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A bank is a financial institution that provides banking and other financial

services to their customers. A bank is generally understood as an institution
which provides fundamental banking services such as accepting deposits and
providing loans. There are also nonbanking institutions that provide certain
banking services without meeting the legal definition of a bank. Banks are a
subset of the financial services industry.

A banking system also referred as a system provided by the bank which

offers cash management services for customers, reporting the transactions of
their accounts and portfolios, throughout the day. The banking system in
India, should not only be hassle free but it should be able to meet the new
challenges posed by the technology and any other external and internal
factors. For the past three decades, India’s banking system has several
outstanding achievements to its credit. The Banks are the main participants of
the financial system in India. The Banking sector offers several facilities and
opportunities to their customers. All the banks safeguards the money and
valuables and provide loans, credit, and payment services, such as checking
accounts, money orders, and cashier’s cheques.


Before the establishment of banks, the financial activities were handled by money
lenders and individuals. At that time the interest rates were very high. Again there were
no security of public savings and no uniformity regarding loans. So as to overcome such
problems the organized banking sector was established, which was fully regulated by the
government. The organized banking sector works within the financial system to provide
loans, accept deposits and provide other services to their customers. The following
functions of the bank explain the need of the bank and its importance:

• To provide the security to the savings of customers.

• To control the supply of money and credit

• To encourage public confidence in the working of the financial system, increase savings
speedily and efficiently.

• To avoid focus of financial powers in the hands of a few individuals and


• To set equal norms and conditions (i.e. rate of interest, period of lending etc) to all types
of customers.


Retail banking is a banking service that is geared primarily towards individual

consumers. Retail banking is usually made available by commercial banks, as well as
smaller community banks. Unlike wholesale banking, retail banking focuses strictly on
consumer markets. Retail banking refers to provision of banking services to individuals
and small business where the financial institutions are dealing with large number of low
value transactions. The concept is not new to banks but is now viewed as an important
and attractive market segment that offers opportunities for growth and profits.

Excess of liquidity, increased dependence of corporate on capital markets, the rising

income of middle class with increase in purchasing power and ability to handle debts, the
increasing amount of NPAs from corporate portfolio and the growth and future growth
potential of the credit card business has induced banks to shift from wholesale banking to
retail banking.

Retail banking has immense opportunities in a growing economy like India. As the
growth story gets unfolded in india, retail banking is going to emerge a major driver.
Some of the key policy issues relevant to the retail banking sector are : financial inclusion
, responsible lending, and access to finance, long term savings, financial capability,
consumer protection, regulation and financial crime prevention.


Often retail banking is referred to as "non commercial banking" this would be your
common checking accounts and consumer loans. Whereas "core banking" is often the
very solid business accounts and commercial loans. It is referred to, as 'core' because it is
a core or central to the banks business. Few banks survive from just retail banking
services, they need those core business accounts that are perhaps more stable than retail

“Business Banking ” tends to work with small to medium sized snterprises(SMEs.).

Business banking does all the things that retail banking does but adds the following
1) More services: Business banking includes things like more treasury services,
revolving credit, merchant credit, cash management, group insurance, corporate
cards and secure internet banking (e.g. server to server)
2) Better rates: Since SMEs bring in more money, they tend to get better rates than
the retail banking customer, who tends to need lots of maintenance compared to
their deposit sizes.
Retail, SME and corporate banking customers use the same infrastructure, but the
sales platforms tend to be different to cater to their specific need.



Retail banking has inherent advantages outweighing certain disadvantages.

Advantages are analyzed from the resource angle and asset angle.

o Retail deposits are stable and constitute core deposits.

o They are interest insensitive and less bargaining for additional interest.

o They constitute low cost funds for the banks.

o Effective customer relationship management with the retail customers built a strong
customer base.
o Retail banking increases the subsidiary business of the banks.

o Retail banking results in better yield and improved bottom line for a bank.

o Retail segment is a good avenue for funds deployment.

o Consumer loans are presumed to be of lower risk and NPA perception.

o Helps economic revival of the nation through increased production activity.

o Improves lifestyle and fulfils aspirations of the people through affordable credit.

o Innovative product development credit.

o Retail banking involves minimum marketing efforts in a demand –driven economy.

o Diversified portfolio due to huge customer base enables bank to reduce their
dependence on few or single borrower

o Banks can earn good profits by providing non fund based or fee based services without
deploying their funds.

o Designing own and new financial products is very costly and time consuming for the

o Customers now-a-days prefer net banking to branch banking. The banks that are slow
in introducing technology-based products, are finding it difficult to retain the customers
who wish to opt for net banking.

o Customers are attracted towards other financial products like mutual funds etc.

o Though banks are investing heavily in technology, they are not able to exploit the same
to the full extent.

o A major disadvantage is monitoring and follow up of huge volume of loan accounts

inducing banks to spend heavily in human resource department.

o Long term loans like housing loan due to its long repayment term in the absence of
proper follow-up, can become NPAs.

o The volume of amount borrowed by a single customer is very low as compared to

wholesale banking. This does not allow banks to to exploit the advantage of earning huge
profits from single customer as in case of wholesale banking

The Indian players are bullish on the retail business and this is not totally
unfounded. As the face of the Indian consumer is changing, that is reflected in a change
in the urban household income pattern, the direct fallout of such change is on the
consumption pattern and hence on the banking habits of Indians, which is now skewed
towards retail products.

Following changing consumer demographics have led to the need for expansion of retail
banking activities in India.


