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RETAIL BANKING Tool for Profit

By Mr. Prashant D. Nanche Abhyudaya Co-Op Bank Ltd.

Introduction:
Retail Banking is a banking service that is geared primarily toward individual consumers. It is usually made available by commercial banks as well as smaller banks. Retail banking focuses strictly on consumer markets. Today much of retail banking is streamlined electronically via Automated Teller Machines (ATMs), or through online banking.

Retail Banking Products in Abhyudaya Bank:


ATM Savings Accounts Current Accounts Fixed Deposits Internet Banking Mobile Banking

Loans:
Home Loans Personal Loans Car Loans Commercial Vehicle Loans Loan against securities Education Loan

What the bank has to offer ?


Savings Bank A/c and Current A/c & FD A/c Internet Banking. Phone Banking. Mobile Banking. Cheque Truncation system. Kiosks, POS Terminals. Demat services, MF distribution services, Insurance products. Consumer loans , Home loans, Vehicle loans. Loans against Shares, Insurance policies. Online Tax Accounting System (OLTAS) Electronic Accounting System in Excise and Service Tax (EASIEST)

Drivers of Retail Banking Growth:


Available Tax benefits from govt. Growing disposable incomes. Youngest population in the world. Increasing literacy levels. Higher adaptability to technology. Growing consumerism. Buy and Pay attitude rather than Save and buy attitude.

Retail Banking Business response to change:


Any where, Any time Banking improved processes/Bundled product offerings Faster service, Customer specific products/offerings on a regular basis Bank customer has replaced Branch customer Focus on understanding customer needs/ preferences Segmentation/Differentiation of customers Customer driven strategies Building relationships

Rising issues in Indian Retail Banking:


KYC. Technology issues. Organizational alignment. Product Innovation. Price Bundling approach. Business process reengineering(BPR). Effective human resource. Rural orientation

Favorable role of RBI:


Inclusion of housing loans within priority sector. Reduction of risk weightage in case of housing loans from 100% to 50%. Reduction in CRAR up to 9%. Introduction of base rate system to provide favorable rates to customers. Using CRR and SLR as tools to control bank credit

Challenges faced by Indian Retail banking:


Issue of money laundering. Issue of outsourcing. KYC challenge. Supporting customer faithfulness. Technology induced threats. Acute shortage of manpower talent. NPA reduction. Avoiding Debt Trap for customers. Bringing rural masses into the purview of retail banking

Advantages:
Retail deposits are stable and constitute core deposits RB increases the subsidiary business of the banks. RB results in better yield and improved bottom line for a bank. Improves lifestyle and fulfils aspirations of the people through affordable credit. Innovative product development credit. Retail banking involves minimum marketing efforts in a demand driven economy.

Disadvantages:
Designing own and new financial products is very costly and time consuming for the bank. Customers are attracted towards other financial products like mutual funds etc. Though banks are investing heavily in technology, they are not able to exploit the same to the full extent. A major disadvantage is monitoring and follow up of huge volume of loan

According to RBI:
There is a need of constant innovation in retail banking. This requires product development and differentiation, innovation and business process reengineering, microplanning, marketing, prudent pricing, customization, technological upgradation, home / electronic / mobile banking, cost reduction and cross-selling. How far the retail banking is able to lead growth of the banking industry in future would depend upon the capacity building of the banks to meet the challenges and make use of the opportunities profitably.

Conclusion:
Customers redefine the rules of the game. Universal banks and ultra focused niche players thrive. Changing workforce composition dictates new approaches. Regulatory burdens intensify. Technology improves inexorably to enable breakaway value.

Thank You

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