Paidisetty VenkateshTAPMI

Executive Summary:

Problem StatementAnalyze the Digital vs Branch banking and come up with new products and a clear road map

Methods used

• Industry Analysis• Primary Research• Secondary Research• Product Analysis

Recommendations

• Making banking outlets available or closer to the villagers• Currently there were no attractive deals in the products offered• Creating product-specific awareness to ensure greater usage of these products• Creating greater awareness about banking services among women and among rural

households with relatively low incomes.• Personal Finances Management

Economy & Industry Analysis:

India's banking industry could become the 5th largest banking sector globally by 2020 and the third largest by 2025.

The deposits growing at a CAGR of 21.2 % in the period FY 06–13, there has been evident growth in the overall industry.

According to CRISIL forecasts till 2016-17:- Aggregate car and UV loan disbursements will grow at a CAGR of 18-20 %- Housing loans disbursements to grow at CAGR 16%- Real annual disposable household income in rural India grow at CAGR of 3.6 %

Rising middle class population as per NCAER forecasts : -Increase from 13.1% in 2011 to 20.3% in 2015-16 - This attracts them with attractive offers as the other financial investment avenues

Balance in customer profitability v/s customer satisfactionIncrease in popularity of internet and mobile banking with customer relationship management (CRM) and data warehousingAnticipated to drive the next wave of banking technology in the countryPromote new-age banking models to aid innovation: This includes technology firms trying to set up digital banks, which will lead to

• Disruptive innovation• Huge competition• Technology and innovation

Our View

SWOT analysis of Digital Banking:

Technological aspects should be handled efficiently else it would impact the customer base

Security aspects are directly related to monetary losses.

Technical glitches would create hurdles for

the transactions Huge dependency on internet connection for

availing any service Possibility of Security threats Technology underpins user-friendliness and

customer interaction

Huge potential to attract new audience Knowing customer preferences and thinking helps bank to

serve better Offers substantial benefits to banks for exploiting with new products

Improvements in user-experience through interactive and rich visualizations

Enhanced digital security services due to advances in mobile devices & networks seamless end-to-end experience with new channel integration technologies Rise of social media enabled control of ‘Brand message’ from business to customers

Strengths Weaknesses

Opportunities Threats

Banks should consider four main aspects of a robust digital offering:1. Customer attitudes and behaviour are changing2. Digital is preferred globally3. Digital is a part of Generation Y’s lifestyle and this is the key time for them to decide on their primary banking relationship.4. Digital is evolving – technology devices and software all serve to disrupt traditional means of communication. Simultaneously, each brings opportunity.

SWOT analysis of Branch Banking:

Strengths•Increased

customer satisfaction due to direct face-to-face interaction

•Availability in tier 1 and tier 2 cities with many ATM branches

•Supports the bank with cutting edge technologies in its operation

•Appealing ambience to customers for offering services

Weakness• Does not provide seamless services to customers• Time consumption during transaction process• Limited number of branch banks & ATMs• Inexperienced staff• High cost for labor and infrastructure facilities• Increased customer complaints due to ineffective

customer services• Incur high service charges

Opportunities• Penetrate into digitalization of banking services• Enter into untapped rural markets• Increase number of product offerings• Increase the number of branches

Threats•Intense

competition for market development in nearby branches

•Decline in economy

•Increased capital gains & taxes

Branch Banking SWOT

Research Methodology

Step 1

•Define objective :Why customers prefer click or brick formats

Step 2

•Exploratory Research – Focus Group Discussion was conducted among 8 respondents to identify major factors affecting banking decisions

Step 3

•Questionnaire preparation

Step 4

•Online Survey. Results collected from 139 respondents in the age group of 18 to 50+ years

Step 5

•Analysis/ Evaluation of data

Step 6

•Presentation of Findings

Primary Research: Branch Banking

18-2520%

26-357%

36-4510%

46-5023%

>5040%

Branch Banking - age group wise distribution

People aged above 46 preferably use branch banking compared to other age groups.Primary research indicates more than 50% users of Branch banking are Gen X people. Privacy factor is considered as the most important factor when they go for branch banking. Relative importance shows 88 out of 139 respondents, consider privacy as most important.

