Sunday, June 14, 2015

CAIIB-RETAIL BANKING-UNIT 1 RETAIL BANKING: INTRODUCTION

UNIT 1 RETAIL BANKING: INTRODUCTION

v  "Retail Banking is a banking service that is geared primarily toward individual consumers.

v  Unlike wholesale banking, retail banking focuses strictly on consumer markets.

v  Although retail banking is, for the most part, mass-market driven, many retail banking products may also extend to small and medium sized businesses.

v  Pure retail banking is generally conceived to be the provision of mass market banking services to private individuals.

v  Attractive interest spreads since spreads are wide, since customers are too fragmented to bargain effectively; Credit risk tends to be well diversified, as loan amounts are relatively small.

v  There is less volatility in demand and credit cycle than from large corporates.

v  Higher delinquencies especially in unsecured retail loans and credit card receivables.

v  In some banks retail banking was christened as consumer banking as the focus was towards individual consumers.

v  Capgemini. ING and the European Financial Management & Marketing Association (EFMA) have studied the global Retail Banking market with the aim of providing insights to financial services community through the World Retail Banking Report(WRBR).

v  The pricing indices were developed based on three usage patterns viz., less active, active and very active users.

v  Introduction of the telegraph in the early 1850s which made the process of communication and information exchange faster and reduced the price differentials between stock markets.

v  Banking services follow the standard industrial development pattern in which prices decline with maturity.

v  The share of interest income had almost remained steady at about 84% and the share of non interest income also is almost stable at around 16%.This indicates that there were no serious efforts by banks to increase the non interest income through fee based product and third party distribution models.

v  Retail Banking as a concept in India has been initiated by the PSBs and nurtured by the foreign banks and new generation private sector banks.

v  It grew by a compounded annual growth rate of 30.5% between 1999 and 2004 and expected to grow at above 30% in 2010

v  The penetration level of retail banking in India is still very low as compared to the other Asian countries like China, Malaysia, Thailand etc..