ING Hunt for Lions

2. Banking Industry in India
◦ India to be 5th largest consumer economy with aggregate
consumption expected to grow to 1.53 trillion USD in 2025. [1]
◦ Middle class segment rising
◦ 80% of business controlled by Public Sector Banks
◦ In emerging markets, banking reaches about 37%of the
population, compared to a 50% penetration rate for mobile
phones. [1]
◦ The Return on Equity for the banking sector has been around
13% in the last four years with top performing banks having 18-
20% as RoE.
◦ According to research by Reich and Sasser (HBR) 5% increase in
customer retention can increase profitability by 35% in banking
buisiness, 50% in insurance buisiness
Source: http://www.ibef.org/industry/banking-india.aspx

3. Industry Growth Drivers

4. Rural Banking in India
 Statistics state that only 37% of bank branches of Scheduled
Commercial Banks are in rural areas with only around 40% of
the population holding bank accounts. [2]
Only 5% of the 600,000 village
habitations in the country have a
commercial bank branch
Only 40% of the population have
bank accounts
51.4% of nearly 89.3 million farm households do not have
access to any credit either from institutional or non-institutional
Debit card holders constitute only
13% of the population and only 2%
have a credit card
Only 13% of farm households are
availing loans from the banks in the
income bracket of < Rs. 50,000.
sources.

5. Online Banking
Customers access e-banking
services using an intelligent
electronic device, such as a
personal computer, personal
digital assistant, automated teller
machine, Touch tone
telephone.
• Cost effective solution.
• Enables the bank to reach its
customers on the net.
• Reduce rush at the counters of
the bank.
• Enables the customers of the
bank to access information
from anywhere and at any
time.
• Balance and transaction history
search
• No more Queues
• Growth:
EY:Banking on Technologies
Source: Indian Research Journal- Ebanking : The Indian Scenario by Dr. Roshan Lal and Dr. Rajni Saluja

6. SWOT Branch Banking
• The banks financial positions grows at
a rate of 20% every year which is a
major positive sign for any bank
• Traditional banking: higher trust
• Safety locker, Loans etc are preferred
• Strong History and loyalty
• Since 2009, RBI has increased CRR
by 100 basis points
• Increased repo rate reverse repo rate
by 50 points – 11 times of late
• RBI allowed foreign banks to invest
up to 74% in Indian banking
• Government schemes are most often
serviced only by govern banks
• Online Banking is preferred by Gen Y
• Robbery
• Expansion into rural areas
• Security Locker user rates are
increasing
• Small traders opt traditional Banking
• Fixed Operating Time
• Liquidity problems
• Customer has to visit the branch in person
• Slow pace of operations are time
consuming
• Document management is challenging

7. SWOT Online Banking
• Competitive Advantage for economies of
scale
• India is currently 4th largest user of internet
• Internet banking users has increased from
9% in 2003 to 50% in 2010
• Access anywhere, anytime: There are no
geographical barriers.
• Personalized transaction report
• Security
• Poor technology infrastructure
• Ineffective risk measures
• Easy Access of internet banking account by
wrong people through email ids
• When the server is down the whole process
is handicapped
• Traditionalists do not appreciate change :
IT Fatigue
• Expansion into rural areas
• Rising Middle Class Sector in India
• Rising population of Generation Y’s the
Tech Savvy Youth
• Increased demand for financial products
• Incentives offered by emerging E-commerce
and bill payments
• Retail Boom
• Technology leading to advanced products
and services
• RBI allowed foreign banks to invest
up to 74% in Indian banking
• Government schemes are most often
serviced only by govern banks
• Security Breaches : Hackers, Safety of
present RSA algorithms etc.

8. Factors that influence customer behavior:
 Trust :
• Institutional Stability
• Customer Experience
• Fees and rates
• Word of mouth
• Security
 Product ownership and Satisfaction
 Customer Care Services
 Convenience
Courtesy: EY Global Consumer Banking Survey (2014)

9. Customer Insights
 Based on Primary and Secondary research Security, face to face
interaction, Safety, uncomfortable with technology are main
concerns of the customer on digital banking.
 These concerns change with the demographics ( age,
profession, education), geography of target sample.

