JinitSIMSREE

Executive Summary

• It’s a high time now that Banks specifically private banks get into full fledged digital operations. Banks should understand that their approach now should be Customer-Centric which delights the user and provides him with convenience of carrying out banking transactions from wherever and whenever he wants

• Having said that some of the private banks such as ICICI Bank, Kotak Mahindra Bank & Axis Bank have scaled up their activities towards Digital adoption of their products with the necessary technical enhancements along with following the norms set upon by RBI

• Along with the Marketing and promotions of the services that will be provided by Banks on a digital platform, they also need to restructure their organizational structure and removing barriers for Digital Strategy. ING Vysya needs to work on the back end that is required in order to set up a full functional Digital operation feasible and viable

• The scope of Digital banking is quite appealing, there has been remarkable growth in the number of NEFT/RTGS transactions last year as compared to 2012 and even more when considering Internet Banking, Online transactions through Credit/Debit Card which depicts us the mood of Indian Consumer that is shifting towards digital

• Matter-of-fact that RTGS grew from 941 INR trillion to 1026.4 INR Trillion from the span of 2010 to 2012, Mobile payment rose to 229% in 2013 as compared to previous year

References: Cognizant Business Consultancy & Accenture Consultancy, Reserve Bank of India

SWOT Analysis for Digital Banking

Opportunities

Strengths Weaknesses

Threats

• Customized Personal attention• Low Cost induced per Customer• Ease of Convenience • Customer can carry transactions from

anywhere at anytime• Huge savings for banks as less

paperwork will be Involved• Less Time required, automated

process• Increased Reach & Marketing in

reduced costs

• High bank service charges. • Poor technology infrastructure• Ineffective risk measures• Easy Access of internet banking

account by wrong people through email ids

• When the server is down the whole process is handicapped

• Banks provides all services through electronic computerized machines and this creates problems to the less educated people

• Capital requirements• Huge investment in technologies• Low awareness amongst traditional

users

• Increasing risk management expertise

• Advancement of technologies, strong asset base would help in bigger growth

• India’s internet penetration is Increasing, hence more opportunities

CASA Products of ING Vysya Bank

FeaturesGenereal Current

A/C

Comfort Current A/c

Advantage Current A/C

OrangeCurrent A/c

Platina Current A/c

AQB (Rs.) 10,000 25,000 50,000 1,00,000 5,00,000

FeaturesPlatina Savings

A/C

Zwipe/Zwipe Classic

SavingsA/c

Orange Savings A/C

AspiraSalary A/c

Advantage Salary A/c

Zing Savings

A/C

AQB (Rs.) 1,00,000 25,000/20,000 10,000 Zero Zero 2,500

Current Account

Saving Account

Comparison with other Banks

Bank A B C

ING Vysya Platina Account Formula Saving Account

Orange Saving Account

ICICI Titanium Privileged Account

Gold Privileged Account Savings Account

HDFC PlatinumAccount

Saving Max Account

Regular Savings Account

Research Analysis

13%

4%4%

78%

Percentage of In-dividuals Prefer-

ring Branch Bank-ing

20-30 30-40 40-50 >51

54%

11%

15%

20%

Percentage of Indi-viduals Preferring Di-

gital Banking

20-30 30-40 40-50 >51

Security Issues

No internet Access

Satisfied with Bank Branching

Prefer Personal Touch

0% 5% 10% 15% 20% 25% 30% 35% 40%

Reason for preferring Bank branching instead of Net banking

Scope of Digital Banking

2010-11 2011-12 2012-13850

900

950

1000

1050

1100

RTGS

• RTGS have increased from 1900 INR Crores in FY2004 to 1026 lakh Crores in FY2013

• NEFT has rised from 17100 INR Crore in FY2004 to 29 lakh crore in FY2013

• Credit Cards payment have grown 7 seven times from 2004 till 2013 and it hovering around Rs 1.2 Lakh crore

• Debit card payment have increased to 15 times to around Rs 74300 Crore a year in 2013

INR Trillion

References: Cognizant Business Consultancy & Accenture Consultancy, Reserve Bank of India

Scope of Digital banking

2010-11 2011-12 2012-20130

2000

4000

6000

Average monthly Credit Card Usage in INR

2010-11 2011-12 2012-130

50100150200250

Average monthly Debit Cards usage in INR

References: Cognizant Business Consultancy & Accenture Consultancy, Reserve Bank of India

Increase in the Shift to Digital payments

7 Strategic areas to consider

Infrastructure: Few Banks have integrated infrastructure in place to enable the seamless retrieval, storage and distribution of information and data, both up- and downstream.