320 million people will be added in the middle-income group in a period of 15
years approximately.


demographics indicate vast potential for growth in consumption both qualitatively
and EXCEL International Journal of Multidisciplinary Management Studies
quantitatively, due to increasing affluent with bulging middle class and youngest
people in the world. 70% of Indian population is below 35 years of age which
means that there is tremendous opportunity of 130 million people being added to
working population. The BRIC report of the Goldman-Sachs, which predicted a
bright future for Brazil, Russia, India and China, mentioned Indian demographic
advantage as an important positive factor for Funds.

 INCREASING LITERACY LEVELS: Due to increase in the literacy ratio,

people have developed a taste for latest technology and variety of products and
services. It will lead to greater demand for retail activities specially retail banking

 HIGHER ADAPTABILITY TO TECHNOLOGY: Convenience banking in the

form of debit cards, internet and phone-banking, anywhere and anytime banking
has attracted many new customers into the banking field. Technological
innovations relating to increasing use of credit / debit card, ATMs, direct debits
and phone banking have contributed to the growth of retail banking in India.


population is also an important feature influencing the retail banking.


prosperity and the consequent increase in purchasing power have given a fillip to a
consumer boom. During the 10 years after 1997, India's economy grew at an
average rate of 6.8 percent and continues to grow at the almost the same rate – not
many countries in the world match
this performance. It means that Indian consumers are now shifting from the
tendency of buying more and better quality to new services and products.
of the banks, which had strengthened the bottom lines of banks for the past few
years, Has been on the decline during the last two years. In such a scenario, retail
business provides a good vehicle of profit maximisation. Considering the fact that
retail‟s share in impaired assets is far lower than the overall bank loans and
advances, retail loans have put comparatively less provisioning burden on banks
apart from diversifying their income streams.

 DECLINE IN INTEREST RATES: Finally, decline in interest rates has also

contributed to the growth of retail credit by generating the demand for such credit.

Retail banking has immense opportunities in a growing economy like India. As the
growth story gets unfolded in India, retail banking is going to emerge a major driver.
How does the world view us? I have already referred to the BRIC Report talking India as
an economic superpower. A. T. Kearney, a global management consulting firm, recently
identified India as the "second most attractive retail destination" of 30 emergent markets.

The rise of the Indian middle class is an important contributory factor in this regard.
The percentage of middle to high income Indian households is expected to continue
rising. The younger population not only wields increasing purchasing power, but as far as
acquiring personal debt is concerned, they are perhaps more comfortable than previous
generations. Improving consumer purchasing power, coupled with more liberal attitudes
toward personal debt, is contributing to India's retail banking segment.

The combination of the above factors promises substantial growth in the retail
sector, which at present is in the nascent stage. Due to bundling of services and delivery
channels, the areas of potential conflicts of interest tend to increase in universal banks
and financial conglomerates. Some of the key policy issues relevant to the retail banking
sector are: financial inclusion, responsible lending, access to finance, long-term savings,
financial capability, consumer protection, regulation and financial crime prevention.


A number of researches have been conducted on net banking and its adoption,
development and its perils. Due to shortage of time and resources, a review of all the past
researches done could not be mentioned in this research project. So, a snapshot of some
of the reviews have been presented.

 Corrocher (2002) in his study examined the drivers of the adoption of the Internet
banking, in order to understand its role with respect to the traditional banking
activity and to offer a comprehensive picture of the diffusion of such a technology
within the sector. In doing so, it analyses the role of firm-specific and non firm-
specific (technology, market, environment) characteristics in influencing the
decision to adopt the new technological platforms to perform on-line banking
transactions within the retail segment of the financial sector. The main purpose of
this paper is to investigate the relationship between the Internet banking and the
traditional banking activity, in order to understand if these two systems of financial
services delivery are perceived as substitutes or complements by the banks.
 Singh & Malhotra (2004) in their study found that the tremendous advances in
technology and the aggressive infusion of information technology had brought in a
paradigm shift in banking operations. The purpose of this paper is to help fill
significant gaps in knowledge about the Internet banking landscape in India. The
paper presents data, drawn from a survey of commercial banks websites, on the
number of commercial banks that offer Internet banking and on the products and
services they offer.

 Nandan (2008) in his paper discusses the concept of internet banking,
perception of internet bank customers, non-customers and issues of major concern
in internet banking. The state of internet banking in india has been explored using
various concepts like e-banking continuum, and gap analysis related to the various
services and the security features offered. In order to have a clear and focussed
insight about the perceptions of users (and non-users) about internet banking a
survey was conducted. The findings of the survey provide valuable insights into
concern for security, reasons for lower penetration, and likeliness of adoption,
which have been used to make useful recommendations.

 Mishra & kiranmai (2009) in their study found that information technology is
considered as the key driver for the changes taking place around the world.
According to heikki, the transformation from the traditional banking to e-banking
has been a 'leap' change. The evolution of e-banking started from the use of
automatic teller machines (atms) and telephone banking (tele-banking), direct bill
payment, electronic fund transfer and the revolutionary online banking. The future
of electronic banking would be more interactive i.e., tv banking. Finland is the first
country in the world to have taken a lead in e-banking. In india, icici bank initiated
e-banking services during 1997 under the brand name 'infinity'. It has been
forecasted that among all categories, online banking is the future of electronic
financial transactions. The rise in e-commerce and internet in enhancing online
security transformation and sensitive information has been the core reason for the
penetration of online banking in everyday life. The shift towards the involvement
of the customers in the financial service with the help of technology, especially
internet, has helped in reducing costs of financial institutions.

