naresh ibs bangalore

NareshIBS Bangalore

Digitalization in Banking

April 11, 2023 Digitalization in Banking 3

Index• Digital Banking Vs. Branch Banking (Who preference and Why ?)

• SWOT (Digital Banking & Branch Banking)

• Digitalization – A Differentiator in Banking

• India’s sentiment on Digitalization

• Road Map towards Digitalization

• Competitors position on Digitalization

• ING Vysya’s products and Services

• Customers Insights

• Indian Banking Industry

• Growth Predictions

• Competitor’s products and Services (Above ING’s offerings)


Digital Banking Vs. Branch BankingDIGITAL BANKING BRANCH BANKING

WHO WHY WHO WHY

• Students• Software Professionals• Business People• Agencies• NRI’s• New Generation Employees• HNI’s• Other Country People• Techies etc.• Other White Colored Personnel

• Access to technology• Technology oriented• Standard of living• Culture• Environment• Globalization• Stiff Competition• Reduced Costs• Time Saving• Others

• Primary sector people• Elder People• Home Keepers • People in Tier-3 cities• Rural People• Illiterate Persons• Who won’t like technology•People near to bank• Without Smart phones• Baby boomers• Others

• Access to technology is not available• Some do not like technology• Low income levels• Low standard of living• Low awareness levels of technology• Operational risks in digital technology• Others


SWOT

Opportunity:

- Extended Work hours to serve customers well-Attract new customers through CRM

Threats:

-Globalization- Liberalization- Foreign players with lucrative services-New licenses for incoming players-Standard of living change- Operational Risks

Weakness:

- Difficult to provide All services-Transaction costs- Transition time- Improper Waiting Line Management-Limited Working Hours- Demand and Supply Mismatch

Strengths:

-Convenience- Better Place to know about the products and services-Indians strong belief on the service

Strengths:

- Less Operational Costs- Less transaction time- Higher comfort levels- Integration of various services- Service automation

Threats:

- Stringent Security measures- Higher Operational Risks- Monitoring of operation- Systems and Network Protection

Opportunity:

- Customers from competitors- Globalization and liberalization-Many third party providers- Huge customer base in India- Increasing standard of living

Weakness:

- Media is required to deliver the service- Not every customer is literate on technology-Most of the Indians do not have access

Digitalization Branch banking


Digitalization – A Differentiator in Banking

Why Need for Digitization Competitive Advantage

• Provides competitive advantage• Differentiates best players• Defends tuff competition• Increased Wallet Share of customers• Dissatisfied customers with traditional banking• Maximum utility of technology• Changing customer habits

• Stiff Competition• Threat of foreign players with good services • Entrants with better services• Regulator guidance on business operations• Molding to changing environment• Giving customers the option of good experience.• Others Giants Wants to start the Business (Ex. Google)

• Satisfy the loyal customers with enhanced services• Long Term Customer relationship• Enhanced Business Operations• Enhanced Cross channel functions• Creating Value from information• Innovative business model creation


India’s sentiment on Digitalization

Bank’s Effort on Digitalization Indian Customers


Road Map towards Digitalization

Strategy Design & Build Deploy Digi

Assess Plan Requirements

•Capabilities•Competence•Market•Regulations•Resources•Supply•Stakeholders•Customers•Players•Straddling•Demand•Vendors•Market research•Profits•IT etc.

•Digitalization•SWOT•TOWS•PESTEL•7’S Model etc.

Design Delivery channels•small banks•In-principle bank•message banking•Payment Banks•Coffee Shop Bank•Flagship branch•Pop-Up branch•TV Banking etc.

•IT•Providers•Employees etc.

