Chapter-1 INTRODUCTION OF RETAIL BANKING The Project report is prepared on Retail Banking at HDFC Bank. It is on a research to find out whether people of Nagpur city prefer to deal with private sector banks or nationalized banks. It is also to find out the reasons why they deal with their bank and the most frequently services by them. This was basically to find out for what reason they deal with particular bank and to know theirlevel of satisfaction with the services of their bank. I have collected the resea rch by collect ing the primary data. This research was conducted with the employees of private and government sector, businessman, professionals and students in equal numbers. This report gives a brief idea about the banking industry and the tough competition faced by the banks. Secondl y it gives an overvie w of the company, its history , its product s, its various marketing strategy and much more. Then the main part of the project comes wherein the research and the analysis is included. Stratified random sampling was adopted where the people of various occupations were selected at random from different part of the city. The sampling size selected was 50. Data analysis was done as per the questions through various techniques as per requirement. Finally findings and the data collected concluded that the most preferred bank was HDFC Bank, and the most people were highly satisfied with the services of HDFC Bank where ATM was the most frequently used services. It was found that for what reason private and government employees, students, professionals and businessman deal with the bank and how frequently they visit the bank. Through this research the company can know the choice of different occupational groups and the research for how satisfied they are with the bank they deal with. They can also know the most frequently used services so that they can improve further improve it or encourage the use of theirservices. 1
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Retail banking can be crudely defined as the antonym of wholesale or bulk banking. It is nothing,
but shared business. The corporate and retail divide is nothing but internal segmentations and the
customer remains always a customer.
Retail banking generally refers to offering financial services, products related to deposits
and assets to individual customers for personal consumption.
Retail banking refers to banking in which banking institutions execute transactions directly
with consumers, rather than corporations or other banks. Services offered include: savings and
transactional accounts, mortgages, personal loans, debit cards, credit cards, and so forth.
Investopedia of Retail Banking:
Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of
retail clients. Some retail banks have even made a push into investment services such as wealth
management, brokerage accounts, private banking and retirement planning. While some of these
ancillary services are outsourced to third parties (often for regulatory reasons), they often
intertwine with core retail banking accounts like checking and savings to allow for easier transfers
and maintenance.
Retail banking is banking that provides direct services to consumers. Many people with
bank accounts have their accounts at a retail bank and banks that offer retail banking services may
also have merchant and commercial branches that work with businesses. For people with high net
worth and special banking needs, private retail banking services may be pursued. These offer a
high level of service with a number of options that are not available to average members of the
public.
The most basic retail banking services include savings and checking accounts. Most retail
banks, however, try to make themselves into a one stop shop for banking customers. This increases
customer retention and loyalty, ensuring that the bank has a steady supply of customers. Expanding banking services also provides more opportunities for the bank to turn a profit.
Net broking is finally coming of age, and thousands of small investors are excitedly
logging on to e-broking sites. Taking the example of ICICI, every day, about 1,500 of the 10,000registered customers of ICICI Direct log on to trade. They don’t move a bit of paper. They just
enter the details of the trade they want to execute and hit the mouse. The site does the rest. It
moves funds from their bank account and transfers shares to their depository account. All within a
minute or so.
Quick, instantaneous trading and transparency are driving Net trading. Many more
individual investors are signing up with Web trade services. However, banks, so far, are not so
flexible with their customers. To become an ICICI web-trade customer, it is mandatory to hold an
ICICI bank account, as also its depository account. There are two reasons for this-banks have strict
systems before they can put a trade through and therefore are more comfortable when all the
related transactions are within their control. Second, and are more important, it makes a better
revenue mode. In the case of ICICI, that’s three birds with one stone. It gets money from its
customer for its banking service, depository service and finally its broking service.
But there is a caveat! Now, e-broking rate are lower than offline rates but the technology
and investment for incremental e-broking business is very high. Right now, when the market opens
everyday, there are around 2.000 trades waiting to be executed on ICICI Directs site. With even
0.2- second speed per trade, it may take 5 minutes for the last transaction to be executed. Now to
bring that down requires a more expensive technology. Further, providing the latest technology in
the site costs money. So, investors must be cautious with sites that promise low brokerage. They
simply won’t be able to match the services of the one that charges a reasonable fee. This means
that in the long run, companies whose business revolves around broking revenues will not survive.
