Savings Account.

From that day onwards, he will be given fixed deposit interest rate on the remaining

balancr. As same as HDFC bank deposits, no entry load or exit load will be charged on

customers. Moreover customers can have access to ICICI Direct.com for share trading.

Besides it is offering various Tax saving schemes namely ICICI pension plan, ICICI

Safety bond, Tax Saving mutual fund schemes and so on.

PRODUCTS

During fiscal 2003, ICICI had continued their focus on retail deposits. This has reduced

funding cost and has enabled them to create a stable funding base, with over 4.7 million

deposit customers. Following a life stage segmentation strategy, ICICI Bank offers

differentiated liability products to various categories of customers depending on

their age group.

For e.g.: Young Star Accounts for children below the age of 18 years, Student Banking

Services for students.

As the leading provider of retail financial services, we are constantly striving to provide

products and services that enable customers to fulfill their financial requirements.

II. LOWER CREDIT RISK BY TIGHTER CONTROLS AND BETTER

ANALYSIS

While the distribution network enables the bank to add numbers, stringent credit practices

help control quality and robust back office and use of technology help improve

efficiencies.

In ICICI bank, although distribution is decentralized, risk control is centralized. Credit is

separate from sales, which means while the sales team is responsible for getting new

business, it is the credit team working on the central credit policy, which approves or

rejects customer acquisitions.

In case of mortgages, there is a structured field investigation process to check on the

legal documents and property valuation. All that helps to keep a close watch on retail

credit quality and explains why the bank’s retail net NPA is 0.75%.

III. FOLLOW THE CUSTOMER WORLDWIDE AND BUILD SCALABLE

MODEL FOR GLOBAL ROLLOUT.

To diversify risk across geographies, the bank in the last two years has been increasing

its global footprint and following the Indian corporate customers overseas, where it has

set up seven representative offices or branches with applications put in for two more in

South Africa and Bangladesh, and a subsidiary in Russia.

Going forward the bank’s policy to consolidate its presence in existing markets,

accelerate growth, sustain profitability and build a business model to withstand the

pressures of a global rollout.

M&A as a route for growth is unlikely as the bank sees little value in acquisitions given the

bank’s own reach and equity with customers. Instead, he wants to grow it organically to

keep both costs and risks down.

IV. LEVERAGE BALANCE SHEET STRENGTH AND STRONG

CORPORATE RELATIONSHIPS

In a bid to further strengthen its balance sheet, the bank securitized assets worth RS

10,700 crore. For marginally lower realization, it takes a lot of risk off the bank’s own

balance sheet. With Basel II norms round the corner, the bank will have to access low

cost funds to protect its profit margins and cover bad loans.

ICICI’s DISTRIBUTION STRATEGY

Multi-channel driven retail customer expansion

With the market expansion and customer expansion, ICICI can’t just expand

branches. Therefore it needs to look for another delivery model making it

convenient to the customers to do banking. So it needs a model to prevent the

customer from coming to the bank and at the same time service him.

So there are various other modes like Internet, Mobile, Phone Banking. Roughly, only

30% of the transaction happens through branch, 50% through ATMs, and 10% with

phone banking and net banking, but cost wise these channels have a very low cost as

compared to a branch transaction. On a rough estimate, if at a branch ICICI has to spend

Rs50 per transaction, at an ATM it is almost 25% of the Rs50. So cost of transaction is

very low. Therefore it encourages customers to use the ATM or call up if he needs a

cheque book etc. If they want to transfer money, it encourages them to go online. ICICI

has branches open for 12 hours and migration of the customers from physical to online

saves a lot of cost to the bank

.

To cope with the growth in expansion, ICICI is sourcing almost 2 lakh customers per

month. The branches are the same and there is tremendous pressure otherwise on the

branch. Therefore, it encourages migration.

Certain core activities customer will continue to do from the branches. There are people

who come to the bank just to find out the balance. Things are improving. India being a

conservative country, things are taking time. Earlier, there were so many apprehensions

about the success of ATMs. Today, it is convenient and popular.

ICICI has almost 1700 ATMs coming up. Right now there are 300 transactions per

ATM per day. The moment it crosses 400 plus, it starts putting up an ATM.

To efficiently distribute its products and services, ICICI Bank has developed

multiple access channels comprising lean brick and mortar branches, ATMs, call

centers and Internet banking.

FY2001 saw a significant growth in the branch network (including extension counters) to

378, on account of the merger of Bank of Madura. In March 2001, ICICI Bank became the

first Indian bank to cross the 500 ATM mark. The current network of 510 ATMs is the

largest in the country accounting for nearly 20% of all ATMs in the country.

Customers can now access their ICICI Bank accounts over telephones in 17 cities. These

investments in channel infrastructure have enabled ICICI Bank to achieve rapid growth in

its retail business. During the year ICICI Bank added over 2.5 million customer accounts,

taking the total number of accounts up from 0.65 million at March 31, 2000 to 3.2 million

at March 31, 2001. A significant portion of this increase came from savings accounts

which increased from 0.29 million to 1.66 million. NRI accounts also witnessed a strong

growth and increased from 23,500 to 84,000. ICICI Bank’s Internet banking customers

increased 400% to 550,000 at March 31, 2001.