ICICI Bank is an Indian multinational banking and financial services company

headquartered in Vadodara. As of 2014 it is the second largest bank in India in terms of
assets and market capitalization. It offers a wide range of banking products and financial
services for corporate and retail customers through a variety of delivery channels and
specialized subsidiaries in the areas of investment banking, life, non-life insurance,
venture capital and asset management. The Bank has a network of 3,800 branches and
11,162 ATMs in India, and has a presence in 19 countries.

ICICI Bank is one of the Big Four banks of India, along with State Bank of India,
Punjab National Bank and Bank of Baroda. The bank has subsidiaries in the United
Kingdom, Russia, and Canada; branches in United States, Singapore, Bahrain, Hong
Kong, Sri Lanka, Qatar and Dubai International Finance Centre; and representative
offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia
and Indonesia. The company's UK subsidiary has also established branches in Belgium
and Germany.


ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994. The
parent company was formed in 1955 as a joint-venture of the World Bank, India's public-
sector banks and public-sector insurance companies to provide project financing to Indian
industry. The bank was initially known as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank.
The parent company was later merged with the bank. ICICI Bank launched internet
banking operations in 1998.

ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public

offering of shares in India in 1998, followed by an equity offering in the form of
American Depositary Receipts on the NYSE in 2000. ICICI Bank acquired the Bank of
Madura Limited in an all-stock deal in 2001 and sold additional stakes to institutional
investors during 2001-02.

In the 1990s, ICICI transformed its business from a development financial

institution offering only project finance to a diversified financial services group, offering
a wide variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be listed on
the NYSE.

In 2000, ICICI Bank became the first Indian bank to list on the New York Stock
Exchange with its five million American depository shares issue generating a demand
book 13 times the offer size.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal
Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The
merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the
High Court of Gujarat at Ahmedabad in March 2002 and by the High Court of Judicature
at Mumbai and the Reserve Bank of India in April 2002.

In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and
branches in some locations due to rumours of adverse financial position of ICICI Bank.
The Reserve Bank of India issued a clarification on the financial strength of ICICI Bank
to dispel the rumours.



ICICI Bank offers wide variety of Deposit Products to suit our requirements.
Coupled with convenience of networked branches/ ATMs and facility of E-channels like
Internet and Mobile Banking, ICICI Bank brings banking at your doorstep.

Savings Account:

ICICI Bank offers a power packed Savings Account with a host of convenient
features and banking channels to transact through.

(a) Debit- cum-ATM Card

(b) Money Multiplier Facility
(c) Internet banking
(d) Customer Care
(e) Mobile Banking
(f) Standing Instructions

Fixed Deposits:
Safety, Flexibility, Liquidity and Returns!!!! A combination of
unbeatable features of the Fixed Deposit from ICICI Bank.

(a) Wide Range of tenures

(b) Choice of investment plans
(c) Partial withdrawal permitted
(d) Auto renewal possible
(e) Loan facility available

Senior Citizen Services:

The Senior Citizen Services from ICICI Bank has several advantages that
are tailored to bring more convenience and enjoyment in your life.

(a) Designated senior citizen desk

(b) Higher interest rates on term deposits
(c) Demand loans against your deposit
(d) Free collections of outstation cheque drawn on any icici bank location.
(e) Special senior citizens ‘Life plus’ Debit card
(f) Money multiplier facility
(g) Anywhere banking
(h) Internet banking
(i) Customer care
Young Stars:
It's really important to help children learn the value of finances and money
management at an early age. Banking is a serious business, but we make banking a
pleasure and at the same time children learn how to manage their personal finances.

Recurring Deposits:

Through ICICI Bank Recurring Deposit you can invest small amounts of
money every month that ends up with a large saving on maturity. So you enjoy twin
advantages- affordability and higher earnings.

(a) Encourage savings without stress on your finances.

(b) High rate of interest (As compare to savings deposit)
(c) Non applicability of tax Deduction at source

 Home Loans:
(a) Home Loan tenure upto 25 years
(b) Simplified Documentation
(c) Doorstep delivery of home loan papers
(d) Sanction approval without having selected a property.
(e) Free personal accident insurance (Terms & Conditions)
(f) Insurance options for your home loan at attractive premium

 Personal Loans
(a) Key benefits of ICICI Bank Personal Loan:
(b) Loan upto 15 lakhs
(c) No security/guarantor required
(d) Faster Processing
 Farm Equipment Loans:
(a) Comfortable repayment tenures from 1 year to 6 years
(b) Flexible repayment options in tandem with the farmer’s seasonal liquidity
(c) Financing farm equipments in over 381 locations soread across the country.
 Business Installment Loans:
(a) Loans upto 25 lakhs
(b) No security/guarantor required
(c) Faster Processing
(d) Minimum Documentation
(e) Attractive Interest Rates
(f) 12-48 months repayment options

 Farmer Finance:
Providing finance to the farmer for his various needs of inputs and consumption in the
form of crops loans, dairy loans and loans for allied activities to agriculture like irrigation
etc. For input needs and auto loans (two, three and four wheeler) and personal loans for
consumption needs. The customer can also avail of working capital term loan for setting
up a poultry project. Flexible repayment pattern and tenure to align to the cash flow of
the customers.