They will need to offer a range of personal finance services or product, which can be priced so as
to subsidize the broking business. The point of web trading is instantaneous trade and anything else
Funds Management: Funds management is an extremely important area for retail sector
banks since a proper strategy in this respect can increase profitability to large extent. There are also
major types of Funds Management.
i) Cash Management: Although our society is fast progressing, it still remains a cash
managed society compared to a credit managed society as in the west. Thus small customers are
greatly dependent on cash for their routine transactions forcing banks to hold large amounts of
cash whether in extension counters, cub-offices of the parent bank, non-currency chest branches or
currency chest branches. However, holding large amounts of cash means as opportunity lost for
profitable investments. Therefore, a skillful management of cash is needed so that the need for
liquidity does not erode profitability. For this, excess build up can be eliminated links, which are
quite feasible in the current Indian scenario. Also banks should educate their customers on the
movement from a cash based society to a credit based society.
ii) Product Profitability Analysis: In the transactional banking scenario, Product
profitability Analysis is of utmost importance in determining which products to promote or
withdraw. It is basically a cost-benefit analysis of each product. The transactions of each product
are flow-charted. At each stage of the flow, costs are allocated to the product depending on the raw
material attention time, overheads, etc. the final cost of the product is then worked out at each
stage. Product also serves as a toll to generate new products since the costs of a particular service
can be worked out in advance.
iii) Investment Management: In the light of retail banking, banks have to match their
assets with their liabilities, which are generally of short-term duration. Thus although long- term
securities would give maximum yield, they would not be able to match the short-term liabilities. In
this situation, retail banks should try for short-term investments. This may be done throughTreasury Bills, which have low yields. A secondary market for bonds can allow for maturity
matching. Banks should also venture into areas like consumer durables financing, loans against
shares, etc, which are short-term lending. However, these activities need economies of scale and
prompt service, which will be essential for future earnings. With the deregulation of interest rates,
HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a major Indian financial services
company based in India, incorporated in August 1994, after the Reserve Bank of India allowed
establishing private sector banks. The Bank was promoted by the Housing Development Finance
Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725
branches and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an
online real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion.
For the fiscal year 2008-09, the bank has reported net profit of 2,244.9 crore (US$498.37 million),
up 41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at19,622.8 crore (US$4.36 billion) in 2008-09.
It was among the first companies to receive an 'in principle' approval from the Reserve
Bank of India (RBI) to set up a bank in the private sector. The Bank started operations as a
scheduled commercial bank in January 1995 under the RBI's liberalization policies.
Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with
HDFC Bank Ltd., in 2000. This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than
1,000. The amalgamated bank emerged with a base of about Rs. 1, 22,000 crore and net advances
Senior banking professionals with substantial experience in India and abroad head various
businesses and functions and report to the Managing Director. Given the professional expertise of
the management team and the overall focus on recruiting and retaining the best talent in the
industry, the bank believes that its people are a significant competitive strength.
Technology:
HDFC Bank operates in a highly automated environment in terms of information technology and
communication systems. All the bank's branches have online connectivity, which enables the bank
to offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to
retail customers through the branch network and Automated Teller Machines (ATMs).
The Bank has made substantial efforts and investments in acquiring the best technology availableinternationally, to build the infrastructure for a world class bank. The Bank's business is supported
by scalable and robust systems which ensure that our clients always get the finest services we
offer.
The Bank has prioritized its engagement in technology and the internet as one of its key goals and
has already made significant progress in web-enabling its core businesses. In each of its
businesses, the Bank has succeeded in leveraging its market position, expertise and technology to
create a competitive advantage and build market share.
Promoter:
HDFC is India's premier housing finance company and enjoys an impeccable track record
in India as well as in international markets. Since its inception in 1977, the Corporation has
maintained a consistent and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has
developed significant expertise in retail mortgage loans to different market segments and also has a
large corporate client base for its housing related credit facilities. With its experience in the
financial markets, a strong market reputation, large shareholder base and unique consumer
franchise, HDFC was ideally positioned to promote a bank in the Indian environment.
The objective of the Retail Bank is to provide a full range of financial products and
banking services, giving the customer a one-stop window for all his banking requirements. The
products are backed by world class service and delivered to the customers through various delivery
channels including the branch network, as well as alternative delivery channels like ATMs, Phone
Banking, Net-Banking and Mobile Banking.