Says O P Srivastava, head of the retail channel infrastructure group at ICICI Bank,

“When the banking sector was liberalised we knew that to get a lead over the well

entrenched PSU banks, we had to take the help of delivery channels like ATMs. This was

the only way to counter the reach of national players.”

ICICI Bank is the most aggressive deployer of ATMs and has seen its base surge from

125 ATMs in January 2000 to 1,200 ATMs today. Such has been the impact of ATMs that

ICICI Bank’s customer base has grown from two million to five million in the last two

years. ICICI attributes this increase to the increase in ATM outlets.

ICICI is also developing new strategies to leverage their ATM outlets. For instance, rather

than set up a branch in every suburb, ICICI Bank has hit upon a ratio of 8 ATMs to one

branch office, thus effectively reaching out to a large customer base, at a substantially

lower cost.

Anywhere Banking

ICICI Bank is the second largest bank in the country. It services a customer base of more

than 5 million customer accounts through a multi-channel access network. This includes

more than 500 branches and extension counters, over 1800 ATMs, Call Centre and

Internet Banking.

Thus, one can access the various services ICICI Bank has to offer at anytime, anywhere

and from anyplace. To learn more about the various channels, please click on the topic of

your interest mentioned in the left menu.

http://www.icicibank.com/pfsuser/channels/internet/internet.

htm

E-LOBBIES

By installing self-service machines and maybe a one-man enquiry point at the large

corporate, the bank has provided a convenient service for the employees. These clients

make good cross-selling prospects as they are a relatively risk-averse segment. Keeping

in line with the idea of offering convenient, anytime, anywhere banking, ICICI Bank has

pioneered the idea of unstaffed branches in India. Its e-lobbies are its answer to

expanding its branch network while still controlling costs. Using leading edge technology,

the self-service banking centers allow customers to pay bills, withdraw money, video-

conference with a customer service executive, carry out online broking and make other

such transactions, without needing a cashier. The e-lobbies also offer Braille and voice-

enabled ATMs for visually impaired customers. At some locations, the e-lobbies also

display artwork by upcoming artists, acting as an art gallery.

DISTRIBUTION THROUGH INTERMEDIARIES

ICICI Bank has seen 100% of its incremental growth in its home loan portfolio through the

DSA network. Home Loans disbursed by ICICI bank for the year 2002-03 were Rs7000

crore. Evenits, by now famous ‘loan melas’ are conducted by DSAa under the supervision

of its employees. The bank also grew its retail personal loan, auto loan and credit card

portfolio utilizing its 1000 odd DSAs. About 70% of the incremental growth in personal

loans, 40% of its Rs 4100crore incremental growth in auto finance and 60% of credit card

issuance came from DSAs.

DIRECT APPROACH

Recognising the inconvenience of visiting a branch in the highly populated and traffic

congested cities like Mumbai and Delhi, ICICI Bank decided to use direct agents to sell its

mortgages. Supported by the call centre, which would identify prospects and initiate

dialogue, the direct sales agent could arrange a convenient time to visit and discuss the

product with the prospective client.

This allowed the bank for personal preferences to be catered for. For example, couples

could invite the agent to meet them at home after dinner when both husband and wife are

present. A similar sales model was used to sell other products, such as credit cards and

personal loans.

To sell its automobile and two-wheeler loans, ICICI Bank teamed up with the

manufacturers and dealers – so that it became the preferred financier at each level – from

the customer to the dealer to the manufacturer. During the fiscal year 2002, it increased

its lead in the automobile loans market, expanding its distribution network to 145 cities

and towns across India.

The key drivers for growth were the strength of our corporate relationships with leading

automobile manufacturers, strong distribution capability and customer service focus.

PRODUCT CENTRIC INNNOVATIONS IN ICICI BANK

If the bank goes to a guy who is already banking with one of the nationalized bank, what

is the new thing it can tell him? That is where new and innovative products help. The new

products at ICICI give a lot of value added services to the customer making the product

more attractive from the plain vanilla products available at other banks.

Moreover, it also focuses on the customized products for various segments like r "Young

star" account focused on young children; ‘Bank on Campus ‘for the college student and

salary account for the working people. ICICI also focuses a lot on cross selling to promote

the products.

ICICI BANK provides the following retail banking products for

its customers:

SAVINGS ACCOUNTS

Features

•The ICICI Bank Ncash debit card is a debit-cum-ATM card providing the convenience

of acceptance at merchant establishments and cash withdrawals at ATMs.

•Auto Invest Account

•Internet Banking is offered free of cost.

•Anywhere Banking - This facility entitles the account holder to withdraw or deposit

cash upto a limit of Rs.50,000 across all ICICI Bank branches.

•A customer can give the bank various types of standing instructions like transferring

to fixed deposit accounts at regular intervals.

•An average quarterly balance of Rs 5,000 only.

SPECIAL SAVINGS ACCOUNT

Features

•An operating account with free multi city chequebook facility.

•A saving account, which offers to sweep balances above Rs.25,000 in multiples of

Rs.5,000 to a fixed deposit for 1 year.

•No minimum balance requirement. In other words, there is no penalty for non-

maintenance of minimum balances in the accounts.

•Internet Banking

•Free Anywhere banking

•Free collection of outstation cheques

•Free monthly account statements.

•Payroll processing for employees of the organisation through ICICI Bank Salary

Accounts

•Inward remittance through Money2India for FCRA approved trusts.

