UNIT 3 RETAIL BANKING: APPLICABILITY OF
RETAIL BANKING
v
The most
common strategies are end to end outsourcing, predominant outsourcing, partial
outsourcing and in house sourcing.
v
Regulatory
prescriptions are one of the major determinants of outsourcing or lack of it in
these banks.
v
In some
foreign banks, both front and back end operations are outsourced and in some
banks, the back end operations are outsourced while the front end operations
like sourcing of HNI clients are done through captive resources.
v
The four
broad classifications as envisaged by Boston group were defined based on the
technology and customer interface capabilities of the banks and are
(i) Horizontally Organised Model
(ii) Vertically Organised Model
(iii) Predominantly Vertically Organised Model
(iv) Predominantly Horizontally Organised Model
v
Horizontally
organised model is a modular structure using different process models for
different products offering end to end solutions product wise.
v
Vertically
organised model provides functionality across products with customer data base
orientation and centralised customer data base is used across products.
v
Predominantly
horizontally organised model is mostly product oriented with common customer
information for some products. In predominantly vertically organised model,
common information is available for most of the products
v
In most of
the PSBs, horizontally organised model is the standard norm.
v
New private
sector banks generally follow a vertically organised model.
v
As a part of
overall segmentation game plan of the bank, branches are classified as Resource
Centres, Profit Centres, Priority Centres and General Centres to have a clear
business focus.
v This concept is an effective business model for PSBs with large
network and useful for focused strategies and already getting implemented in
some public sector banks.
v
Liability
products are offered to retail banking customers basically under three spaces -
Savings Accounts, Current Accounts and Term Deposit Accounts. Product differentiation
among these accounts is best achieved by adding different value propositions.( from a plain
vanilla account to a value enriched account.)
v
Retail asset
financing is a major component of retail banking model of banks.
v
Not all PSBs
are in the credit card business since it is a big volume game and needs process
efficiencies.
v
In the
development process, geography is not given importance but type of branch and
centre and business potential are given due importance.
v
Banks adopt
different process models for retail asset products.
v
The common
form of process models are Centralised Retail Assets Processing Centres where
all the retail loans sourced at the branches and marketing team are processed
at a single point and assets are financed through that centre or processing
alone done at the centre and financing done at the branches.
v
Opening of
account, issue of Pass Book, Cheque Book, ATM Card/Debit Card, PIN Mailers for
the Cards are the stages in the tangibilisation process.(Centralized
Processing)
v
Process time
is a major differentiator in the efficacy of retail banking operations. Process
Time is business sensitive and customer sensitive.
v
Stand alone
pricing for different products and services is the basic structure.
v
Regarding Price Structuring quantum and volumes are two
important determinants.
v
Structuring
also involves price bundling where a holistic pricing is offered across a
specific bundling of products and services so that the total price proposition
is attractive than the stand alone pricing for the individual products of the
bundle.
v
This
structuring is a cross selling strategy to entice the customer to avail more
products so that profitability per customer is enhanced.
v
The
technology models basically adopted by banks are In House Models, Outsourced
Models, Partially In House and Partially Outsourced Models.