 Credit Card:

A credit card is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for them.
The issuer of the card creates a revolving account and grants a line of credit to the
consumer (or the user) from which the user can borrow money for payment to a merchant
or as a cash advance to the user.

A credit card is different from a charge card: a charge card requires the balance to be paid
in full each month. In contrast, credit cards allow the consumers a continuing balance of
debt, subject to interest being charged. A credit card also differs from a cash card, which
can be used like currency by the owner of the card. A credit card differs from a charge
card also in that a credit card typically involves a third-party entity that pays the seller
and is reimbursed by the buyer, whereas a charge card simply defers payment by the
buyer until a later date.

How credit cards work:

The credit card issuer would issued a credit card to a customer at the time or after
an account has been approved by the credit provider, which need not be the same entity
as the card issuer. The cardholders can then use it to make purchases at merchants
accepting that card. When a purchase is made, the cardholder agrees to pay the card
issuer. The cardholder indicates consent to pay by signing a receipt with a record of the
card details and indicating the amount to be paid or by entering a personal identification
number (PIN). Also, many merchants now accept verbal authorizations via telephone and
electronic authorization using the Internet, known as a card not present transaction

Electronic verification systems allow merchants to verify in a few seconds that the
card is valid and the cardholder has sufficient credit to cover the purchase, allowing the
verification to happen at time of purchase. The verification is performed using a credit
card payment terminal or point-of-sale (POS) system with a communications link to the
merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip
on the card; the latter system is called Chip and PIN in the United Kingdom and Ireland,
and is implemented as an EMV card.

For card not present transactions where the card is not shown (e.g., e-commerce,
mail order, and telephone sales), merchants additionally verify that the customer is in
physical possession of the card and is the authorized user by asking for additional
information such as the security code printed on the back of the card, date of expiry, and
billing address.

Benefits to cardholder :

The main benefit to the cardholder is convenience. Compared to debit cards and
checks, a credit card allows small short-term loans to be quickly made to a cardholder
who need not calculate a balance remaining before every transaction, provided the total
charges do not exceed the maximum credit line for the card.

Many credit cards offer rewards and benefits packages, such as enhanced product
warranties at no cost, free loss/damage coverage on new purchases, various insurance
protections, for example, rental car insurance, common carrier accident protection, and
travel medical insurance. Credit cards can also offer reward points which may be
redeemed for cash, products, or airline tickets. Research has examined whether
competition among card networks may potentially make payment rewards too generous,
causing higher prices among merchants, thus actually impacting social welfare and its
distribution, a situation potentially warranting public policy interventions

 Debit cum ATM Card

A debit card is a plastic payment card that provides the cardholder electronic
access to his or her bank account(s) at a financial institution. Some cards may bear a
stored value with which a payment is made, while most relay a message to the
cardholder's bank to withdraw funds from a payer's designated bank account. The card,
where accepted, can be used instead of cash when making purchases. In some cases, the
primary account number is assigned exclusively for use on the Internet and there is no
physical card.

 Travel Card:

The Travel card is an inter-modal travel ticket for unlimited use on the London
Underground, London Over ground, Docklands Light Railway, Tram link, London Buses
and National Rail services in the Greater London area. Travel cards can be purchased for
a period of time varying from one day to a year, from Transport for London, National
Rail and their agents. Depending on where it is purchased, and the length of validity, a
Travel card is either printed on a paper ticket with a magnetic stripe or encoded onto a
reusable contactless electronic smart card, known as an Oyster card. The cost of a Travel
card is determined by the area it covers and, for this purpose, London is divided into a
number of fare zones. The Travel card season ticket for unlimited travel on London
Buses and the London Underground was launched on 22 May 1983 by London Transport.
One Day Travel cards and validity on other transport modes were added from 1984
onwards. The introduction of the Travel card caused an increase in patronage and reduced
the number of tickets that needed to be purchased by passengers.


Along with Deposit products and Loan offerings, ICICI Bank assists you to
manage your finances by providing various investment options such as:

 ICICI Bank Tax Saving Bonds

 Government of India Bonds
 Investment in Mutual Funds
 Initial Public Offers by Corporate
 Investment in "Pure Gold"
 Foreign Exchange Services
 Senior Citizens Savings Scheme, 2004

ICICI Bank Demat Services boasts of an ever-growing customer base of over 7 lacs
account holders. In their continuous endeavor to offer best of the class services to our
customers we offer the following features:

 Digitally signed transaction statement by e-mail.

 Corporate benefit tracking.
 e-Instruction facility - facility to transfer securities 24 hours a day, 7 days a week
through Internet Interactive Voice Response (IVR) at a lower cost.
 Dedicated specially trained customer care executives at their call centre, to handle
all queries.

With ICICI Bank, banking is no longer what it used to be. ICICI Bank offers Mobile
Banking facility to all its Bank, Credit Card and Demat customers. ICICI Bank Mobile
Banking enables you to bank while being on the move.

ONLINE MONEY TRANSFER facility available to NRIs worldwide through at the click of a button!

 FREE Money transfers into accounts with over 30 banks in India
 Demand Drafts issued and payable at over 1250 locations in India
 ONLINE Tracking of the status of your funds
 SUPERIOR Exchange rates
 OFFLINE MONEY TRANSFER facility is also available across geographies
 Our local branches and in association with partner banks/ exchange houses.


The pricing decisions or the decisions related to interest and fee or commission
charged by banks are found instrumental in motivating or influencing the target
market.The RBI and the IBA are concerned with regulations. The rate of interest is
regulated by the RBI and other charges are controlled by IBA.