Data: Precise information is the key to understanding bank customers and creating unique digital personas for tailored interactions. Financial instruments and transaction

Content: An enterprise content management roadmap for digital banking includes storage, management, workflow, process, integration, BI, analytics, reporting, information architecture meta-model, content type, and lifecycle and syndication methodology

. Business process: Process components include a service orientation, governance, technology adoption, process orchestration, tuning and optimization, rules engine adoption and enterprise service bus adoption

Digital Strategy

Strategic Areas to consider…

Analytics:

Analytics capabilities include multi dimensional analysis by geography, customer type, IVR path, and speech to text. They also include data, Web site and real-time content analysis, user profiling and segmentation, campaign optimization, time and path correlation, frequency and monetary analysis. Also important is the ability to track customer behaviour to correlate with revenue-driving activities and nurture cross-selling opportunities.

Social and mobile:

Information must be accessible from anywhere and from any mobile form factor. Other key components include collaboration for external client facing business applications, authentication and access security

User experience:

A consistent user experience needs to be provided across all major interaction touch points. Other key factors include an information architecture, personas, wireframes, screen flows (process UI), visual design, interactive mockups, campaign management, branding, search engine optimization, user experience and session management, responsive Web design, usability, prototyping and UI technology.References: Cognizant Business Consultancy & Accenture Consultancy

Digital Banking’s Multi-dimensional Attributes

Channels: For smaller banks, a mobile channel strategy may be the best choice rather than investing in a state-of-the-art digital branch infrastructure. For larger banks, a diversity of branch designs is an option, as are kiosks, smart ATMs, digital recognition technology, video and enhanced personal banking tools and offices.

Partnership and acquisition models: Banks can offer digital services directly, or they can partner with or acquire young companies to gain digital capabilities and processes. BBVA recently acquired Simple, an American online banking platform, for $117 million.

Revenue models: E-commerce business models build on the potential for generating multiple transactions from individual customers. Online banking goes beyond single transactions by focusing on interactions and loyalty that serve to maximize customer lifetime value.

References: Cognizant Business Consultancy & Accenture Consultancy

Digital Banking Enterprise Roadmap

A bank’s choice of digital business model is heavily influenced by factors:

• Processes for sales, customer acquisition and customer service.

• Customer experience with automation, self-service and assisted service.

• Product pricing and design, as well as the cost structures supporting them.

• Underlying incentives and compensation systems.

References: Cognizant Business Consultancy & Accenture Consultancy

Breaking Organizational Barriers

• Many banks operate in silos that do not offer integrated service offerings, digital or otherwise. Such compartmentalization is the result of traditional organizational management approaches that segregated offerings by and within lines of business and by product and channel.

• However, out-dated silo structures run counter to digital banking’s holistic view of customers, and they have played a large part in the industry’s painfully slow transition to online banking.

• Digital banking breaks through organizational barriers. It compels banks to rethink organizational constructs, as well as revenue and profitability recognition across the enterprise

• The reorganization includes merging current lines of business management and the enterprise-level product and technology functions, as depicted in Figure 6.

Building a Digital Organization Structure

Removing Organizational BarriersReferences: Cognizant Business Consultancy & Accenture Consultancy

Conclusion

Looking at the scope of the digital growth in the country along with the advent of new Internet start-ups in the country, the general trend of people is shifting towards having digital life. ING Vysya could command and capitalize this growing potential by placing their products digitally paired with aggressive marketing campaign which could create a niche sector in the market and get an early mover advantage. Having said that ING Vysya should also invest and make sure that there Digital system is robust enough to handle this increasing demand and cater the needs of the people.