Insights

21.00%

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

RANKING OF FACTORS FOR BRANCH BANKING

Privacy Customer Service Customer SatisfactionNear by branches Face to face interaction

Face to face interaction

Near by branches

Customer Service

Customer Satisfaction

Privacy

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

40

45

70

74

88

33

35

26

23

8

29

26

11

10

13

28

25

25

19

13

9

8

7

13

17

IMPORTANCE OF FACTORS - BRANCH BANKING

Very Important Important Neutral Not important Not Very Important

Primary Research: Digital Banking

18-2549%

26-3531%

36-4512%

46-506%

>502%

ONLINE BANKING- AGe GROUP DISTRIBUTION

18-25

55%26-35

25%

36-45

15%

46-505%

MOBILE BANKING-AGE GROUP DISTRIBUTION

S e c u r i t y

C o n v e n i e n c e

T i m e

U n a v a i l a b i l i t y o f n e a r b y b r a n c h e s

H e l p

T r a n s a c ti o n c o m p l e t e i o n

R e s p o n s i v e n e s s

98

76

66

39

47

68

78

7

26

31

39

41

27

24

5

10

11

33

32

19

9

12

13

18

18

16

16

16

17

14

13

10

3

9

12

Importance of factors-digital bankingVery Important Important NeutralNot important Not Very Important

21.00%

22.00%

23.00%

24.00%

25.00%

26.00%

27.00%

28.00%

RANKING OF FACTORS - DIGITAL BANKING

Security ConvenienceTime Unavailability of nearby branchesHelp Transaction completeionResponsiveness

Targeted customers in the age group of 18 to 35 years are more receptive to the online bankingCustomers in the age group of 18 to 35 years preferring a mobile medium of banking Of all the factors which play an important role in digital banking, Security is the most predominant one followed by responsiveness and convenienceRelative importance shows 78 out of 139 respondents, consider responsiveness as most important.

Insights

Financial Product Comparison:

HDFC

• Women’s Saving Account

• Kids Advantage Account

ING Vysya ICICI

• Advantage Women’s Saving Account

• Young Stars Saving Account

HDFC

• Two Wheeler Loans• Car Loans

ING Vysya ICICI

• Commercial Vehicle Loans

• Car Loans

HDFC

• Regular Fixed Deposit

ING Vysya ICICI

• Fixed Deposits

ING Vysya is not targeting Women and kids, Also the names given to various Savings Account wont create any resonating and empathizing impact on potential customer

Two wheeler loans have strong rural demand and also according to CARE two wheeler industry likely to register a growth of 8-9 per cent in FY14. Including Vehicle loans in the loan portfolio is the need of the hour to increase sales.

FD Plus offered by ING Vysysa

PERSONAL FINANCES MANAGEMENT

+ Money IN28,996 INR

DATE: Sept 1st 2014-Sept 25th 2014

- Money OUT32,033 INR

Dashboard

31%

6%

11%

38%

14%

Food and GroceriesEntertainmentClothing/ShoesTravel and Rental ExpensesOthers

So You overspent !!!3037 INR

90%Food and Groceries

133%Entertainment

142%Clothing and Shoes

80%Travel and Rental Expenses

Budgeted Expenses Vs Actual ExpensesSpending

Recommendations:

Making banking outlets available or closer to the villagers

Creating product-specific awareness to ensure greater usage of these products

Creating greater awareness about banking services among women and among rural households with relatively low incomes

Formulation of products linked to income status of the borrowers thereby providing them opportunities for using banking products and services

Personal Finances Management

To increase the awareness of the products, need to do aggressive marketing in all the channels

Road Ahead:

Creating greater awareness about banking services among women and among rural households with relatively low incomes

Creating product-specific awareness to ensure greater usage of these products

Formulation of products linked to income status of the borrowers thereby providing them opportunities for using banking products and services

Making banking outlets available or closer to the villagers

To increase the awareness of the products, need to do aggressive marketing in all the channels

Sources

• KPMG report on Indian Banking – The Engine for Sustaining India’s growth agenda

• http://www.ibef.org/industry/banking-india.aspx

• www.rbi.org

• www.ingvysyabank.com

• www.hdfcbank.com

• http://info.shine.com/industry/banking-financial-services/8.html