SENIOR CITIZENS SAVINGS ACCOUNT

Features

•Higher Interest Rates.

•Demand Loan / overdraft against deposits will be upto 90% of the deposit.

•The upcountry cheque collection facility for locations with ICICI Bank presence free of

charge to the Senior Citizen customers.

•Auto Invest Account

•Internet Banking is offered free of cost.

•Anywhere Banking - This facility entitles the account holder to withdraw or deposit

cash upto a limit of Rs.50,000 across all ICICI Bank branches.

A Fixed deposit with a minimum value of Rs.10,000 and avail zero balance facility in

the savings accounts

WOMEN ACCOUNT

The features of the account have been specially designed keeping in mind a woman's

financial requirements. These include :

A)Recurring Deposits

B)Financial planning of children

C) Family Shield Insurance

In addition to these, all features of the existing bank account are available with this

account as well such as

•Free international debit card

•Internet Banking

•Phone Banking

•ATM's

BANK@CAMPUS

With bank@campus, ICICI Bank's Student Banking Service, a student can now look

forward to the new face we have given to banking - his / her computer monitor.

In addition, he gets:

Free Phone Banking

Free transfer of funds into his / her account from any ICICI Bank account

• Annual statement of accounts

•

CURRENT ACCOUNTS

Made to Order current account

Made2order current account, unlike the normal current account which is based on the

quarterly balance, allows the customer to have customized current account based on the

business requirement. The made2order current account is totally flexible and can be

adapted to changing business requirement, without having the requirement to Current

Accounts have specific requirement of Quarterly Average Balance (QAB) maintenance

and inturn offer various facilities free of cost to the customer based on the QAB.

A personalized schedule of charges is derived for each customer based on:

•Service Required

•QAB as agreed to be maintained in the account

•Float expected in the account

YOUNG STARS ACCOUNT

Banking can be fun

Here, at Young Stars, cute companions will guide your child through the world of banking

-through checking the account balance, fun zones and special pages on the internet. It

makes banking a pleasure and of course teaches your child to manage their personal

finances.

With the pocket money that you transfer to your child's account, you can even shop with

him / her at Young Stars very own shopping page.

You can even open a recurring deposit in your child's name.

Once you are done with your 'banking', you can access your child's account with all the

fun links to special zones designed to suit your child's area of interests and also impart

knowledge on the current events of the world.

LOANS

Home Loan:

•Attractive interest rates

•Door-step service from enquiry stage till final disbursement

•Can transfer your existing high-interest rate loan

•Free personal accidental insurance

•Special 100% funding for select properties

•Personal Loan

•Car Loan

•Two Wheeler Loan

•Commercial Vehicle Loan

•Loans against Securities

•Farm Equipment Loans

•Construction Equipment Loans

•Office Equipment Loans

•Medical Equipment Loans

•Loan against Gold

ICICI CARDS

ICICI TRAVEL CARD

The ICICI Bank Travel Card is a powerful new concept for international travelers: a pre-

paid card, you can buy using Indian rupees, and withdraw in any local currency in the

world

Convenient & Secure:No more hassles of finding Money Changers and encashing

travellers cheques!

As good as Cash: ICICI Bank Travel Card gives access to local currency through

8,50,000 VISA ATMs.

One can also shop at over 13 million merchants who accept VISA Electron Cards.

Worldwide Assistance: Round the clock medical and travel assistance.

DEBIT CARDS

ICICI Bank HPCL Debit Card- The Sensible Choice

Basic Features

ICICI Bank and HPCL bring the "Fuel" Debit Card. A debit card designed with just your

convenience in mind. Just hand it over at any HPCL pumps and SAVE on your fuel

purchases. In fact you can use the card for all your shopping, dining and traveling needs,

so you spend with total control.

Your ICICI Bank HPCL Debit Card comes packed with the following features:

•Direct On-line debit to your ICICI Bank account.

•Refund of surcharge* for fuel purchases at HPCL pumps.

•Accepted at over 90,000 shops, more than 1,800 ICICI Bank ATM's and more than

10,000 VISA ATMs all over India.

•International card offering deposit access at over 13 million shops and & VISA ATM's

all over the world.

•24 Hour Customer Care Centre

•Speed-O-Miles Rewards Programme.

•Itemized billing on your bank statement.

•Lost card insurance.

ICICI Bank Ncash Debit Card- Power Your Wallet

Basic Features

Combining the acceptability of a credit card and the prudence of an ATM Card, the ICICI

Bank Ncash Debit card is a most convenient accessory for you. No more fear of

overspending. No more searching for the nearest ATM. Only more comfort and

convenience! With the ICICI Bank Ncash Debit Card you can shop using VISA Electron's

on-line debit program, and debit your ICICI Bank account directly when transacting at any

VISA accredited member establishment or ATM across the world!

RECENT LAUNCH

ICICI Bank has recently launched `Mutual Fund Sweep Account' for its current account

holders. According to a bank release, customers can park surplus funds in their current

accounts in high-liquidity mutual funds through an automatic sweep facility.

Initially, the mutual fund schemes available under this facility are restricted to liquid fund

schemes of Prudential ICICI AMC and GIC Mutual Fund. The choice of funds would be

increased subsequently.

