Soumya Ranjan Baral GIM

Digital vs Branch Banking

Customer Preferences

SWOT Analysis Road Map Value

Proposition

Executive Summary : Digital banking doesn’t tend to substitute for branch banking but complement it

Analysis

Strategic Objectives

Insights

Recommendation

Assess the advantages and dis-advantages of digital and branch banking

What channels do customers prefer and analyse the reason for the preference

Analyse and explore strength, weakness ,opportunities and threats to each mode

Determine future strategy for ING Vysya to move towards digital banking

Different value propositions to be offered to help achieve increased growth

Focus on strategic analytics tools, social media interactions and innovative payment solutions

Gen Y and X to large extent prefer digital

Focus on strategic analytics tools, social media interactions and innovative payment solutions

Optimum Branch Model: Shop,

Pod, Lounge and Pharmacy

Analytical, Social, Ecosystem,

Experience ledDigital playground for banks is still very small, however evolving

Secure, ease of access and faster time savingBetter customer engagement and on the move mobility 24*7

Non-banking corp. one of the largest threatCross selling not possible in digital mode

Go Analytical, Go Social and Go Mobile

Increase revenue by 25% and reduce

cost by 20%

Rise of Machines : ” But its not the end rather the beginning”

Erosion of public trust due to several bank failures and crisis

Data theft, identity theft, Phishing

Optimizing a branch network helps save about

30%

Core banking services to become simpler but value added services will growInternet and

mobility: ever increasing trend

Banking has reached a tipping point with digital as its fulcrum.

Hub and Spoke Model

Huge potential in rural India: still not penetratedDigital

technologies will accelerate branch transformation and not make them extinct

Customers are willing to pay a premium for the innovative products and services who has good reputation for services

Most complex and profitable financial products, such as mortgages, are still sold in branches.

Introduce innovative offerings like Hub flagship Branches , Notification by Twitter/ Facebook , etc.

“Digical”Mashup of digital technologies and physical facilities

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Digital

New concept in area of electronic banking

Enrich online and mobile banking services by integrating digital technology

Currently undergoing the third wave of digital banking

Focus on strategic analytics tools, social media interactions and innovative payment solutions

Rise of Machines : ” But its not the end rather the beginning”

Digital playground for banks is still very small however evolving

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Erosion of public trust due to several bank

failures and crisis

Preference for digital is pervasive worldwide

Security : No need to carry cash

Fast moving life

style

Increased regulation

Collapse of liquidity in the market

Reduced risk

appetite

Services on the move and interactive

applications

Customers are willing to pay a premium for the innovative products and services from a bank who had given them a good service earlier or has the reputation to do so

Why do customers prefer or are switching to

digital?

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Digital Banking Branch Banking• On the go connectivity• Convenience of 24*7 services• Huge cost reduction (nearly

50%)• Better customer primacy and

engagement• Better offerings for customers• Security : No need to carry cash• Higher efficiency with service

time per customer decreasing• Easy account opening and

access• Higher returns for investors as

cost is low

• Many banks are still not able to provide basic online services

• Partner with firms that are acting as catalysts for change

• Follow buy approach rather than build approach : Difficult to imitate

• Displacement strategy to increase the wallet of share

• Platform for innovation : sophisticated authentication mechanisms and location based personalization

• Data Theft• Digital technology itself is

changing rapidly and thus difficult to catch up

• Identity theft and Phishing• Non-banking organizations

could seize the opportunity to own the customer experience layer and provide alternate means of distribution

• Loss of high net worth individuals

• Many people are still not comfortable with online applications

• Lack of trust on digital channels

• HNI’s still prefer one on one engagement

• Instruments like loans still require to visit the branches

• Cross selling is limited

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Digital Banking Branch Banking• Better Customer Engagement• Cross selling• Secure from data theft and

phishing• Most complex and profitable

financial products, such as mortgages, are still sold in branches.