The pricing policy of a bank is considered important for raising the number of
customers’ vis-à-vis the accretion of deposits. Also the quality of service provided has
direct relationship with the fees charged. Thus while deciding the price mix customer
services rank the top position.

The banking organizations are required to frame two- fold strategies. First, the
strategy is concerned with interest and fee charged and the second strategy is related to
the interest paid. Since both the strategies throw a vice- versa impact, it is important that
banks attempt to establish a correlation between two. It is essential that both the buyers as
well as the sellers have feeling of winning..

(a) Pricing Bank Product:

Some considerations for loan and deposit pricing are:

(a) ROA or ROE objectives

(b) Related income taxes
(c) Earning assets to total assets
(d) Equity-to-asset ratio
(e) Cost to service earning assets being funded or deposits funding an earning asset
(f) Pricing for the activities and risks associated with the product
(g) Rate tiers based on product balances
(h) Asset and liability mix


This component of marketing mix is related to the offering of services. The services
are sold through the branches.

The 2 important decision making areas are: making available the promised services to
the ultimate users and selecting a suitable place for bank branches.

The number of branches OF ICICI: 1900 in India and 33 in Mumbai.

Reason for selection of bank

(a) The selection of a suitable place for the establishment of a branch is significant
with the view point of making place accessible.
(b) The safety and security provisions a Convenient to both the parties, such as the
users and the bankers


 Advertising: Television, radio, movies, theatres.

 Print media: hoardings, newspaper, magazines

 Publicity: road shows, campus visits, sandwich man, Sponsorship

 Sales promotion: gifts, discount and commission, incentives, etc.

 Personal selling: Cross-sale (selling at competitors place)


Flow of activities:
all the major activities of ICICI banks follow RBI guidelines. There has to be
adherence to certain rules and principles in the banking operations. The activities have
been segregated into various departments accordingly.

ICICI bank has got standardized procedures got typical transactions. In fact not
only all the branches of a single-bank, but all the banks have some standardization in
them. This is because of the rules they are subject to. Besides this, each of the banks has
its standard forms, documentations etc. Standardization saves a lot of time behind
individual transaction.

There are specialty counters at each branch to deal with customers of a particular
scheme. Besides this the customers can select their deposit period among the available

Number of steps:
Numbers of steps are usually specified and a specific pattern is followed to
minimize time taken.

In ICICI banks various functions are segregated. Separate counters exist with clear
indication. Thus a customer wanting to deposit money goes to ‘deposits’ counter and
does not mingle elsewhere. This makes procedures not only simple but consume less
time. Besides instruction boards in national boards in national and regional language help
the customers further.

Customer involvement:

ATM does not involve any bank employees. Besides, during usual bank
transactions, there is definite customer involvement at some or the other place because of
the money matters and signature requires.


Physical evidence is the material part of a service. Strictly speaking there are no
physical attributes to a service, so a consumer tends to rely on material cues. There are
many examples of physical evidence, including some of the following:

 Internet/web pages
 Paperwork
 Brochures
 Furnishings
 Business cards

The physical evidences also include signage, reports, punch lines, other tangibles,
employee’s dress code etc.
Signage: each and every bank has its logo by which a person can identify the company.
Thus such signages are significant for creating visualization and corporate identity.

Financial reports: The Company’s financial reports are issued to the customers to
emphasis or credibility.

Tangibles: bank gives pens, writing pads to the internal customers. Even the passbooks,
cheque books, etc reduce the inherent intangibility of services.

Punch lines: punch lines or the corporate statement depict the philosophy and attitude of
the bank. Banks have influential punch lines to attract the customers.

Employee’s dress code: ICICI bank follows a dress code for their internal customers.
This helps the customers to feel the ease and comfort.


 All people directly or indirectly involved in the consumption of banking services

are an important part of the extended marketing mix. Knowledge Workers,
Employees, Management and other Consumers often add significant value to the
total product or service offering. It is the employees of a bank which represent the
organisation to its customers.
 In a bank organization, employees are essentially the contact personnel with
customer. Therefore, an employee plays an important role in the marketing
operations of a service organisation.
 To realize its potential in bank marketing, ICICI become conscious in its potential
in internal marketing - the attraction, development, motivation and retention of
qualified employee-customers through need meeting job-products. Internal
marketing paves way for external marketing of services. In internal marketing a
variety of activities are used internally in an active, marketing like manner and in a
coordinated way.
 The starting point in internal marketing is that the employees are the first internal
market for the organization. The basic objective of internal marketing is to develop
motivated and customer conscious employees.
 A service company can be only as good as its people. A service is a performance
and it is usually difficult to separate the performance from the people.
 If the people don’t meet customers' expectations, then neither does the service.
Therefore, investing in people quality in service business means investing in
product quality.