The HDFC Bank Preferred program for high net worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind needs of
customers who seek distinct financial solutions, information and advice on various investment
avenues. The Bank also has a wide array of retail loan products including Loans against shares,
Auto Loans, Personal Loans and Loans for Consumer Durables and Two-wheelers. It is also a
leading provider of Depository Participant (DP) services for retail customers.
HDFC Bank was the first bank in India to launch an International Debit Card in association
with VISA (VISA Electron) and issues the MasterCard Maestro debit card as well. The debit card
allows the user to directly debit his account at the point of purchase at a merchant establishment, in
India and overseas. The Bank launched its credit card in association with VISA in November 2001.
The Bank is well positioned as a leader in various net based B2C opportunities including a wide
range of internet banking services for Fixed Deposits, Loans, Bill Payments, etc.
Loan-Based Products:
Advance against securities and IPO financing provides theclient with opportunities to leverage on his investment assets, without loss of ownership. What
could be better than having somebody manage your assets for you and be able to borrow against
the assets from the same entity?
Capital Market Products: Badla, arbitrage, stock lending are all products which are
beyond traditional asset management but allow you the opportunity to participate in the markets
with the additional comfort and safety of still dealing with your own Private Banker.
Off-Shore Products: The Private Bank, by making use of its international network, is
in a better position to also offer multi-currency, multi-location investment assets to its NRI clients,
including Trust services. (A word of caution here: there are a number of large banks in India
offering International Private Banking – essentially cloak and dagger outfits helping resident
Indians park funds overseas and hence, should be steered clear of!)
referred to above, the ratings awarded were the highest assigned by the rating agency for those
instruments.
Corporate Governance Rating:
The bank was one of the first four companies, which subjected itself to a Corporate
Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information
Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's
current performance and an expectation on its "balanced value creation and corporate governance
practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating which indicates
that the bank's capability with respect to wealth creation for all its stakeholders while adopting
sound corporate governance practices is the highest.
HDFC IN RETAIL BANKING
Retail banking, as the term itself signifies, is directed towards the common man who
requires a host of traditional banking facilities like deposits, loans, ATM facilities, and now capital
market related services like depository services etc. Many banks have now started offering
Investment Services to the retail customer, which is essentially advice and execution of mutual
fund investments and redemptions. Advice on debt and equity is restricted primarily to new issues,
with secondary market investments being discouraged. There are no charges for this service, in
fact, customers are paid incentives/commissions for investing through them. The bank essentiallygets its income from the mutual fund/broker directly and also cross-sells other banking products.
Although HDFC bank is in universal banking, retail banking is its key area. in an country like
India and for a new bank like HDFC surviving the competition of public sector bank is really a
praiseworthy job. Nobody would have imagined except a chosen few that a bank which had to face
competition with both public sector and private sector including foreign bank would come up as
winner.
The picture is clear now. The recent data shows that HDFC bank has already been declared
most efficient and most IT driven bank in India. It is really a great achievement that starting with a
few branches just five year ago, it has now 535 branches and 1323 ATMs nationwide. This data
shows that it has taken great care of its retail customer. and vice-versa retail customer has shown
interest in its operation and they are now becoming satisfied &faithful customer. In India most of
the known banks are in retail banking operation .it is very difficult to survive in this competitive
market if one doesn’t have always something new to offer to its customer and one doesn’t values
relationship with customers.
HDFC bank has decided to be real innovator. It is customer friendly and most of the operations are
IT driven. It has a large portfolio of products and services that’s caters need of every customer. For
example, different kind of saving accounts, current accounts, net banking, phone banking, mobile
banking, ATM , fund transfer etc. it has decided to turn itself into a complete virtual bank in the
future. In its product range it has got something for everyone to choose from. large no of choices
are available and apart from that it always comes with some innovative product and services for
example recently it has tied up with Indian Railways. It will boo your rail tickets without any
service charge provided you make the payment through net banking. Other new services are also
available in its portfolio. You need to make your booking, purchase and others but you will have to
make payment by net banking.
