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INDIAN BANKING THE CHANGING LANDSCAPE

BANKING TODAYREDEFINED AND RE-ENGINEERED

AGENDA FOR THE SESSION


o

To Sensitize the Participants to the Latest Changes in Banking Industry

What is the Response to the Current Trends from


Bankers and Customers?

INDUSTRY PROFILE

Public Sector banks


Private Indian Banks New Generation Banks

Private Foreign Banks


Cooperative Banks

Non Banking Financial Institutions

Banking Sector Reforms Post-Liberalization


1st Narasimham Committee Report on Financial Sector Reform 1991 Introduction of Capital Adequacy Norms and Prudential Norms - 1992 Deregulation of Interest Rates, Prudential Norms for Maximum NPA 1993 Introduction of Banking Ombudsman Scheme 1994

Banking Sector Reforms Post-Liberalization


Concept

of Local Area Banks Introduced 1995 1st Shared Payment Network System & conditional autonomy to PSUs 1996 2nd Narasimham Committee Report of Banking Sector Reforms 1997 Guidelines on Risk Management 1998

RECENT TRENDS IN BANKS


Entry of New Generation Banks Change in the Process, Methods & Techniques New Products and Services Collaboration between Banking & Insurance Companies. Improvement in Service Quality Increasing focus on Retail Banking Shift Towards Branchless Banking

RECENT TRENDS IN BANKS


Change in Customer Expectations Outsourcing of Resources [Human&Nonhuman] Steady Reduction in Interest Rates Increasing Non- Interest and Fee Based Income Corporate governance and Business Transformation Mergers, Acquisitions and Consolidations

CHANGING PERCEPTION OF CUSTOMER


Servicing the Customer 1950s to 1960s Satisfying the Customer - 1960s to 1980s Pleasing the Customer - 1980s to 1990s Delighting the Customer -1990-2000 Retaining the Customer 2000 and beyond

WHAT CHANGES ?

Electronic Fund Transfer (EFT) Electronic Clearing System (ECS) Automated Teller Machines (ATM) Shared Payment Network System (SPNS) Credit Cards/ Debit Cards Point of Sale Terminal Tele-banking Mobile Banking Net Banking Electronic Data Interchange Corporate Banking Terminals

WHERE ARE WE GOING?


Anywhere Anytime Anyplace Banking Timeless and Placeless Banking Banking at Convenience Good by to Traditional Instruments (Cheques &DD) & Invitation to new Instruments Disappearance of Conventional Risk and Arrival of New Risks Leading to currency-less monetary system Dismantling of Physical Structure

WHAT IS THE TRIGGER?


Hyper Competition Shrinking Margins Need to Reduce Cost Take Advantage of Technology Changing Customer Expectations Simplify the Procedure and Process Reduce Traditional Risk Offer Better / Improved Service Some Constraints [Policy/Resources/Physical/Structure]

Author for Change


Players in the Banking Business Eco-System

Shareholders Management Depositors Borrowers Employees Government Regulatory Authorities RBI Competitors

PHASE OF TECH BANKING


INDUSTRY

PSB
PIB

SBI, SBT ETC. ICICI,IDBI,HDFC,UTI BANK ETC.. CITI BANK,SC BANK, ETC.. SCB,UCB,DCBs/SCBs

PFB
CB

NBFI

SOME EARLY ADOPTERS


BANK ____________ CHANNEL ATM (No.) ATM Share(%) Other Channel[%] (mobile,
phone, net)

HSBC Bank

HDFC Bank

UTI Bank

CITI BANK

ICICI Bank

250 40

500 50

550 NA

174 80

1000 45

35

15

NA

15

15

Branch Banking[%]

25

35

NA

40

STRATEGIES OF BANKS
Citibank: HSBC ICICI

Parallel Banking

: Leveraging branches to grow C B : Reducing importance of branch

HDFC UTI

B: Conservative migration
: ATMs as a force multiplier

Issues and Challenges


What

will happen to the traditional rural credit institutions like, Cooperative Banks, RRBs and Low performing Public Sector Banks? are all the options for the Public Sector Banks?

What

Issues and Challenges

Can the machines establish a strong connecting link with customers? Is the Convenience Banking good for all segment and all seasons? Is it not challenges the conventional wisdoms (keeping close contact with the customers)?

Issues and Challenges

Does IT confer Competitive advantage or is it just the cost of staying in business? How do we dispose the existing human resource? What are the new security issues? Is this changes a customer demanded/bank wanted? Are the customers happy and comfortable with the shift?

Electronic Fund Transfer


Transfer

of funds between banks located in different cities in place of DD/MT/Telegraphic transfer.

Electronic Clearing System


Facilitates inter-bank settlements -

both Debit & Credit clearances through INFINET.

CC: Companies who have to make bulk payments to a large number of beneficiaries prepare the credit instructions on the magnetic media and submit the same to RBI for payment. DC: Payment to utility companies by banks on behalf of the customers.

Tele-banking
Using automatic voice recorder it

facilitates both cash & non-cash transactions for the bank and customers.

Automated Teller Machines


Device

used for withdrawal of money, depositing of money and balance enquiry and verification for 24 hours of a day.

Shared Payment Network System


Facilitates

Use of ATM cards across participating banks at ATM centers using Master/Visa Cards. In case of using other banks ATM one may have to pay service charges.

Credit Cards/ Debit Cards


CREDIT CARD: It is a card that empowers the

Customer to spend up to the fixed value of money limit fixed - A prepaid card.
DEBIT CARD: It is a post paid card and

money is transferred after the spending.

Corporate Banking Terminals


Facilitates

the Corporate customers to log on into the banks data base and have access to their account for balance verification etc. with defined powers.

Point of Sale Terminal


Computer

terminal that is linked online to computerised customer information files that facilitates purchase from retail shops as it credits the retailer account online.

Electronic Data Interchange


Transmit

financial information and payments in electronic form.reduces transmitting cost and risk.

THANK YOU