Retail banks are facing greater challenges than ever before in executing their
customer management strategies. Intensifying competition, proliferating customer contact
channels, escalating attacks on customer information, rising customer expectations and
capitalizing on new market opportunities are at the top of every bank executive’s agenda.
In looking for ways to drive growth, banks need to evaluate their customer management
Faced with these numerous and varied trends, retail banks are reshaping the way
they must interact with their customers. A fully integrated, enterprisewide CRM platform
ensures banks have the core capabilities to take full advantage of their customer
relationships and capitalize on these market dynamics, rather than losing out because of


A CRM solution should help a bank target customers based on the “value” they
bring to the bank, now and throughout the life of the customer (and beyond through “next
generation” marketing). Banks need to ensure that their value propositions have traction
with the right market segments. This will enable the bank to identify, target and capture
new customers


Customer retention can be achieved by enhancing customer satisfaction and loyalty,
improving problem resolution, and creating the ability to identify and save “at-risk”
customers. In fact, an “at-risk” customer actually represents a major opportunity for
additional revenue – if handled correctly. However, the greatest danger for banks is either
not identifying “at risk” customers or not having the capabilities to do anything to recover

For example, a customer makes a large withdrawal from his or her account. This
may signal that the customer is switching funds to another bank. Or the customer may be
buying a house, a boat, or paying college tuition, in which case there are clear
opportunities to sell additional products or investments. The identification and treatment
of this customer should reflect his or her lifetime value. CRM-driven techniques will help
retain customers and can migrate mere “account holders” into loyal, long-term, profitable

To win profitable customers and build longterm relationships with them, banks need
to have the right insight, products and services for the right customer at the lowest
possible cost. From call centers to Web sites, every one of a bank’s multiple channels
must be scalable, flexible, low-cost and fully integrated with all the other channels. This
is the only way to consolidate customer information and provide consistent treatment
across the enterprise. Each of the bank’s channels must also be able to accommodate
change and adapt to future trends in the marketplace.


ICICI has transformed itself into a technology intensive financial services group in
the last decade. To achieve its long term goal of being in a position to practice One-to-
One marketing. ICICI has taken a series of initiatives. As 0part of the plans, it is
implementing various projects to establish world-class CEM practices which would
provide0 an integrated view of its customers to everyone in the organization. The paper
discusses some of the lessons learnt while implementing these projects.

ICICI set up as a Development bank over four decades ago to provide products and
services for the corporate segment, diversified into retail segment of the financial markets
in the early 1990s. In the last decade it has transformed itself to a technology intensive
financial services group. The first such move came in the mid-nineties when ICICI raised
debt from the retail market. Since then, ICICI has been increasing its reach to this
segment in terms of resources mobilization, and by offering quality investor services
through ICICI Infotech services, its subsidiary. In 1994, it established ICICI Bank as a
commercial bank that is flexible, in addition to the bank, the retail initiative include
(a) Prudential ICICI AMC- a tie up with the prudential Group of UK for its foray into
the mutual funds business.
(b) ICICI Personal finance services (PFS) – to offer retail assets products like home
finance, automobile finance, durables finance ets.
(c) ICICI Capital services – to services retail liability products like bonds and


ICICI has ambitious plans for its retail business initiatives. The retail strategy
revolves around intensive deployment of technology. Information technology will help
reduce cost of service, increase customer retention, help in cross-selling and up-selling
while improving process of efficiencies. Electronic channels including internet, ATMs,
call centers, contact centers, desktops, kiosks, mobiles and other hand held devices will
perform financial activities while ensuring that customer has multiple options for access
and transaction.

The group has adopted a ‘click and brick’ strategy to leverage the power of
electronic channels and physical presence to ensure rapid product delivery, fulfillment of
financial deals and documentation.

As part of the plans, it is implementing various projects to establish world class

CRM practices, which would provide an integrated view of its customer to everyone in
the organization. CRM at ICICI involves increased communication between the virtual
universal banks and its customer and prospects, as well as within the group itself. The
underlying idea is to enhance every instance of contact with the customer. ICICI believes
that a true customer - centric relationships can only be accomplished by considering the
unique perspectives of every single customer of the organization. Hence the pressing
need to put in place a technology enabled CRM solution.
CRM, at ICICI is viewed as a discipline as well as a set of discrete software
technology, which will focus on automating and improving the business processes
associated with managing customer relationships aims to achieve the end goal of one to
one marketing.

The CRM software applications will not only facilitate the coordination of multiple
business functions but also coordinate multiple channels of communication with the
customer-face to face, call center, ATM web, telephone, kiosks, bank , branch, sales
associates, etc. – so as to enable ICICI carry out cradle-to-grave customer management
more efficiently. I

From an architecture perspective, the enterprise –wide CRM solution should

seamlessly integrated non-transactional information housed in the back office. Creating
the enterprises CRM strategies required the combination of nine distinct steps as shown






The CRM Business Transformation Map below shows the various aspects of that
change. There are five inter-related areas. These include:

1. Business Focus
2. Organizational structure
3. Business Metrics
4. Marketing Focus
5. Technology









The key to building the CRM action plan was in understanding where the
organization stood relative to each of the five aspects of change. Interviews with key
individuals throughout the organization helped identify different initiatives that have been
launched, al focused on CRM. While all of these initiatives may have merit, failure to
address the total business transformation requirements can lead to very short - lived

The next step in the planning process was a Gap Analysis. This analysis essentially
and specifically describes the gaps. In addition to the more obvious gaps, this analysis
helped identify the CRM organizational holes:

1. Marketing Sales and services practices

2. Collections, capture, processing and development of customer information.
3. Distribution and operations effectiveness at customer touch points

Another key factor I n identifying gaps is to understand how the organization

functions relative to the CRM Business Cycle. There is a universal, underlying cycle of
activity that should drive all CRM initiatives and infrastructure development. All
initiatives and infrastructure development.