AWARDS
HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian
Bank". We realized that only a single-minded focus on product quality and service excellence
would help us get there. Today, we are proud to say that we are well on our way towards that goal.It is extremely gratifying that our efforts towards providing customer convenience have been
HDFC Bank offers Phone Banking, a phone banking facility. Now your bank account is now just a
phone call away. You can carry out all your transactions, from checking your account balance to
ordering a new cheque book to stopping a cheque payment over the phone. You can request for
demand drafts / funds transfer, open a fixed deposit account, and even pay your electricity,
telephone and cell phone bills using the Bill Pay facility. So now, whenever you need to conduct
any of your transactions, just give us a call. These services have made banking in India a pleasure.
Phone banking facility is available round the clock, everyday, in Mumbai, Delhi, Chennai,
Kolkata, Bangalore, Hyderabad, Ahmadabad, Chandigarh and Pune.
Net Banking:
Internet or Online banking describes the use of a bank's secure website to view balances and
statements, perform transactions and payments, and various other facilities. This can be very
useful, especially for banking outside bank hours and banking from anywhere where internet
access is available. Since the internet revolution most retail banking institutions offer access to
current accounts via online banking.’’
Now, a FREE, safe and secure way to bank over the Internet! Check your account balance for up-to-the-second status, transfer funds between your accounts or to third parties, and much more
with just a click of the mouse.
Mobile Banking:
FREE access to your account on your mobile phone, through SMS or WAP services.
Now, with an HDFC Bank Current Account, experience the freedom of multi-city banking! You
can have the power of multi-location access to your account from any of our 500 branches in 220
cities. Not only that, you can do most of your banking transactions from the comfort of your office
or home without stepping out.
We make it our business, to help you with your business, by offering you a Current Account with
all the benefits you need, to stay ahead of your competition.
At HDFC Bank, we understand that running a business requires time and money, also that your
business needs are constantly evolving. That's where we come in. We provide you with a choice of Current Account options to exclusively suit your business - whatever the size or scope.
Open an HDFC Bank Current Account & control your business operations centrally.
3.Direct Pay
Ever thought of shopping without cash or card? Does online shopping unnerve you? Now, with
HDFC Bank's Direct Pay facility, you can dare to. No more carrying cash, no cheque, not even a
Debit Card or a Credit Card. All you need is your HDFC Bank Savings/Current Account.
HDFC Bank's Direct Pay facility is an e-Age Banking Channel where the purchases are debited
directly to your account and credited to the account of the establishment (or the website where the
purchases were made). If you are an account holder with HDFC Bank, all you have to do is to
register for the Net Banking facility to use this option.
However, shopping is not the only option that you have. If you are a resident of Hyderabad or
Secunderabad, it gets even better. Thanks to the bank's tie-up with E-seva, a unique integrated
service launched by the government of Andhra Pradesh, you can now pay your electricity, water
bills and municipal taxes (telephones to be introduced shortly) using the Direct Pay option. The
most important aspect of this service is that the payments made are updated in the database of the
utility companies on an online and real-time basis.
banking; all banks go into Internet banking. One bank puts branches in supermarkets; all banks
put branches in supermarkets’ (ibid. p.40). However, Porter suggests that now is the time for
banks to move away from their imitative instincts in order to provide a differentiated offering in
the marketplace. In summary, these key findings demonstrate that innovation in the retail banking
sector tends to be incremental and imitative in nature, and retail bank performance is positively
related to the continuous adoption of new-to-the-firm ideas.
2.2 Distribution Channels
A key area of strategic importance for retail banks is distribution channel management
(Bruce et al., 2009; Capgemini et al., 2008). Fundamentally, a distribution channel can be
described as any delivery method through which a bank can provide services to customers. Each
individual bank typically operates an array of distribution channels, collectively termed the bank’s
multi-channel mix. Across the multi-channel mix, those channels that do not involve physical face-
to-face contact with bank staff members have been called ‘direct channels.’ Examples of the most
commonly employed direct channels include: call centres, web banking, direct mail, and automated
teller machines. Historically, banks have actively sought to migrate simple transactions, products
and services away from tellers towards direct channels. This global trend has been driven by a
combination of three underlying forces. Firstly, migration towards direct channels represents a cost
saving opportunity for banks, particularly migration towards web banking (Peppard, 2000;Farquhar & Panther, 2007). Secondly, the migration of simple, low-value activities away from in-
branch tellers, allows staff to focus instead on the sale of high-value products and services
(BearingPoint, 2006). Thirdly, direct channels have the potential to offer customers enhanced
levels of service and convenience (Peppard, 2000). As a result, most clicks and mortar banks must
In the last 2-3 years, technological changes coupled with increased customer
expectations have literally forced banks to offer services like ‘Anywhere, Anytime,Anyhow’ banking. This has perhaps led to the rapid growth of a kiosk termed ‘ATM’,
indigenously as well as globally.
