7th NATIONAL COMPETITION FOR MANAGEMENT

STUDENTS

Managing Organizational and Management

Challenges in India

CHALLENGES AND ISSUES RELATED TO

RETAIL BANKING

Presented By:

VRITI NARAYAN BOHRA

JITENDRA PAL SINGH
RETAIL BANKING : AN INTRODUCTION

 It is a typical mass banking where individual customers

approaches towards branches of large commercial banks for
availing services in the form of savings , personal loans, debit
and credit cards.
STUDY ON REATIONSHIP MARKETING IN CAPITAL MARKET
 In broad
WITH term, basically
SPECIAL REFERENCE it is TO
the EDELWEISS
dealing between commercial
BROKING LTD.
banks and individual customers in provision of banking
services comprising large number of low value transactions.

 It is characterized by 3 basic elements:

1) Multiple Products.
2) Multiple Channels of Distribution.
3) Multiple customer groups.
RETAIL BANKING : GLOBAL PERSPECTIVE

 The retail banking Business accounted for € 1.22 trillion in

revenues, or about 57% of the Global banking revenue pool of €
2.15 trillion.

 Fourteen banking groups earned retail revenues in excess of €10

STUDY ON REATIONSHIP MARKETING IN CAPITAL MARKET
billion, with five groups bringing in more than € 25 billion each,
WITH SPECIAL REFERENCE TO EDELWEISS BROKING LTD.
retail business is still a critical revenue source-representing an
average of 37% of total revenues.

 Contribution of retail loans to GDP:

India 6% China 15 %,
Thailand 24% Taiwan 52%

Source : Boston Consulting Group (BCG)

RETAIL BANKING : INDIAN PERSPECTIVE

 It is classified in the form of scheduled and non scheduled

banks .

 Scheduled Banks are included in the RBI Act , 1934 complying

STUDY
with the ON REATIONSHIP
minimum statutoryMARKETING IN CAPITAL MARKET
requirements.
WITH SPECIAL REFERENCE TO EDELWEISS BROKING LTD.
 Non-Scheduled Banks are joint stock banks, are not included in
the second schedule of RBI Act because of failing to comply with
minimum statutory requirements.
FACTS ABOUT RETAIL BANKING IN INDIA :

The annual growth in bank credit to the commercial sector is at

25.4% as on March 31, 2007 and was lower than 27.2% against
previous year. In the beginning of 2011, retail banking is expected
to grow at a CAGR of 28% to touch a figure of INR9,700 billion.

During 2006-07, gross credit extended by Indian commercial

banks grew by 34.83% to touch INR19,495 billion.

 Retail credit constitutes about 25% of the total credit and has
grown by 28.0% to INR4,218.3 billion.

Source :Indian Banks Association (IBA)

FACTS ABOUT RETAIL BANKING IN INDIA :

 Till January 2011, retail banking is expected to grow at a CAGR

of 28% to touch a figure of INR 9,700 billion.

 On an average , retail banker keeps 12-15% of total deposits in

the current account.

On an average, retail banker keeps 30-33% of total deposits in

savings account.

On an average, retail banker keeps 50-56% of total deposits in

fixed deposits.
HIP MARKETING IN CAPITAL REFERENCE TO
EDELWEISS BROKING LTD.

Source :Indian Banks Association (IBA)

DRIVERS OF RETAIL BANKING GROWTH :

•Growing disposable incomes.

•Youngest population.
-About 70% of Indian population is below 35 years of age.

•Higher adaptability to technology.

•Increasing literacy levels.

-Every ten years the literate population of India goes up by about 10%.

•Fiscal incentives to home loans.

•Desire to improve lifestyles.

CHALLENGES FACED BY THE RETAIL BANKING :

 Customer retention.

 Know your customer ( KYC) issue and money laundering is an

important issue.

 Regulatory compliance based on homeland security, IT

framework and privacy regulations are forcing financial
institutions to integrate the databases and overhaul the
information systems.
CHALLENGES FACED BY THE INDIAN BANKS :

Interest Rates Risk

-To execute business strategies, banks make loans, purchase securities, and
take deposits with different maturities and interest rates. It arises from
differences between the timing of rate changes and the timing of cash flows.

Non Performing Assets

Competition in Retail Banking

The Urge to Merge

Impact of Basel II Norms

FUTURE OF RETAIL BANKING:

Through 2015, retail revenues will expand at an estimated compound

annual growth rate (CAGR) of 3.2%in real terms. Factoring in an
inflation rate of roughly 3%, over all growth should add up to about
6to7%. The retail banking business also continues to deliver a high
return on equity(ROE) than other banking segments. More major
banks currently achieve ROE above 25 percent(before taxes) from
their retail banking activities.

Source : Boston Consulting Group (BCG)

FUTURE OF RETAIL BANKING:

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%, with matching collective gains in strongly growing
markets in Asia-Pacific and the Middle East.

Source : Boston Consulting Group (BCG)

FUTURE STRATEGIES :

 Reaching to masses : Need to customize

 Customer segmentation/differentiation

 Data mining/CRM based campaigns

 Products per customer/loyalty

 Promoting low risk retail lending products

 Offer an array of products and financial advisory.

CONCLUSION :

 Constant innovation needed in the form of product innovation

and business process reengineering , micro planning , marketing ,
customization, technological up gradation .

 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. However the kind of technology used and the
efficiency of operations would provide the much needed
competitive edge for success in retail banking business.
Furthermore, in all these customers interest is of paramount
importance.
THANK YOU !!