(A) Retail banking will remain the dominant source of revenue for banks
worldwide through 2015. In 2006, the retail banking business accounted for 1.22
trillion proud in revenues, Or about 57% of the global banking revenue pool of
2.15 trillion euro.
 Fourteen banking groups earned retail revenues in excess of 10 billion pound in
2006, with five groups bringing in more than 25 billion euro each. Even for most
of the top ten banking titans, retail business is still a critical revenue source –
representing an average of 37 percent of total revenues.

 Through 2015, retail revenues will expand at an estimated compound annual

growth rate (CAGR) of 3.2 percent in real terms. Factoring in an inflation rate of
roughly 3 percent, overall growth should add up to about 6 to 7 percent. The retail
banking business also continues to deliver high return on equity(ROE) than other
banking segments. Most major banks currently achieve ROE above 25 percent(
before taxes ) from their retail banking activities.

 By 2015, the share of global retail- banking revenues generated collectively in the
top five European Countries and in the united states- which are all mature markets-
will have shrunk by an estimated 5 Percent, with matching collective gains in
strongly growing markets in Asia-pacific and the middle east.
 Vast numbers of “unbanked” consumers in emerging markets-what we call the
next billion will take up banking relationships over the next generation. If such
consumers in china, India and Brazil were to generate 50 percent of the revenues
currently provided by “banked”, low income customers in these countries, the
amount of total new revenues produced by 2015 in these markets could be above
20 billion euro-the bulk likely coming from china.

(B) Competition in the global retail banking industry will become increasingly
intense, drivers by the continuing deregulation and opening of international
markets, the opening regionalization and globalization of the industry, the
expansion of direct and online banking, and rising customer expectations.

 The number of new entrants with attacking mindsets in regional markets

will increase. Aggressive players be they direct banks, product specialist, or
traditional banks seeking to expand their scope-will continue to battle
incumbents with fresh price and value prepositions all over the globe.

 The well known trend towards direct and online banking will change the
nature of industry significantly in terms of channel usage. The trend will
gain momentum as adoption rates across all age groups increase and as more
young people-who have raised using the internet-reach bankable age. The
dynamic will inevitably lead to a further decline in the importance of bank
branches for some sale activities, although branches will remain critical for
customer acquisition and advice-intensive products.
 The transparency of the online world and the ability of sophisticated
customers to compare offers and price positions will push the pendulum of
power in the retail banking industry increasingly towards the customers,
thus further pressurizing the competitive landscape.

(C) The grip of margin pressure will continue to tighten. From 2001 to 2006, the
banks in our benchmarking survey showed average margin decline in their retail
segments of about 21 percents.

 Many attackers’ poses highly cost efficient and scalable business models
that allow them to offer cheaper prices on a sustained basis. This fact along
with the ongoing shift towards online and direct banking will lead the
industry towards a new structural equilibrium at lower margin and cost

 In some markets, attacking players have already taken sizable share from
incumbents that have reluctant to fight proactively on the price front. This
trend will gain momentum as more new competitors enter the fray.
Incumbents will either have to offer commodity products for certain
segments at competitive prices or accept loss of market share.
 A key result of heavy price competition and its expansion into a wide range
of products is that revenue pools will grow at a lower rate in many major
markets over the next five years. This will make necessary for banks to
drive down their cost growth in order to keep cost-to-income ratios and

(D) Tougher competition and tighter pressure on margins and costs woll
encourage increasing merger and acquisition (M&A) activity, especially in
mature markets with low growth rates.

 In the future, we will see bigger , differently structured, and increasingly

international deals. Given the current speed of both M&A activity and the
forging of alliances, especially in the Asia pacific region, it is very likely
that by 2015 there will be five to ten truly global banks.

 Cross border mergers should be seen having two, three or more phases to
allow sufficient time for factors such as platform, scale and market
dominance to come into play and for all potential synergies to materialize.

(E) The winning business models of the future have been taking shape in recent
years and will continue to evolve. These models are exemplified by six general
types of retail banks: global titans and regional expansionists, domestic
champions, retail-oriented attackers, direct banks, specialists, and trading up

 The first five categories of players have clearly outperformed the pack or
showed the strongest improvements in recent years. They have an average
advantage in their cost-to-income ratio of 10 percentage points, an average
ROE advantage of 10 percentage points, and a revenue growth rate more
than twice that of most other banks. They also dare to invest in organic
growth and in acquisitions their top line growth allowing cost growth three
times as high as that of most other players .
 Between 2001 to 2006, direct banks and retail oriented attackers showed
the sharpest revenue growth of the six groups, with a CAGR above 20
percent, and at the same time achieved significant improvements in cost-to-
income ratios. Nonetheless, despite direct banks strong influence on overall
industry margins and channel strategies, the largest share of direct and
online banking will remain with multi channel banks. All models will show
a stronger online profile going forward, and some interesting new
combinations may evolve as new players arrive on the scene.

(F) Over the next ten years, traditional incumbents will find themselves more
engaged than ever on Several fronts.

 Incumbents will need to develop sharper positioning and coherent new

business models in order to defend their home markets and fight for share
against an increasing number of attackers. Because they have mature
footprints, many incumbents seeking competitive advantage will turn to
product innovation and better customer service . Products and pricing should
remain easy to copy, the latter Providing sustainable advantage only to low
cost players. Yet a small number of retail banks will realize long term
advantage by delivering a difficult-to-copy superior customer experience.

 Incumbents will also need to make direct and online banking a stronger part
of their multi channel strategies and upgrade their skills in online customer
acquisition and loyalty management. Winners Will learn quickly from other
industries and will transfer recipes for success to retail banking.