Banks across the board have been on an ATM installation spree as part of their
retail strategy. Till 1997, there were just 400 ATMs across India. Two years thereafter,
largely driven by the new generation private banks storming the bastion of nationalized
banks, the number of ATMs soared to over 1,100,280 of them installed by foreign
banks, 350 December 2000, the number of ATMs galloped to 2,175 and by May 2000,
it touched 3,165. Banks went on the installation binge because, besides saving on
infrastructure and employee costs, ATMs do not require permission as is necessary for
opening a branch.
The question arises, whether RBI is now seeking to curb this trend or no? Well,
RBI’s rationale is that the directive does not prevent a bank from installing ‘stand-
alone’ off-site ATMs with functions of deposits and withdrawals, but only ensures that
these are not used for front or bank office functions. But experts are still mystified with
Small wonder then that most banks are aggressively promoting their Net
banking services. As all the high-worth customers have Internet connections either at
their home or at their offices, a complete bouquet of Internet services is essential to
keep them happy. For the urban banker already logging on the net to check his balance,transfer funds from one account to another within bank, issue stop- cheque and
chequebook instructions, etc, the celebrations, might seem two years too late. But there
is another reason for the excitement among bankers: complete Internet banking.
A few months ago, the RBI set up the electronic fund transfer (EFT) facility,
which is about to take Internet banking to the next level of evolution. The EFT makes
complete Internet banking a possibility. With this facility, Internet bankers can now
transfer funds across different banks without as much as picking up their pen. An
account holder fills out a form on the Internet giving details of the account to which he
or she wants to transfer money. The bank sends the requests to RBI’s EFT for the inter-
bank settlement and the money is credited into the beneficiary’s account within one
working day. This is possible even in the beneficiary’s account is not Internet enabled.
Banking in India will never be the same again just as you are rushing off to
work on a depressing Monday morning; your wife decides to make things worse. “The
credit card bills have to be paid by tomorrow. You had better go to the bank to see
whether your salary cheque has been credited into your account,” she orders. You want
to argue, but decide against it. Ten minutes later you are at the bank. Unfortunately, so
is half the neighborhood. The bank clerk is nowhere. Perhaps his wife on a similar
errand has sent him. Half an hour later you finally manage to leave the damn bank, bur
you have missed your regular bus. You make it to office a full hour 99late.
Today, even the largest mainstream branches in the US have Net operations.
The reason: ‘low costs’. Management consultancy Booz Allen & Hamilton came out
with a North American Internet Banking Survey as far back as 1996, which cited
figures proving that a real –world branch was the most expensive way of delivering
services. Tele-banking and ATMs do lighten the load at the counter and reduce teller
costs, but the cheapest mode of delivery is Internet and PC banking. If banks are
redefined as organizations, which crunch information, then they just cannot do without
technology. They just cannot do without the Internet.
That is what the Internet banking revolution is ultimately all about. Web
banking has made a definite beginning hut the utility factor is on the low side.
(Internet banking). According to the survey, by 2009, 35 million US households were
banking through the Net. They were the most profitable customers, accounting for 40%of retail banking profits.
CHAPTER -7
FINDINGS OF THE STUDY
At the turn of the century, one of the largest employers in America was the U.S.
Ice trust, which cut, stored, and delivered ice for people’s “iceboxes.” That industry
doesn’t employ many people now, although it’s not because people have forsaken theneed to cool fresh food. Rather, a product born of new technology, the refrigerator,
entered American homes and all but eliminated the need for ice cutters.
What will happen to the retail banking industry in the coming decades critically
depends on how successfully banks can provide value to their customers. The challenge
for both managers and banking supervisors is to understand what customers want –to
distinguish between cutting ice and keeping food cold.
Banking has changed a lot in the last decade. These changes can be wholly and
solely attributed to the fast developments in information technology and its shrewd use
by the bankers to quickly provide a new range of products and services to customers.