The release quoted Ms Chanda Kochchar, Executive Director, ICICI Bank, as saying, "it

is a unique product that merges the transaction efficiency of the banking account with the

returns potential of a liquid mutual fund and is likely to change the way mutual funds are

sold and distributed.''

Most of the private sector and foreign banks have been offering a sweep facility in the

savings account through which customers can park surplus funds in fixed deposits.

However, mutual fund sweep account is a new product.

CHALLENGES FOR ICICI BANK

The Changing Market

•Increasing customer expectations

•Complex products

•Reduced pioneer advantage

•Competitive pressure on margins

•Products to client service orientation

The Operations Challenge

•Retail business is a transaction oriented business

•Growth in business volumes

•Increase in customer numbers

•Higher transaction volumes

•Operational challenge present in all aspects of the business

•Front Office

•Back Office

•Various systems and processes linking them

MEETING THE CHALLENGE

Operations

•Anticipate transaction volumes and build capacity to meet the same

•Improve productivity of processes

•Re-engineer processes to enhance efficiencies of scale

•Sufficient internal controls and risk management practices

Organisation Structure

•Evolving organisation structure

•Geographic to functional orientation

•Customer centric orientation for identified segments

•Product centric orientation for mass market

•Product centric approach helps gain market share

•Customer centric approach helps deepen relationships

Understanding the customer

•Market research and customer surveys to help in

•designing appropriate products and processes

•improving cross sell ratio and profitability

•Controlling cost by eliminating unnecessary product features and processes

•Pricing products according to value to customer rather than cost

•Managing performance of employees in delivering customer delight

Alliances and partnerships

•Bundling of services to improve convenience to customers

•Overcoming regulatory constraints

•Enhancing customer experience and promoting stickiness

Gauging Customer Satisfaction

•Regular tracking of customer requests and requirements

•Analysis of the same

•Ascertaining change in processes required to meet customer requests

•Re-engineer processes based on feedback

The retail lending portfolio of the bank is growing @ 40-50%, the deposit products by 30-

40% and credit cards by over 100%. The Balance Sheet mix of corporate and retail is

now 68:32. However, this mix is changing and the incremental growth of

corporate to retail is now 45:55.

ICICI: TOUCHING EVERY ASPECT OF CUSTOMER INTERACTION

http://www.outlookmoney.com/scripts/equitytalk/asp/detail.asp?

pt=&si=625205291&rf=0&ci=

ICICI Bank has overtaken HDFC, a major player in home loan market, for the fiscal 2003-

04 by registering disbursements of Rs 13,278 crore as against Rs 12,697 crore recorded

by the latter.

The disbursals of ICICI Bank, which has grown aggressively in a time span of five years,

rose from Rs 8,659.4 crore in FY-03 to Rs 13,278 crore in FY-04. The bank at present

has a market share of about 27 per cent of the total market of Rs 5,00,000 crore

approximately, banking industry sources said.

In the words of ICICI Bank Home Loans’ Rajiv Sabharwal,

"We will continue to try and provide competitive rates, along with innovative add-

on services. We will also increase our presence even beyond the 400-plus

locations where we are currently present".

According the HDFC's annual performance, the disbursals of the entity in FY-04 grew by

28 per cent at Rs 12,697 crore (Rs 9,951 crore in FY-03).

HDFC chairman Deepak Parekh has in the past gone on record that the housing finance

company was not looking at a market share growth but would focus on growing profitably.

Both entities were marketing their home loan products through their branch networks and

direct sales agents. HDFC Bank was also sourcing housing loans from HDFC.

ICICI Bank was currently offering home loans at 7.5 per cent for all tenures on floating

rates while in case of HDFC, the rates were pegged between 7.5 to 8.5 per cent

INNOVATIONS IN CREDIT CARDS

The Evolution of Credit cards

The acceptance of the Credit Card as a replacement for cash has become a reality and

the average usage has hit 3.5 Cards per person in advanced markets; the turnover

matching that for Cash and Cheques. Innovations in the Cards market have resulted in

the evolution of the card from being a “convenient alternative to Cash” to becoming the

“financial window” for the bank to offer bundled services to consumers.

Credits Cards thus, have become an integral part of Consumer Finance with banks

becoming large issuers and acquirers over the years. This has been a natural evolution

with the intermediation of Banks disappearing and the avenues for large scale secured

loans being a distant past.

The expanding gamut of credit cards:

Today, Card products span a wide range of offerings that are structured to meet the

requirements/demands/life style of consumers. Cards issuers constantly analyse

customer

behaviour, competition and technological advances to innovate and improve the

productmix for specific customer segments. These are implemented using a combination

of:

•Features

•New Card Designs

•Fee / APR / Charges linked to option of services

•Pricing Strategies

•Loyalty / Rewards / promotions /campaigns

•Behavioural / Transactional Scoring, to impact:

•Credit Limit

•Over limit etc.

In addition, host of generic services are linked to the Card Products (these would wary

from an issuer to issuer with most of the underlying features being alike)

INNOVATIONS IN THE CARDS BUSINESS

Aided by technology and innovation fuelled by the market needs and underlying growth

propositions, numerous card types have evolved to meet the needs of various consumer

groups. Banks have roped in partners for Co-branding, Co-issuing, Affinity, and Loyalty

programs to encourage cardholders to increase card spends and also to revolve the

credit thus promising to maximise the value for each $ spent by the customer.