Any serious discussion of the future of the retail banking industry eventually raises
a basic question: will future customers still need retail banks? The answer, it turns out,
depends on banks themselves. With technology and nonbank businesses providing new
options for safeguarding and managing their finances, customers will continue to depend
on banks only as long as banks can provide service and value that cannot be found
anywhere else.

There are already signs that customers are questioning the ability of banks to look
out for their financial wellbeing. Only 36 percent of consumers believe what banks tell
them, according to a Forrester survey

1. A separate survey also indicates that over 60 percent of U.S. households conduct their
own research before buying financial services products.

2. As a result, banks have begun to rethink what, where and how they serve an
increasingly informed and demanding customer base.

At the same time, a confluence of industry developments, including consolidation,

regulation, industry specialization, changing workforce needs and new technologies are
putting additional pressure on banks’ operating models and raising questions about
traditional strategies for growth and value creation. So, what will the future look like?
How will banks continue to grow revenues and remain profitable? What will it take to
create and maintain advantage in this highly competitive industry? An examination of the
forces shaping the industry reveals that the future will require superior efficiency and
operational excellence from all banks, while industry leadership will be attained by those
institutions most adept at harnessing product, service and process innovation.

Ultimately, to deliver on these imperatives, banks will have to focus on their core
strengths those activities in which they excel – and partner with best-in-class specialists
for everything else: achieving more by doing less. On the surface, the competitive
landscape of the retail banking industry in 2015 will not look much different than it does

Mergers and acquisitions will likely have reduced the total number of banks,
especially mid-tier regional banks, and industry specialists and non-bank banks will play
a more prominent role. But most of today’s players, including universal banks,
community banks, industry specialist banks and non-bank banks, will still be vying to
differentiate themselves in a crowded marketplace. However, traditional approaches to
creating value through growth and efficiency will no longer be enough. Advantages
gained through acquisition, new market entry and reconfigured product offerings will be
fleeting at best, while partnering and outsourcing will make efficiency a basic
requirement for all.

 Customers redefine the rules of the game –

Pronounced shifts in demographics, attitudes and behaviors, in addition to ubiquitous

information, are giving customers the power to demand much greater responsiveness and
transparency from their banks.

• Universal banks and ultra-focused niche players thrive -

Large players will generate higher aggregate profits by reaping the benefits of super
scale, while niche players will aggressively pursue the most desirable customers by
addressing their needs in distinct ways – those in the middle will get squeezed.

• Changing workforce composition dictates new approaches –

An older and increasingly mobile and diverse workforce will raise management
complexity and require flexible approaches to compensation.

 Regulatory burdens intensify –

Heightened requirements around privacy, security, partnership risk and operational

risk will require banks to take a more proactive, enterprisewide approach to managing
compliance issues.

 Technology improves inexorably to enable breakaway value –

Advanced technologies will allow banks to infuse their legacy operating models
and infrastructures with unprecedented functionality. Emerging technologies such
as grid computing, service-oriented architectures, virtualization of data and
storage, and predictive inteligence will cause entrenched insourcing philosophies
to perish in favor of a partnership model where specialized enterprises thrive. Of
these trends, the first two – increasingly powerful customers and intensifying
competition – stand out as the most
significant forces that will drive industry change over the next decade. The other
three trends – changes in managing human capital, regulations and technologies–
will strongly contribute to and reinforce the effects of intensifying competition and
customer empowerment on banks’ strategic choices.

In this emerging environment, innovation will take many forms, including

advances in products and services, markets, operational processes, customer intimacy,
and new channel and diversification strategies. But innovation will not be possible, nor
will it have the desired impact, unless banks create the requisite conditions for innovation
development. There are four strategic;

 Focus on core strengths and partner for everything else –

Leading banks will optimize their performance by becoming specialized enterprises,

managing only strategic, differentiating business components internally and partnering
with best-in-class specialists for those capabilities that do not drive competitive

 Optimize the potential of each customer relationship-

Rather than attempting to be all things to all people, industry leaders will use
superior customer insights to offer the most appropriate and profitable
products, tools and services to targeted segments.

 Harness the potential of the workforce through effective performance


Banks will need to realign skills and set the right performance metrics to motivate a
changing workforce to continuously pursue innovation.
 Recognize that technology will be a critical element of success –

By making technology a central component of the strategic decision making

process, banks will be able to tightly align their business and technology initiatives,
and will be able to differentiate their offerings and seize market opportunities with
greater agility.


 Retail banking in india has fast emerged as one of the major drivers of the overall
banking industry and has witnessed enormous growth in the recent past. The retail
banking Report encompasses extensive study & analysis of this rapidly growing
sector. It primarily covers analysis of the present status, current trends, major
issues & challenges in the growth of the retail banking sector.

 This report helps in books, financial institutions MNS banks academics,

consultants and researchers to have a better understanding of the booming
opportunities in retail banking in India.

 The life of the banker, we should really write of the financial services provider has
become much more complex. Customers have now been segmented, the product
range has vastly expanded as well as the distribution channels. This figure goes
back to 1996. Today in 2008 one can really state that this is not the future of the
banking industry but the present state of affairs. For many consumers, the bank
management and the staff, the branch was literally and figuratively “the bank
”.This is changing at great pace as the economics of electronics distribution
systems, when compared with branch based systems, are compelling. There is an
obvious need, in the financial industry, to enhance exiting or construct new
electronic distribution systems while shrinking the branch environment.

Customer Relationship Management

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