10. Road Map
Customer
Segment
RURAL TOWNS URBAN
Segment
Need
• Security Lockers
• Credit Information
• Financial Guide
• Loans with low interest
• Women empowerment schemes
• Insurance
• Loans
• Credit Information
• Retail banking
• Ecommerce
• Real Estate:
investment
assistance
• Various other
schemes
• Immediate payments
• Payroll assistance for
multinationals
• Tools to track financial
health
• Online trading
assistance apps
• Elderly generation:
Retirement plans
Differentiate
d Offerings
• Fund IT related farming
techniques Eg. State Bank of
Mysore funded IT dairy farming
• Online Management of Dairy
farms, Poultry farms etc.
• “Virtual Banker” : Offer online
product guide using video
conferencing services.
• Kisan Cards, Mobile SMS alerts
• Integrated wallet
systems
• Locality based
services
• Bill payments
• Micro Business
accounts
• Tax Calculator :
Assistance
• Security: Anti Money
Laundering Systems
• Ecommerce discount
coupons
• Online management tools
for records, transaction
pattern, Bill payments
• Online service request for
door to door
loan/insurance assistance
Delivery
Devices
• Increase ATMs
• Bill Payments through ATM:
Internet banking in ATM
• Virtual Banker tools (used by
Dutsche Bank)
• “Kisan Sabah’s” to increase
Awareness among farmers about
online banking (Village panchayat,,
Friends Club, Rotract associations
etc.)
• Virtual
CFO/Bookkeeper
services
• Online calculators/
• Virtual Safe deposits
• Premium cards
memberships for small
organizations
• Retirement plan online
calculators and service
guides

11. Road Map
 Virtual banker” is a collaboration tool that allows video
conferencing services between consumers in branches and
remote bank advisors.
 E.g. Nykredit(Denmark) implemented the remote personal advisors in June 2012 to meet the
needs face to face interaction resulting in customer satisfaction has increased by 7.5% over
the past year, while employee satisfaction has also increased by 8.5%. ROI has also seen an
improvement at an increase of 5% due to Direct Banking.[7]
 Extensive connection with customers through : Mobile apps,
Facebook, Twitter (Social Media)
 Retail Purchase assistance : Messages about new offers in the
nearest retail store by GPS enabled mobile app which scans for
nearest marts and discount coupons offered by ING Vysya cards
 Collaboration with travel agencies. (Make my trip, red bus,
KSRTC etc)
 Student plans: Online banking offers for students “Pocket
money account”
 Brand Ambassador programs for students as to market the brand
image and provide customer insights on Digital marketing over
social networking sites

12. Road Map
 Improving functional coverage.
 Improving usability experience.
 Analyzing customers for their behavior and banking habits.
 Analyzing customer’s profile and providing customized
offerings.
 Creating customer specific promotional schemes.
 Enhancing intra-channel and inter-channel customer experience.
 Providing value-additions over internet banking.
 Design products based on need of the life stage e.g age,
profession etc.
 Kitty party fund schemes/Chit fund: Home Makers of Urban
area/Rural area.
 “Online part time agents” for life insurance, loans etc : target
students, housewives looking for part time job, rural area talents
etc.

13. Product Comparison
 Extensive marketing required for ING Vysya Bank
 HDFC/Axis bank etc offers discount coupons on online bill
payment, ecommerce etc.
 Payback points on credit, debit cards
 Personalized customer need based loans
 Some banks offer assistance in online trading (Demat
account)
 Few top banks have a separate unit taking care of loan and
insurance sector
 Zero processing fee advertised well in top banks online sites
 Calculators, Track your application number etc. offered as
online services by top banks.
 “Religious offerings” can be included by ING Vysya bank
 Virtual Tutor can be incorporated.

14. Summary
 The growth story of the Indian banking industry showcases vast
opportunity, and it is imperative to appreciate the attractiveness of
this sector.
 Today’s internet banking is speedily achieving the status of being
an independent channel generating revenue.
 Efforts of improving usability, presentation, functional coverage,
enhancing supply chain components, extending transaction
coverage for entire cycle or across geographies are relentless.
 However improving customer experience uniformly across various
channel; customer education and participation, customer profiling,
enhancing customer relationship are vital in the growth of this
channel.
 Multiple parameters such as Functional and Transactional coverage
customer centricity, Prospecting and leading conversion, Channel
oversight, Organization support to channel, Multi-Channel
servicing etc must be considered.

15. Bibliography
[1] Banking Opportunities: Entry Strategy and the Road Ahead by PricewaterhouseCoopers (PwC) Pvt Ltd.
[2] Research paper on Retail banking in India Challenges and opportunities by Dr. Dinesh B. Raghuwanshi
[3] http://www.ey.com/Publication/vwLUAssets/EY_-
_Global_Consumer_Banking_Survey_2014/$FILE/EY-Global-Consumer-Banking-Survey-2014.pdf
[4] Deutsche Bank Research on “Digital Economy and Structural Change” :
http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000196129.pdf
[5] http://www.computerweekly.com/news/2240207464/Technology-and-innovation-in-European-banks
[6] http://www.scienceandnature.org/IJEMS-Vol2(1)-Jan2011/IJEMS_V2(1)5.pdf : Kisan Credit Cards
[7] http://www.computerweekly.com/news/2240207464/Technology-and-innovation-in-European-banks
[8] http://www.capgemini.com/resource-file-access/resource/pdf/Digital_Transformation__A_Road-
Map_for_Billion-Dollar_Organizations.pdf
[9] PRIMARY RESEARCH : Used Survey Monkey and word of mouth.
https://www.surveymonkey.com/s/QWMC3DR