Cards businesses are evolving with intense competition, attractive ROI, joining of retailers

and telecom companies into this space, Card being the underlying proposition in e-

commerce and the best and most convenient vehicle for delivering financial services

across borders. Continuous improvement of processes, practices, services, technology,

alliances and products have reached a stage where the offerings on Card products

include the following variants, covering those segments as well, which were outside the

traditional consumer segment:

•Corporate / Business Cards (AMEX having a $45 BN spend on their 4.9 Million Cards

Portfolio in one Year)

•Business Purchase Cards (Meeting all the Purchase requirements of a small /

Medium Enterprise)

•Co-branded Cards aimed at maximizing benefits to the Card Holder by both the

issuing and Co-branding partners.

•Co-issuing for and on behalf of a partner

•Affinity Cards representing a close user group with the benefits realised on the spend

by the Affinity Group

•Instalment Loans with EMI linked to Card outside the Credit Limit

•Personal Loan linked to a Card

•Consumer Loan disbursed through a Card with a credit line equivalent to the Loan

amount…The paid up instalments adding to Open To Buy (OTB)

•Secondary Limits on the Cards during high spend seasons

•Hybrid products covering the features of the Card and the Loan

•Virtual Card (e-card for exclusive use on the net)

•A Card as part of the Mobile Phone SIM card for making Payments etc.

Standard Chartered’s Marathon Credit Card

Standard Chartered Bank in association with VISA International has introduced the

Marathon credit card. This special card is issued to celebrate the spirit of the

Standard Chartered Mumbai Marathon and to compliment the spirit of fitness.

Standard Chartered Bank is the market leader in sport based affinity card

programmes. Its earlier success includes that of the Cricket Card, the Soccer Card and

Olympic Games Card. The Marathon Card is a logical extension of the Standard

Chartered Bank product suite. It has partnered with Reebok in its endeavour to promote

fitness among the customers.

The exclusive offers for the customer include:

Free Reebok Running Shoes: A pair of Reebok 3D Runner Shoes worth Rs. 2290/- are

offered free with every card

Balance Transfer at 0.99%: An attractive balance transfer at a very low interest rate of

0.99% per month, for the first 6 months.

Supplementary Card free for life: All Marathon cardmembers could gift their near and

dear ones supplementary Marathon Credit Cards. These cards are offered free for life.

Win Reebok treadmills: On spending just Rs 900/- on the Marathon Credit Card every

month, customers get a chance to win Reebok treadmills worth Rs.2, 45,000/- each, for a

period of 8 months.

Citibank’s "Premium"

A 20 per cent discount at the newest food haunt in town, an opportunity to win diamonds

with every purchase or a holiday package dirt-cheap — each time you receive your credit

card statement, out will pop a host of rewards along with it, luring you to binge on your

card. Almost all the credit card companies are looking at the same old F&B tie-ups,

offering discounts at retail stores or tying up with hotels for holiday packages to ensure

customer loyalty.

Is the credit card market heading for clutter? Are credit card companies struggling to

differentiate their respective brands? Although industry experts claim that the market is

growing at a rate of 25-30 per cent every year, with a customer base of seven million

people, they feel that the usage and understanding of the card users are not high, and

that only 20 per cent of the card base actually generates revenue for the card issuers.

"One of the concerns of many card issuers in India is to ensure that once the

customer is sold the credit card, it becomes the preferred payment mechanism in

his wallet vis-à-vis other cards that he may own. While the market is getting

cluttered with offers, incentives and tie-ups, Standard Chartered Bank takes great

care in ensuring the relevance of such offers to the customers. The relevance of

such offers is ascertained through extensive research and feedback from

customers," says Neel Chatterjee, Director (Corporate Affairs), Standard Chartered

Bank.

Rewards and sales

The strategy of offering rewards in the form of a discounted meal or a holiday may sound

run-of-the-mill, but credit card companies still feel that it is a good way of increasing sales.

Encouraging cardholders to use their cards initially through rewards and benefits is a

good way of increasing category awareness and drives up card sales volumes.

"Smartfill, the co-branded card launched by Standard Chartered Bank and Bharat

Petroleum in association with Visa, is an example of offering a value proposition. It

enables cardholders to earn one reward point for every Rs 125 spent on the card.

Cardholders also get a fee waiver on purchase of fuel at over 225 designated Bharat

Petroleum outlets in 10 cities across the country," he added.

The need of the hour is to develop new and innovative areas of usage of cards, which are

not only relevant to the customers but also make business sense to the companies.

Yet another example of a credit card company trying to offer its customers value

propositions through co-branding is ICICI Bank. The bank has four co-branding

relationships — ICICI Bank-HPCL, ICICI Bank-BPL, ICICI Bank-Trinetra and ICICI Bank-

Amway. Each of these targets the need of particular groups of people; we would continue

to look for partnership and associations to provide other value added services to the

consumers," says the ICICI spokesperson.

AUTO LOANS

INTRODUCTION

Chalti Ka Naam Gaadi....

You might be able to differentiate between a cylinder and a piston, but can you

understand the multiple car loan options in the market? You have 6/6 eyesight but still

can't read the fine print. Nowadays there are many cars in the market and as many (if not

more) ways to buy them. We help you in clearing the clutter behind all the jargon. Happy

driving!

