Case Innovation In Indian Banking Sector Case Summary The caselet gives an overview of the innovative services offered

d by the banks in India to stay ahead of the competition. Most of these banks took the help of proprietary processes and technology to launch innovative products to woo customers and differentiate themselves from the competition. Banks also started using their ATMs as a means of differentiating their services, making them more accessible and attractive to consumers. They added bill payment and credit card payment options at the ATMs. In addition, the banks used service personnel as a means of differentiation. Introduction With the Indian Government initiating the liberalization and deregulation process in the late nineties, the Indian Banking Industry changed completely. Liberalization and deregulation saw the entry of private sector banks into India. These banks used state-of-the-art technology, had lean organizational structures, focused on specific customer segments, and set high standards of operations and customer service. They also adopted global practices, and developed core competencies in the form of proprietary technologies and processes and brand building to differentiate them... Question and opinions 1) With the banking industry in India already cluttered with 289 scheduled commercial banks (March 31, 2003), private sector players have resorted to proprietary processes and technology to differentiate themselves. What are the different means that banks have adopted to differentiate their services from those of competitors? ABN Amro ABN Amro offered home loans at 6.5% interest rate (the lowest in the country) for the first two years, after which the consumer paid the market-determined rate. ABN Amro offered consumers who withdrew cash between Rs 5,000 and Rs 200,000 free secure and timely delivery at their doorstep. ICICI Bank ICICI Bank offered loans to customers against their cars, provided these were less than five years old. ICICI Bank increased banking hours from 8 A.M to 8 P.M for customer convenience.

HDFC Bank HDFC Bank offered a unique online card called NetSafe that minimized the risk arising out of online frauds. The One View service enabled customers to access account related information, including their accounts in other banks like ICICI Bank, Citibank, HSBC, and Standard Chartered Bank, on the Net. HDFC Bank, in association with Travelex India, provided home delivery of foreign exchange. Kotak Mahindra Bank Kotak Mahindra Bank offered a unique Sweep-in account wherein any amount in excess of Rs 150,000 was invested in Kotaks liquid mutual fund that earned an average return higher than the savings account interest. Kotak Mahindra Bank offered free access to 4000 ATMs of other banks to its customers. Kotak Mahindra Bank assigned a relationship manager for every customer to look after customer deposits ING Vysya Bank ING Vysya under the Orange savings account provided free access to 8000 ATMs of other banks.

2) Banks have begun to lay emphasis on remote service encounters by encouraging customers to use ATMs and Internet banking services for their banking transactions. Briefly discuss the pros and cons associated with the usage of remote service encounters.
Pros of Internet Banking Convenience: Unlike

your corner bank, online banking sites never close; they're available 24 hours a day, seven days a week and they're only a mouse click away. Ubiquity: If a money problem arises while you're out of state or out of the country, you can log on instantly to your online bank and take care of business -- 24/7. Transaction speed: Online banking sites generally execute and confirm transactions at or quicker than ATM processing speeds. Efficiency: You can access and manage all of your accounts, including Individual Retirement Accounts, CDs, even securities, from one secure site. Effectiveness: Many online banking sites offer sophisticated tools, including account aggregation, stock quotes, rate alerts and portfolio managing programs to help you manage all of your assets more effectively. Most are also compatible with money managing programs.

Cons of Internet Banking It may take time to get started: If you're new to online banking, it might take time to register for your bank's online program. Or, it may be easier to physically fill out a form at your local branch. If you and your spouse wish to view and manage your assets together online, one of you may have to sign a durable power of attorney before the bank will display all of your holdings together. Learning curve: Some banking sites can be difficult to navigate. Plan to invest some time and/or read the tutorials in order to become comfortable in your own virtual lobby. Banking site changes: Even the largest banks periodically upgrade their online programs, adding new features in unfamiliar places. In some cases, you may have to reenter account information. Trust: Trusting an online banking system is an issue for two main reasons: identity theft and operator error. If you use a non-secure wireless Internet connection, it might not be a good idea to use online banking. It's too easy for a savvy ID thief to view your personal information. In regards to operator error, some users worry that they might have pushed the transfer button too much, or not enough.

The Pros and Cons of using ATM Machines are: Pro's: Con's: Only a certain amount of money can be withdrawn based on bank & machine limits If anybody gets your card and PIN number they can use it. Easy and convenient access to money Any time usage No need to stand in bank queues