Retail Banking

RETAIL BANKING

Presented by Group-1

RETAIL BANKING

When services are offered to individuals as their personal requirements, it is called Retail Banking. “Retail Banking should encompass all institutional who provide a range of banking services-money transmittion,deposit and credit service and some form of financial advice.” Retail Banking consists of large volumes of low value transactions. Retail Banking refers to the mobilization of deposit

SURVEY CONDUCTED REGARDING CUSTOMERS USING SERVICES Most of the customers visiting branches 2-3 times a month. Very much satisfied with the services. 24% are not satisfied with the minimum balance required to be maintained in their account. ATM’S are most preferred virtual banking technique by customers. At ATM’S preferred enquiry is balance and cash withdrawal. Internet is giving ground. Customers using telephone having opt for four types of functions  - Check account balance  - Cheque book request  - Check credit card balance

CATEGORIZATION OF RETAIL BANKING SERVICES Core Services Payments

Facilitating Services •Cash •F.E. •T. Cs. •D.Ds. •T.T. •E.F.T.

Current a/c & Saving Bank a/c

•ATM •Inter Branch •Safety vault

Supporting Services •At Door •Internet •Telephone

•Credit Cards •Debit Cards •Internet •Telephones •Flexi a/c •Senior citizen services

CATEGORIZATION OF RETAIL BANKING SERVICES Cont’d… Loan Product: Consumer Loans Personal Loans Housing Loans Education Loans

•Current a/c

Insurance Product

•C/A •S/B •T/B •Safety vaults

•Life •General

•Saving Banking a/c •Time Deposit a/c

•Delivery time period •Interest Rate OptionFixed/ Floating •Pre payment facility •Counseling •Legal services for documentation •ECS for payment of Installment

•Additional Insurance for family members •Counseling on post retirement savings

RETAIL BANKING SERVICES 1) Saving Bank accounts 2) Fixed Deposit schemes 3) Current Accounts 4) Corporate Salary Accounts 5) Automated Teller Machines 6) Internet Banking Services 7) De-mat Services 8) Inter Branch Banking 9) 24- hour Loan Banking 10)Bill Pay 11)Safe Deposit Lockers 12)Debit Cards, Credit Cards and Charge Cards 13)Easy Loan

RETAIL BANKING SERVICES Cont’d… 13.) 14.) 15.) 16.) 17.)

Free Investment Advisory Service Banking through Mobile Phone Free Home Services Bankassurance Kid e Bank

ADVANTAGE OF RETAIL BANKING Resource Side 1) 2) 3) 4) 5)

Deposit stable insensitive and less bargaining for additional interest Such deposit are loan cost funds Strong customer base Retail increases the subsidiaries business

Assets side 1) 2) 3) 4) 5) 6)

Better yield and improved bottom line Good avenue for funds deployment Consumers loans presumed to the lover risk ,less NPA Helps economic revival through increase in production Innovative product development Improve life style of people through cheap

STRATEGIES FOR SUCCESS IN RETAIL BANKING Bank can formulate the following strategies in order to achieve success in the retail banking segment  Adoption of advanced and latest technology  Skilled man power in all branches and offices  Balanced and sustained growth in deposits and advances  Strategic cost management

STRATEGIES FOR SUCCESS IN RETAIL BANKING Cont’d…

 Market research and market intelligence in order to formulate competitive and innovative products  Customer relationship management  Universal banking/ financial supermarkets  More delivery channel 

TYPES OF RETAIL LOANS Installment Credit

Clean Demand Loan,

Immovable Property, Housing Loans

Future Rentals Home Financing, House

Construction Loan Educational Loans Personal Consumption Professional, Loans

Regular, General, Serving Executive, Rural,

Urban, Semi-urban Credit Card/Revolving Credit

Overdraft/Open Credit Urban, Semi-urban

Pensioners, Vehicle Loan, Executive, Rural,

TYPES OF RETAIL LOANS Cont’d… Mahila Vikas Yojana

Tailor Small Traders

and Saw

Others

and tour, Defense Kits,

Griha Sewa, Beauty Parlor, Boutiques, Shops

Day to day loans, Timber merchants mills

Earnest money scheme, Bon Voyage scheme for financing travel Personal Loan, CNG

EVALUATING RETAIL LOANS  Differ from commercial loans No comprehensive analytical format applies  In commercial loans, financial papers , etc are available on which credit decision is taken  Consumer loans are peculiar, bank cannot guage the creditworthiness of the borrower  Credit analysis and credit scoring techniques

EVALUATING RETAIL LOANS Cont’d… CREDIT ANALYSIS/SCORING TECHNIQUES Credit Analysis includes 6c’s namely character, capital, capacity, condition, collateral, compliance  Credit Scoring covers certain steps are as followsJudgmental as well as credit scoring procedure Through score bank states the borrower in terms of risk Historical data on the performance of previous loan is analyzed good/bad weighted average of borrowing

RISK MANAGEMENT & RETAIL BANKING  Intensive competition  Banks may compromise on quality of credit.  Banks have to target specific customer base on individual behavior, needs and value.  Customer data based stored in the bank would be handy.  International trends shows that large losses can be related to retail loans portfolio.  There is need to tread cautiously and manage risks proactively.  Through portfolio of retail loans is better diversified than corporate loans a systematic risk arising out of macroeconomics shock could still have a large negative impact.

RISK MANAGEMENT & RETAIL BANKING Cont’d…

Risk includes following -

Deficiencies in lending policies  Incorrect product structuring  Inadequate loan documents  Deficiencies in credit appraisal  Inadequate risk pricing  Inadequately defined lending limits

EMERGING ISSUES IN HANDLING RETAIL BANKING Knowing The Customer b) Easier said than practiced c) Branch data warehousing d) Customer preferences, spending patterns

Technology Issues g) Huge investment in technology h) New delivery channels, ATMs, credit cards etc.

EMERGING ISSUES IN HANDLING RETAIL BANKING Cont’d… Product Innovations b) New products may not become successful c) Product should create value not amusement d) Can not sell the product on shelf

Pricing Of The Product g) Banking sector witnessing price war h) Transparency in pricing i) Minimum amount due, total amount due, processing charges not advertised in credit cards, so these are hidden charges

EMERGING ISSUES IN HANDLING RETAIL BANKING Cont’d… HRD Issues b) Motivating frontline staff, project them as sales managers rather than as clerk c) Changing the image of the bank from transaction provider to solution provider

Low Cost And No Cost Deposits f) Banks are in need of more s/b a/c and current a/c so that their cost of liability is less

NEW BANKING SERVICES TO BE STARTED IN COMING YEARS BY NPSBS More Services through ATM’S Smart Cards E-Cheques Wealth Management Services