Comparison Of Different Banks/ Auto Finance Companies

EMI (per

Rs

100,000

loan)

Remarks

1year

(Rs)

3 years

(Rs)

5 years

(Rs)

Citibank 9,120 3,565 2,445 Cardholders get a discount

HSBC 9,097 3,541 2,459 Existing customers get preferential rates

HDFC Bank 8,993 3,515 2,451 Check for accountholder benefits

ICICI 8,973 3,492 2,438 ICICI bond holder get discount

Fiat

Finance8,912 3,423 - Only Fiat Cars

Kotak

Mahindra8,973 3,515 2,489 Comprehensive schemes incl leasing

Countrywid 8,993 3,515 2,451 Maruti Specials

e

ANZ

Grindlays8,993 3,493 2,438

Offered special services to expedite delivery

Saraswat

Bank- 3,500 2,425 Slow processing and FD requirements

Ford Credit 8,973 3,492 2,975 Only for Ford cars.

Source: Auto India- Dec '2001

New products or innovations in the car finance sector

Car Overdraft:

ICICI Bank has already launched the Car Overdraft product in 2004 and it is going to be a

focus area in the year 2005. The overdraft facility is provided in the form of an ICICI Bank

Roaming Current Account (with an overdraft limit). An overdraft account is opened for the

customer with a pre-approved limit set up. This limit depends on the vintage and condition

of the car, which is valued before setting up the limit. Once this limit is set up, the

customers can then withdraw money from ATMs or use their debit cards at various

merchant establishments as per his requirement. The customer pays interest only on the

amount withdrawn by him from the account for the period it is withdrawn for. He also has

the flexibility of repaying a minimum of 5 per cent of the total outstanding every month,

very similar to the facility available on credit cards repayment. The car overdraft facility is

like providing mixed benefits of a personal loan, credit card, car loan, as also the regular

benefits of a roaming current account.

Loan on Phone:

This is a unique offer to some of ICICI customers who have been given a pre-approved

car loan based on their existing relationship. The customer can simply contact the call

centre to find out if he/she has a pre-approved loan. On getting a confirmation he can

walk into any dealership or contact our channel partner and take the car by completing

minimal documentation.

Used cars loans:

These are expected to get more aggressive. With better control on process of

transactions on used cars — highlighted by entry of organised players and showroom

price tags, this is expected to lead to more financing on used cars. The availability of used

cars loans is now expected to reach much beyond the current reach and into the C

category smaller townships across India. Refinance and top-up loans are also being

offered for not just ICICI Bank customers, but even customers with repayments from other

financiers.

Car loans is another turf where competition is forcing innovation. For instance, Standard

Chartered is offering loans of up to 75 per cent of the value of a car less than five years

old. Even though it is classified as a personal loan, the rate is cheaper because the loan

is secured against the car and the money can be used for anything. Normally, personal

loans are costlier because they are unsecured loans.

ICICI Bank introduces `Car Overdraft' facility

ICICI Bank has launched the 'car overdraft' facility against the car as security. Under the

scheme, the bank will open an ICICI Bank roaming current account in the customer's

name with a pre-approved overdraft limit.

The account is accessible to the customer through multi-city cheque and debit card,

according to the bank. The limit of the overdraft will be determined on the basis of the

vintage and condition of the car.

The customer will pay interest only on the amount withdrawn and for the period it is

withdrawn. They also get the flexibility of repaying only a minimum of five per cent of the

total outstanding every month.

In addition, customers will get all the regular benefits of ICICI Bank 'roaming current

account', including multi-city chequebook, fund transfer facilities, ICICI Bank HPCL Visa

Electron Debit card, internet banking, phone banking etc.

CUSTOMER PREFERENCES SURVEY

“Which bank/s are you banking with?”

As the graph clearly shows, the most popular and the most used channel for all retail

banking needs is still branch banking. This is followed by ATMs, internet banking and,

phone banking and mobile banking in that order.

As the above pie charts depict branch banking usage is also dependent on the age of the

customer segment. The key results are:

Branch banking is the most popular in the age group >30 years as there are almost 67%

of respondents in these age groups who prefer branch banking over all the other

methods.

In the age groups up to 30 years, branch banking was the second choice for the majority

of the customers.

“Reasons for not using the lower ranked channels”

A majority of people banking with public banks cited the reason that they did not use

technology based methods like ATM, internet etc. as they were either not available with

the bank or they did not know how to use them

On the other hand, the majority of private and foreign banks’ customers felt that these

methods were unreliable, time consuming and they were not aware that these services

were available with the bank.

The other reasons cited were:

•Never felt the need to use any other method

•Don’t want to try something new etc.

As depicted by the graph, majority of the respondents felt that convenience was

more important to them than the extra costs involved in getting those services.

• This implies that even if banks charge a nominal fee for some of the extra services

to make retail banking more convenient to the customers, it would be acceptable to

the customers.

“Branch banking is the most reliable channel since it involves face to face

interaction”

“Information concerning internet banking transactions can be tampered by others”

Security of the banking transactions over the internet seemed to be the most important

hindrance in making people use internet as a channel for retail banking.

Majority of the respondents who agreed that internet was not secure had either never

used internet as a channel or used it as their last choice for banking.

