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Banking channels refer to the means by which customers access a banks products and services. While it is tempting for a bank to offer many channels, it is a big challenge to manage all of them due to cost and the fact that a unified view of client interactions becomes difficult. Typical channels offered by banks include: i. Branch Banking ii. ATMs iii. Net Banking iv. Phone Banking v. Mobile Banking (i) Branch Banking: This is still the most popular channel. (Note: include this as a pop-up: the total number of Scheduled Commercial Bank branches in India was 76,518 at end- June 2008 a growth of 5.2 per cent during the year. These comprised 31,127 rural branches, 17,858 semi-urban branches and 27,533 urban and metropolitan branches.The geographic distribution of branches, interestingly, is concentrated in Southern and Eastern India!


However, note that it is also the most expensive channel for a bank. It involves large investment in infrastructure and employees. In fact, banks like Citibank in India charge customers if they use branch banking! It is trying to move customers to more cost-effective channels for standard transactions which dont need a face-face interaction. Functions of a branch The functions of a branch are illustrated below. They can be divided into back-office or operations, and the front-office or customer interfacing functions. Most large banks today centralize operations. For example, if you walk into ICICI Bank to open your account, the branch will just accept the documents and verify them. The actual opening of the account on the www.learnwithflip.com 2011

system, generation of debit card, cheque book, etc. all happens in one centralized processing center. Hence for large banks, operations within each branch are minimal. The front office or customer facing functions are those of the Teller, Customer Service and Sales. Often, as shown, one person can have dual responsibilities: a Teller can also answer customer queries. A customer service staff can use his interaction time to sell a bank product.

(Note: What do we mean by a product and a service in the world of banking? A standardized set of services with standard fees/rates attached would be called a product. For example, a savings account is a standard set of services and would be called a product. A foreign currency transaction or a demand draft for a customer on the other hand, would be called a service.) (ii) ATMs as: ATMs can be just cash dispensers or evolved facilities offering facilities such Balance Enquiry Statement of Accounts Cash Withdrawal Cash deposit Check deposit Check cashing Funds transfer Bill Payment Currency Exchange Loan Application Investment Advice MF, Insurance sales Electronic Purse loading Ticketing

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ATMs communicate with each other through a network. In India today we have a national-level ATM switch, which inter-connects nearly 35,000 ATMs of banks, across the country. Thats the reason why, even though you may be an Axis Bank employee, you can withdraw funds from an ATM managed by, say, HSBC. Earlier, such thirdparty ATM transactions would result in a fee income to the third-party bank (in the example above, HSBC), charged from the customer. A recent RBI circular allows customers to make 5 transactions at third party ATMs. Heres a look at the large ATM players: THE BIG BOYS CLUB
Banks with maximum number of ATMs Bank ATMs State Bank 11250 Group ICICI Bank 4600 Axis Bank 3570 HDFC Bank 3,177* Canara Bank 2007
*As on December 31, 2008

Source: http://www.business-standard.com/india/storypage.php? autono=353044 (iii) Internet Banking Internet Banking refers to the ability to access banking services/products via the internet. It is one of the cheapest channels for a bank Typical Internet Banking offerings include: Static information about the banks offerings, application forms Specific account information: Statements, Alerts, Ability to change/edit account information Stop payments, cheque book requests/other instructions Payment transactions to other accounts within and external to the bank Bill Payments

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(iv) Mobile Banking Banking using a mobile phone network can use either SMS or WAP technology. Interactions can be classified as either transactions or enquiries; as also if they are bank initiated (Push) or Customer initiated (Pull), as shown in the table below.

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