Banks have been forced to adopt technology to meet increasing customers. Banks have
been forced to adopt technology to meet increasing customer demands, to overcome
fierce competition from other banks and to deliver higher share holder value.Technology is now being seen as the key to retain customers and deal with falling
margins and ballooning costs. Many domestic banks still continue to rely on age- old
“counter” banking. The difference could be well established with private sector bank,
where, an ATM is seen as a more visible delivery channel than a branch. In contrast, the
PSU bank still relies on branch as the prime medium for trapping new customers the
present strategies seems inadequate.
STAGES OF INTERNET BANKING
Information kiosks
Bank websites offer basic traditional information on the financial products and services
on offer in traditional branches
Who’s there: Most Indian banks, especially public sector banks
Basic internet banking
Customers can do basic transactions like opening an account, paying utility bills andchecking their balance
Who’s there: Some of the smarter private sector and foreign banks
E-commerce
Banks become electronic marketplaces where individuals and companies can buy and
sell through a bank’s payment gateway
Who’s there: The real web enthusiasts like HDFC Bank
On the basis of study done and data collected, the analysis has been made. It was found
that public sector banks still enjoy the hold over masses. Despite the excellent performance by private sector bank, most of the respondent still feel safe with public
sector bank . but the private sector banks are also gaining pace. Especially in the case of
HDFC bank it is amazing. Most of the 76 respondent were enthusiastic about HDFC
bank and 60 % of them were planning to open a new account with HDFC bank. The
reason behind this enthusiasm could be as per the respondent:
HDFC bank is
•
Most customer friendly• Technologically most advanced
Most of the respondent felt that HDFC bank is expanding its operation and network rapidly. According to the study done in DELHI I found that four years back there were
only 8 ATM but now in july 2003 , the number of ATM in Delhi has gone up to 60. its
amazing that in only one city HDFC installed 52 ATM in four years. According to
branch manager GKII, HDFC bank is planning few more ATM in Delhi this year. They
are really upbeat with this growth, particularly he was very optimistic about growth in
retail banking because he feels that it is associated with mass banking and with the help
of world class services and product they can pull the customer of public sector bank.Overall bank is exploring new market and coming up with new branches and ATM.
On the basis of data collected from Delhi and Deharadun it was found that most of the
customers of HDFC bank are well educated and equipped with internet services either
in home, office or at cybercafé. 40 % of the respondent frequently use net for different
purpose of banking but most of them around 70 % of the net users for banking still feel
insecure with the security problem arising in net banking despite the assurance from
banking this regard an employee of SDA branch of HDFC bank says that it is due to the
old mind set , we people in India cant shed this mindset easily, but he was optimistic
too that in the near most of the HDFC bank customer will be using net banking for all
the purpose rather checking balance and ordering cheque book only.
Data from Delhi shows it is fast turning into credit based society from cash based
society. 90% of the respondents were planning a loan from a bank. When asked from
which bank they are likely to avail the loan. 80 % of them were not sure of that they
had some preconditions in their mind eg. interest rate should be low, terms and
conditions should be easy, banks must be cooperative, there should not be any hidden
cost, approval of loan should not take longer period of time etc. in this regard I think
banks need to work hard to educate loan seeker about all the questions they have in
their mind. In fact bank should conduct time to time survey know the mind set of loan
seeker so that the product can be designed accordingly. in this regard HDFC bank in
Delhi has done a tremendous job . When visiting around the city I found people from
different banks including HDFC bank campaining at different places and dealing with
people regarding the loan provided by their banks, their terms and conditions and other
related things. In fact HDFC bank has made loan facility very easy for loan-seeker and
the range of loans provided is wide. for example home loan, housing loan, vehicle
loan(4 wheeler and 2 wheeler), education loan and even loan for foreign trip.
Very few respondents were enthusiastic about insurance business of HDFC. ThoughHDFC has collaborated with DSP meryllnch in insurance segment, it still has to work
hard in this segment.
Overall HDFC bank is a real world class banking organization that is clear from study
and performance of the bank in Indian market. From the responses made by bank
employees and the data from other sources like magazines, websites etc. It is found that
HDFC bank has done very good job in field of technological infrastructure setup. It is
using world class software for its back office banking operation, net banking, phone
banking and mobile banking. You have access to your account virtually from
everywhere even from moving train or while you are flying. It uses software from iflex
solution, Intel corp. and others to help its operation. In fact HDFC bank is the real
technology enthusiast in the banking sector in India.