Modifying 1

Modifying 2

Change Management

Phase 1- Metros Only

Phase 2- Tier II Cities

Phased Approach Only

Phased Approach Only

•Customers•Employees•Suppliers•Third Party•Top Management

Monitoring

Pilot Test

StartEnd

Implementing the Design is Critical


Competitors position on Digitalization

SBI

ICICI

AXIS

HDFC

CITI

Though it has huge market share, it is behind In the race in terms of Digitalization

Majority of the Indian banks are digitalized, the mentioned banks are reaping fruits because of their commitment to Technology


ING Vysya’s products and ServicesMar-11 Mar-12 Mar-13 Mar-14

Branches 511 531 546 557

ATM’s 416 456 500 638

Employees 7041 10001 9758 10058

PERSONALBANKING

WHOLESALE BANKING

OTHERS

Banking: - Preferred Banking - Savings Account - CA - Demat - Term Deposits - Credit/Debit Cards - Forex Services - Salary Accounts - Institutional accounts - Lockers

Borrowing:- Home Loan- Personal Loan- Credit Cards- Gold Loans- Loan on Securities- Loan on Property

Financial Markets: - Risk Management - Research& Analysis - Market Trading - ALM

Debt Capital Markets:- Syndicated Loans- Bonds/NCD’s - Securitization - Structured Products

Business Banking:- SME Loans- MSME/CGTMSE- AGRI- Accounts & Deposits- Business Net Banking

Investment:- Wealth Management- General Insurance- Exide Insurance- ING Fortunate trade- QFI

Access Points:- Internet Banking- Mobile Banking- Phone Banking- SMS Banking- IMPS- Business Net Banking

Shop & Pay Online:- E deals- My Card, My Style- Recharge& Shopping

Loans: - Term Loans - Demand/Short Term - Cash Credit/Overdraft - Pool Buy-outs

Corporate Finance:- M&A- Private Equity Advisory- PE Advisory- Other

Global Transactions:- Cash Management- Trade Services

Private banking:- Measuring Risk- Investment Banking- Investment Advisory

NRI Banking:- Accounts- Fixed Deposits- Money Transfer- Wealth Management- Home Loans- PO Box Services

* Indicates more efforts are needed to Digitalize

CASA -34.23% (137,587 Mn) FD -41216.7 Crore NIM -3.58% CRAR-16.76 Tier I -14.86%, Tier II- 3.9 Bn


Customers Insights


Indian Banking Industry

• IBA assets US$ 1.8 Trillion• Expected to touch US$ 28.5 Trillion• 2001-2010 revenue US$ 11.8 bn-US$ 46.9 bn• Credit Card & Personal Loan segment is booming• ICICI’s Personal loans 1461.6 % growth• Axis bank’s Personal loans at 49.8% and credit cards at 31.1% growing

• HDFC&UBI planning to set up equity markets.• Exim Bank strongly supporting exports from India to South Asia, Africa and Latin America• IndusInd Bank will soon begin its asset reconstruction business• Jammu and Kashmir (J&K) Bank plans to increase its presence outside India

• The RBI has announced a few measures in its bi- monthly monetary policy (US$ 75000- 125000)• State Bank of India (SBI) has announced a one-year rural fellowship program• The RBI has simplified the rules for credit to exporters. • The RBI has enabled overseas investors

Market Size Investments Govt. Initiative

• Pradhan Mantri Jandhan Yojana’s vision will change banking regime.• CAD 8 year low of 2% of GDP• FII inflows increased• Japan’s bank MoU with India• Good governance in Public sector banks• In 5-10 Yrs. 2 Mn. New Jobs

News

References: Media Reports, Press releases, RBI Documents


Industry Growth


Competitor’s products and Services

• Pehla Kadam

SBI

• Pehla Udaan

SBI

• World Card

SBI

• Virtual Card

SBI

• DSA

ICICI

• FX Innovative Servises

ICICI

• Family Wealth Account

ICICI

• Special recurring Deposits

PNB

• ECGC

PNB

• Insurance Linked education

Canara

• MCC

Canara

• Double dhamaka NRE Scheme

Bank of Baroda


Thank You