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8/2/2019 Imc Mrssoundarakumar Sbi(Retail Banking)
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RETAIL BANKING
STRATEGIES FOR THE FUTURE
Mrs. Soundara KumarGM Personal Banking
State Bank of India
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Present Scenario
Indian retail banking has been showingphenomenal growth
In 2004-05, 42% of credit growth came fromretail
Over the last 5 years CAGR has been over 35%
Retail credit levelcrossed Rs.189K Crore in2004-05
Market has transformed into a buyersmarketfrom a sellersmarket
Comprises of multiple products, channels of
distribution and multiple customer groups
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Economy vs. Retail Banking
Retail assets are just 22% of the total bankingassets of India
Contribution of retail loans to GDP:
India 6% China 15 %,
Thailand 24% Taiwan 52%
Indian population below 35 yrs of Age70 %
Reach of Formal Banking Channels 20-25%
of Indian population
Source: Cygnus Industry Insight
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Auto28%
Other personal
Loans
16%
Home
49%
ConsumerDurables
7%
Market Share: Retail Loan - 2005
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Drivers Of Retail Growth
CHANGING CONSUMER DEMOGRAPHICS Growing disposable incomes
Youngest population in the world
Increasing literacy levels
Higher adaptability to technology
Growing consumerism
Fiscal incentives for home loans
Changing mindsets-willingness to borrow/lend Desire to improve lifestyles
Banks vying for higher market share
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Industrys response to the change
Anywhere,Anytime Banking
Improved processes/Bundled product offerings
Faster service/Reduced TATs
Customer specific products/offerings on a regularbasis
Bank customer has replaced Branch customer
Focus on understanding customer needs/
preferences
Segmentation/Differentiation of customers
Customer driven strategies
Building relationships
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The accelerated retail growth has been on a historicallylow base
Penetration continues to be significantly low compared
to global bench marks
Share of retail credit expected to grow from 22% to 36%
Retail credit expected to grow to Rs.575,000 crs by 2010at an annual growth rate of 25%
Source: Cygnus industry insight
Future Of Retail Banking
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Future of Retail Banking Contd.
Dramatic changes expected in the creditportfolio of Banks in the next 5 years
Housing will continue to be the biggest
growth segment, followed by Auto loans
Banks need to expand and diversify byfocussing on non urban segment as well as
varied income and demographic groups
Rural areas offer tremendous potential toowhich needs to be exploited
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Strategic prerequisites.
Performance oriented leadership
Sophisticated marketing and sales
Efficient distribution channels
Process efficiency and ease of scalability
Superior credit policy, procedures and skills
Source: Mckinsey
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Challenges
Sustaining Customer loyalty
NPA reduction & Fraud prevention
Avoiding Debt Trap for customers
Bringing Rural masses into mainstream banking
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Strategies for Future
Reaching to masses : Need to customize
Customer segmentation/differentiation
Data mining/CRM based campaigns
Products per customer/loyalty
Promoting low risk retail lending products
Offer an array of products and financial advisory.
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Strategies for Future Contd.
Cost effective expansion
Renewed emphasis on superior execution by
front-line employeesGrow through Alliances:
Hospitality Education
Retailers Automobiles
Consumer Durables Housing/Construction
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The bank that best addresses and anticipates
customers needs, delivers consistently higher
quality service and connects to the customer
via their channel of choice wins
Y.Y.Chin, OCBC Bank
Winning Strategy
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Thank You !