HDFC Bank Ltd.: Solution
HDFC Bank received many benefits from Internet banking solutions based on high-
performance Intel-based servers and software. These include a lower cost of entry than
RISC-based solutions, more freedom of choice in choosing vendors, products and
partners, and faster solution development due to ease of applications with the large base
of skilled technical engineers. HDFC Bank worked closely with solution providers I-
flex Solutions Ltd. and SR Singapore Pvt Ltd. for its Internet banking solutions, an
example of the broad ecosystem of fellow travelers conversant in Intel architecture,
software and solutions. These benefits come at no sacrifice to the essential robustness
required of any solution in the financial services industry.
"We have found that Intel architecture Internet banking solutions meet business-critical
standards of reliability, availability, scalability and manageability," says C.N. Ram,
head of Information Technology at HDFC Bank. "Cost effectiveness has also been very
good. Intel architecture provides a cost-effective growth path, from a low cost of entry
that can be scaled upward to meet a bank's growth needs." Commenting on the speed at
which Intel architecture-based solutions can be deployed, Because Internet banking is
relatively new at HDFC Bank, detailed data is not yet available on return on
investment, but the early returns indicate that the bank's e-Business solutions have
helped to improve customer services, as well as in the acquisition of new customers.For instance, the bank's retail customer base has grown threefold during the two years
that Internet banking has been in operation. And on the corporate side, Internet banking
is popular and in demand, as many corporate customers are using it to automate their
own value chain.
Internet Banking Solution Details
The retail Internet banking solution, ITPS, is an Internet transaction processing engine
built around Microsoft Transaction Server-based middleware and uses the COM
application architecture. This is deployed using a Java* 2 Enterprise Edition (J2EE)
class application server, with the architecture layers interfacing with each other via
Extensible Markup Language (XML). The application server runs on two 8 way Intel®
Pentium® III Xeon™ processors with 4GB RAM. The Microsoft* SQL Server*
database supporting the application runs out of two 4 way Intel® Pentium® III Xeon™
processors with 4GB RAM.
In the retail space, the mobile Internet banking solution offers two services: GSM-based
cell phones utilize Short Message Service (SMS) via Short Message Service Centers
(SMSC) provided by the mobile service provider; Intel architecture-based Wireless
Application Protocol (WAP) services rely on a micro-browser from Phone.com on the
WAP mobile clients. Two-way connections from the mobile service provider to the
bank's ITPS Internet transaction processing engine are via the Internet using SSL 3.0 to
guarantee security.
Developing the Solution
To complement its real-time services available via branch, ATM, phone banking and
call center, HDFC Bank decided to Internet-enable its services. At that point, HDFC
Bank executives gathered and reviewed information from multiple sources about
platforms and software solutions, and took into consideration the advice of I-flex and
other trusted solution providers. In evaluating the possible choices, HDFC Bank first
looked to the applications and system software that were available on Intel architecture.
In the retail space, for instance, I-flex proposed the ITPS Internet banking application
that runs on Intel-architecture, and from that point the basic due diligence began.
The key question, of course, was would an Intel-based solution offer the performance,
reliability, availability, scalability and manageability required of any business-critical
solution. Availability of consistent support was also a key consideration in choosing the
Intel platform. Says Mittal, "We generally do not have the luxury to reinvent the
wheel." With these elements in mind, HDFC Bank chose Intel architecture for retail,
corporate and mobile Internet banking.
"The lower cost of entry and faster time to market played a key role in our decision,"
says Mittal. In fact, HDFC Bank started with database and application software on the
same machine, and has since split these into separate servers. HDFC Bank is currently
scaling its solution to a Microsoft-based high-availability cluster. Says Mittal, "To keep
up with growing demand, we have been scaling both up and out." Intel architecture also
enabled HDFC Bank to take advantage of the latest technology enhancements inMicrosoft's product suite, and in the Web application server areas, Java deployment and
J2EE-based application servers.
In summary, HDFC Bank has been well pleased with its choice of Internet banking
using Intel architecture-based solutions. "The quality of the solutions is impeccable and
the attitude of Intel [e-Business Network] members has been very helpful," Mittal says.
"We are highly satisfied with our e-Business solutions running on Intel architecture."