Research Paper on Multi Channel

7/30/2019 Research Paper on Multi Channel

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Use of Multi Channel Distribution System in IndianBanking Sector

Nishant Thacker(Lecturer, B.P. College Of Business Administration, Gandhinagar)

Abstract

Usage of multiple channels by businesses to reach and serve potential and existing customers

has proven efficient and productive system in this techno-savvy scenario. This system uses

different channels to promote and sell products. The businesses try to reach potential customers

through multiple channels to acquire and to serve them. In service sector the service providertries to provide services to target customers through various ways. In Banking Sector also they

provide their services through the various channels like E-banking, Mobile-banking, ATM

facility, Real Time Gross Settlement (RTGS), Electronic Funds Transfer (EFT) and many

more. With the help of these various facilities customers can use 24 x 7 x 365 days banking

services with the help of Core Banking Solution and it does not creates compulsion on the

customer to visit the branch for the availing banking services. Now-a-days with the help of

Information Technology paper-less transactions can be done and hence it provides with the

solutions to both, Bankers and Customers quickly and cost effectively. Part I of the paper

discusses the concept and multi-channel usage in the banking sector. Part II of the paper

highlights the problems faced by banks while implementing multi-channel distribution system

followed by recommendations and conclusion.

Key Words : Multi-Channel Distribution System in Banking, E-Banking, Real Time Gross

Settlement (RTGS), Electronic Funds Transfer (EFT)


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Introduction

Multichannel marketing is an efficient and productive system used by businesses to reachpotential customers. In this marketing system businesses tries to provide same product orservices with the help of different marketing channels. This system aims to use

distribution methods to create a return on investment for the business in a shorter period.An advantage of multichannel marketing systems is that they create reliable distributionchannels that concentrate on different demographic populations. Further, multichannelmarketing systems contribute to the rapid growth of revenue and branding. There arevarious new channels are available to the businesses for the distribution of product andservices with the help of Internet facility. Specifically in banking industry they usevarious distribution channels with the help of internet or with the help of rapid growth inthe Information Technology like E-banking, Mobile-banking, ATM facility, RTGS andEFT.

Objectives

To Study Multi Channel Distribution System and its uses in Indian BankingSector

To Study various distribution channel used by banking sector and its valueaddition in banking services

To Study various Issues and Challenges faced during the implementation of somedistribution channels

Methodology

The study is based on both primary and secondary data. primary survey for 120respondents have been carried out in Gandhinagar and nearby villages of Gandhinagarcity, a capital of Gujarat state through a questionnaire. The secondary data have beencollected from various articles, periodicals and web sites. Data has been analysed fromquestionnaire with the help of statistical tools like simple mean, average, percentage andgraphs.

Distribution Channel used by the Banking Industry

With the rapid changes in the environment and consumers buying behavior specificallyin service sector, it forces the banking sector to introduce some change and innovation inthe distribution channel. Now a days consumer demands fast, convenient and cost-


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effective services. with the help of technology banks have introduced various innovativedistribution channels and some innovations in traditional distribution channel also.

Automatic Teller Machine (ATM)

With the help of Automatic Teller Machine (ATM) customer can use banking facility 24 x 7 x

365 days. With the help of this machine customer can withdraw cash at any time, they can

transfer balance from one persons account to another persons account, they can make bill

payment, they can also pay insurance premium and balance inquiry can also be done. With the

help of ATM Machine customer can use banking facilities without approaching branch

personally. So, it provides facility to customer with convenience, speed and cost-effectiveness.

Internet Banking

With the help of Internet Banking customer can use banking facilities with the help of internet

portal. For the use of this facility customer has to crate Log-in Id and pass word and then

customer can use banking facility at any time any where without approaching branch

personally. Customer can do balance inquiry, fund transfer, bill payment and on-line shopping

as well.

Real Time Gross Settlement (RTGS)

Real Time Gross Settlement (RTGS) system, introduced in India since March 2004. RTGS is a

system through which electronic instructions can be given by banks to transfer funds from their

account to the account of another bank. The RTGS system is maintained and operated by the

RBI and provides easy and fast fund transfer from one bank to another bank.

Electronic Funds Transfer (EFT)

With the help of Electronic Fund Transfer (EFT) facility customer can transfer balance or he

can make payment to another person by providing instruction to his bank like name of the

person to whom fund should be transferred, account number of person to whom fund should be

transferred, type of account, bank name, branch and transaction amount.


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Mobile Banking

Customer can use banking facilities on its mobile instruments with the help of mobile banking.

Customer can give instruction of fund transfer from their account to another persons account

through the SMS and fund will b e credited into the beneficiarys account. Customer can dobalance inquiry, fund transfer, bill payment and also get short summery of their account

without approaching bank branch personally.

Problems faced by banks while implementing some distribution channel

With the rapid changes in the environment and consumers buying behavior specifically in

service sector, it forces the banking sector to introduce some change and innovation in the

distribution channel. Innovative distribution channel provides solution fast, convenient andcost-effective but it is also having some limitations which are explained as below:

Huge Amount of Capital Investment

Information Technology requires huge amount of capital investment. Internet banking, Mobile

banking requires huge amount of capital investment at the initial stage and the Return On

Investment (ROI) at the initial stage is quite low.

Easy access to alternative credit:

Out of the 120 respondents, of rural areas only 64 respondents are having bank account

and 56 respondents are not having bank account. These 56 are taking loan from their

friends, shrofs or from any other way and also they are not investing their savings into the

bank but they are investing it into post account saving scheme or availing other

investment options.


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Low literacy rate

Specifically in rural area the literacy rate is low and therefore they are not able to use banking

services through the E-banking or Mobile banking. They are also not aware about the some

banking products and services. so it is quite difficult for them to use distribution channel which

requires use of information technology.

Out of the total sample, 60 (50%) were school dropout, 15 (12%) were high school passed, 24

(20%) were Sr. Secondary passed and only 18 (15%) were Graduates. and 3 respondents didnt

answer the question.

50%

12%

20%

15% 0%

3% LITERACY LEVELschool dropoutHigh schoolSr.secondaryGraduatePG or AboveNA

Consumer buying behavior

Technological factors also affects while consumers are using banking services. Consumers of

rural area are not used to avail banking facilities through E-banking or Mobile banking because

they are not literate or they are not comfortable with the information technology. They often

visits branch and getting their work done there only.


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Conclusion

In this 21 st Century era of Information Technology has changed the Product and Service Sector

both. Specifically in service sector service provider provides services with various innovative

ways. In banking sector also banks have come with number of innovations in its services and

its distribution channel. Now a days with the help of E-banking and Mobile-banking banks

provides fast, convenient, cost-effective services at any time without approaching bank branch

personally. The future of new distribution channel like E-banking, Mobile banking is quite

good but still it faces some hurdles while providing services through this distribution channel.

RBI is also playing developmental role for the providing safe and innovative banking services.

Bank should also motivate the customers for using the Information Technology rather than

visiting bank branch personally. With the help of one separate cell bank should createawareness and educate customers about the new innovative distribution channel of banking

sector.

References

S. Dharmarajan (2007), Information Technology in Banking Services-Trends, Issues

and Challenges

Ashish P. Bhuva, Amita Prajapati (2012), Financial Inclusion: Practices of IndianBanks. Edited book on Emerging Role of Financial Services, Insurance and Banking

ISBN 978-81-89972-83-7 pp 240-249

www.rbi.org.in

www.sbi.org.in


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Documents

Research Paper on Multi Channel