Similarly those who disagreed that internet was not secure, used it as their first or second

choice for retail banking functions. This shows their reliability on internet and preference

for convenience.

“I would not like to use new technology based methods for my banking

transactions”

Approx 65 % agreed and 35% disagreed that they would like to try internet and other

methods on trial basis if they knew how to use them and if there banks provided them

with all the required information.

This shows that the banks more than just providing the services should also focus on

spreading awareness about them and also make people aware of how easy they are to

use and how to use them.

“Factors considered important for choosing a retail bank”

As shown in the above graph, the most important reason cited for dis-satisfaction was

high interest on loans followed by bad service which includes ATMs usually not working,

Mobile message alerts not being received on time etc.

The least important reason for dissatisfaction was cited as Lack of special offers for

existing customers, the reason for which can be that customers want first to be satisfied

with the current products and services before being offered new products from the same

bank.

“What according to you should the banks do to retain you as a customer?”

As depicted by the above pie charts, people in different age groups have different

expectations from their banks which are as follows:

•Respondents in the age group of 20-25 and 25-30 had similar requirements as a

majority of respondents of both the groups favored bundling of banking and non

banking services followed by a need for innovative products.

•An equal number of respondents in the age group of 30-40 gave importance to

innovative products, convenient distribution channels and less costly services as

tools for banks to retain them

•The respondents in the age group of greater than 40 wanted less costly services and

convenient distribution channels.

•Respondents in the age group of >30 years seemed to be more price sensitive

towards the products & services being provided by the banks.

“What are the information tools that you use for making your retail banking

products decisions? “

The pie charts for future retail banking requirements give the following results:

•Majority of people in the age group (approx 50%) would need auto loans in the next

two years, which is for their first vehicle. Followed by this, approx 33% would need

credit cards.

•77% of the respondents in the age group 25-30 years mentioned that they would

need a home loan in the next two years followed by 23% who said that they would

need auto loans. This finding proves that this is the most attractive segment for

banks to give housing loan offers.

•A similar result was shown in the segment of 30-40 years i.e a majority of them

needed home loans in the next two years followed by auto loans.

•A majority in the age group > 40 years planned to take home loans in the next two

years even though for them the intention was to buy a second car for the family.

Almost an equal number wanted to get credit cards and home loans in the near

future.

•Only 13% of the respondents that too belonging to the age group of >40 years said

that they needed personal loans in the near future.

“I would prefer the bank I am currently banking with, for my next future retail

banking need”

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Although personal experience and loyalty was not rated high as an important factor for

making retail banking decision, yet 73% of the respondents agreed that they would prefer

going to their current bank for their future retail banking needs as well.

This proves that cross selling can prove to an important strategy for banks to

increase their share in the customer’s wallet.

RECOMMENDATIONS

•Although the banks have been providing distribution channels like in internet, phone

banking etc, most of the customers are reluctant to use them as they are either not

aware of it, think it is unreliable or do not know how to use them. Therefore the

banks need to focus on spreading more awareness about their benefits, usage and

reliability if they want to save costs at the distribution channel’s end.

•Banks need to focus on factors like promptness of service and quality of service in

order to gain the market share; this is essentially true for some of the Public Sector

Banks.

•Banks should devise future products looking at the individual requirements of the

various customer segments. Moreover they should direct their marketing strategies

towards segments which can be the most attractive for that particular retail

product. For e.g Home Loans for the age group of 25-30 years.

•Another aspect that was revealed out of this survey was that customers favor retail

banking products which combine a banking product with non banking products or

benefits. This is being implemented in the Credit and debit cards to a large extent

but now should also be linked to the other products.

•Customers today are willing to pay more for convenience, want better services, are

willing to try new product and delivery channels if they are safe. All this provides

immense opportunity for banks to continue inventing to grow in the retail banking

industry.

•What the retail banks need to do is identify new segments more frequently and come

up with more and more value-propositions which will give the customers enough

and more reasons to use their products. For e.g The banks could probably look at

offering a credit card to college students for their educational expenses."

CONCLUSION TO MY RESEARCH

The retail banking scenario is changing at an immense speed. It is characterized by the:

•Significant change in demographic profile

•Huge market potential

•Increasingly challenging business environment

•Competitive tools are different – need to redefine delivery models and

business processes.

In this fast changing scenario, banks need to equip themselves with internal capabilities

and build efficient and viable business models to create the advantage of new

opportunities available into a long term sustainable competitive advantage

Banks today cannot restrict their learnings to the best practices followed in the industry

but they need to look at other benchmark industries to derive learning on various

important business parameters. They need to learn from each other and also benchmark

not only banking and financial services industries but winning companies across a wide

range of industries

A continuous innovation in every aspect of business can only help banks to keep pace

with the ever changing and ever evolving consumer mind.

EXECUTIVE SUMMARY

The Project involves studying the retail banking strategies being adopted by various

banks with special focus on ICICI Bank.

Retail banking is typical mass-market banking where individual customers use local

branches of larger commercial banks. Services offered include: savings and checking

accounts, mortgages, personal loans, debit cards, credit cards, and so forth.

The report starts with a detailed analysis of the retail industry how its has grown and who

are the major players in the industry. Thereafter I have included ICICI as a case to

understand the strategies followed by it in order to grow in the retail banking scenario.