• When it comes to depositing a check, people would rather hand it directly

• HNI’s prefer branch banking(provide more business than retail investors)

• Many banks are still not able to provide basic online services

• Regain trust and build engagement with the customer

• Develop new offerings for the customers

• Seamless integration of digital and physical distribution channel

• Digital technology itself is changing rapidly and thus difficult to catch up

• Has reached a tipping point with digital as its fulcrum.

• Loss of customers• Decrease in share of wallet• Lack of trust

• Gen Y and other customers don’t want to stand in a queue

• Proximity of the branch may be large

• Highly cost intensive (nearly 50%)

• Need to hire more staff• Staff quality differs from each

branch• Service time per customer is

very high• Products offered are costly• Transactions are can be done

within the working hours only

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Road ahead for Digital Banking

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Not envisioning a branchless future, but a future with

lesser branches

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

ING Vysya

Iwish by ICICI provides the convenience of FD returns and at the same time the flexibility of saving as much as you want and any time you want based on your goal

ICICI has my rewards offer which accumulates points at every purchase and also payback points at the same time

ICICI direct provides seamless navigation and continuous trading advice in the form of reports on daily, weekly , monthly and yearly basis.It has been awarded as the best demat service provider for subsequent years

Couple of banks allow user to complete part of the loan process and cheques via online channels which again reduces time and increases efficiency

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

ConclusionThe Opportunity

Increase revenues by Reduce service cost by

25% by increasing growth rate to

20% 10%

Align Governanc

e and Organisati

ons

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

Though the majority of Indians live in villages, the number of

branches in rural and urban India is almost same

1

Rural India Accounts for miniscule share of total credit

disbursed by banks

2

Private sector banks, in particular are the laggards at providing credit to

rural India

5

3

4

Digital vs Branch Banking

Customer Preferences

SWOT Analysis

Road Map

Product Analysis

Value Proposition

Conclusion

SocialLeveraging the power of a customer’s social network to create a greater personal intimacy

AnalyticalUsing information about a customer to their advantage, creating a deep and intuitive understanding of their goals

Fidor Bank Introduced “Banking with Friends” which allows user to register

using Facebook

EcosystemA network of partnership both financial and non-financial , seamlessly integrate a customer’s banking activities with the rest of their day-to day life

Mobile phones used as primary payment devices

replacing debit/credit

card : Feature introduced in

IPhone 6

Experience ledFocusing on fulfilling a customer's needs rather than selling banking products

Visual Financial Management

tool

“Digical”Mashup of digital technologies and physical facilities

Introduce Innovative Offerings…• Hub flagship

Branches : serve as showrooms for complex product sales and for providing trusted expert advice

• Notification by Twitter/ Facebook of a transaction

• Store Loyalty cards and

Convert to cash automatically

• Offer Spending Analysis Tool

• Storage of key documents in

Virtual Vault• Mobile phone Replacing

debit /credit cards• Voice-activated Virtual

Assistant for mobile devices

Digital vs Branch Banking

Customer Preferences

SWOT Analysis Road Map Product

AnalysisValue

Proposition Conclusion

References

• WWW.rbi.org.in• http://www.pwc.com/en_GX/gx/banking-capital-markets/publications/assets/pdf/pwc-new-digital

-tipping-point.pdf• http://www.carolinemoeckel.com/defining-digital-banking/• http://www.economist.com/news/finance-and-economics/21589471-banks-have-no-branches-ar

e-making-surprising-resurgence-third-time-lucky• http://www.sec.gov• http://

www.bain.com/Images/INDUSTRY%20BRIEF%20As%20UK%20customers%20embrace%20mobile%20banking%2C%20will%20the%20branch%20disappear.pdf

• http://blogs.hbr.org/2014/09/rethinking-the-bank-branch-in-a-digital-world/• http://thefinancialbrand.com/35509/digital-channels-branch-banking/• http://www.visiblebanking.com• http://www.atkearney.com/digital-business

RBI_Banking Centre Distribution.xls

RBI_Branch Details.xls

RBI_Online Transactions.xls

INDUSTRY BRIEF.pdf

Digital vs Branch Banking_Survey.xls