I have also included examples from some other banks that have been bringing in product

centric and distribution centric innovations in order to differentiate themselves. My main

focus has been on the Savings Account, Credit Cards, Home Loans and Auto Loans. This

information was gathered by studying the products and distribution channels of these

banks and selecting some of the best examples.

Thereafter the report tries to look at the other important aspect of Retail Banking i.e. the

customer’s perspective, his preferences and expectations. This has been done through a

market survey of sample size of 50 respondents. The questionnaire had a wide range of

questions from the distribution channels used by the customers, to their current retail

requirements and also their future requirements and expectations.

On the basis of the entire research I have given my own recommendations and

conclusion as to what should be the focus of the banks in order to succeed in the retail

banking arena.

REFERENCES

Magazines:

•Chartered Financial Analyst- Indian Banking November 2004 “Retail Banking, the

new growth driver”

•Business Today January 2, 2005 “India’s Best Banks”

•Pitch: Marketing at crossroads December 15- January 14, 2004/05 “Banking ON

Emotional Bonding”

•Financial Express, Oct 21,2002 “Knowing Your Customer, New Age Banking

Way”

Business Standard “Innovation games bankers play” Tamal Bandyopadhyay |

May 22, 2004

Websites:

•http://fic.wharton.upenn.edu/fic/papers/97/9748.pdf

•http://www.bseindia.com/downloads/PersonalFinance.pdf

•http://www.bcg.com/publications/files/Protecting_the_Franchise_as_New_Forces_Tr

ansform_Retail_Banking_Sep04_OfA.pdf

•http://www.myiris.com/cards/compare1.php

•http://www.icicibank.com/pfsuser/aboutus/investorelations/annualreport/pdf/ar2k3.pdf

•www. Indiainfoline.com

•http--www.igi-online.com-downloads-pdf-ITJ2551_5OVKFbGH37.pdf

•http--www.hdfcbank.com-pdf_forms-investorpresentation.pdf

•http--www.bseindia.com-downloads-AsianBanking.pdf

QUESTIONNAIRE

1. Which bank/s are you currently banking with? (Please mention all)

2. Which retail banking products do you currently have?

•Home Loans

•Auto Loans

•Credit Cards

•Savings Account

•Personal Loans

•Others ___________________________________

3. Rank the following channels from 1 to 5 in terms of how much do you use

these channels ( 1 being the rank of the channel that you use the most)

•Internet Banking

•ATMs

•Branch Banking

•Phone Banking

•Mobile banking

4. Tick the reason/s for not using the lower ranked channels mentioned in

Q3:

•It is not available with my bank

•It is unreliable

•I don’t know how to use it

•I think its very complicated and confusing to use

•Its more time consuming than the other methods

•I don’t know if it’s available with my bank and for my banking needs

•It is costlier than the other channels

•I don’t have access to it (no internet connection, no phone, no ATM around my area

etc )

•Any other reason ____________________________

5. Please mark your level of agreement with the following statements:

1 - Strongly agree; 2 – Agree; 3 - Somewhat Agree 4 - Disagree

5 - Strongly Disagree

Trade off between Convenience and Costs

•“Convenience is more important for fulfilling my banking needs than the extra costs

involved”

Reliability

•“Branch banking is the most reliable channel since it involves face to face interaction”

•I am concerned over the security aspects of internet banking transactions.

•Information concerning internet banking transactions can be tampered by others

•I don’t like to use new technology based channels for my banking transactions”

Triability

•To what extent would you use internet banking and paid channels if it is available on

a trial basis for a month

Very interested ----------------------------------------- Not Interested

1 2 3 4 5

6. Rate the factor from 1 to 5 in terms of their importance in choosing a retail

bank (5 being the highest and 1 being the least)

•Charges/ Fees for services

•Quality of service

•Loyalty/ Personal experience with the bank

•Branch ambience and location

•Speed/ promptness of service

•Brand image (like ICICI reliable)

•Special promotional offers (0% interest on credit cards for 1 year etc )

•Interest rates on deposits/ car loans/ auto loans/ credit cards etc

•Others Please specify ________________________________

7. Rate the possible reasons for dissatisfaction from a retail banking provider

(rate from 1 to 5; one being the lowest rating and 5 being the highest.)

•High interest rates on loans/ overdrafts

•Bad customer service

•Less number of delivery channels (branches/ ATMs etc)

•Time consuming transactions/ Processes

•Lack of special offers for existing customers

•Inefficient staff

•Mention if any other reason ______________________________

8. What according to you, should the banks do to retain you as a customer?

•Better and innovative products

•More convenient distribution channels

•Less costly services

•Combining financial services to provide package offers

•Bundling of banking services and non banking services (such as tickets to concerts,

discounts at stores with credit cards etc)

•Establish a better brand image.

•Others please specify __________________________

9. Which of the following information search tools which you could use for

making a choice for your retail banking product?

•Family/ Friends/ Relatives advice

•Bank staff

•Website visits

•Newspapers

•Banking magazines and reviews

•Others

10. What could be you future financial needs in the next 2 years?

•Home Loans

•Car Loan

•Credit Cards

•Savings Account

•Personal loans

•Others ___________________________________

11. “I would prefer the bank I am currently banking with, for my next retail

banking need”

•Yes

•No: