NITIE MumbaiTeam: Abhimanyu

Saurabh KatiyarPGDIE 45BSaurabh.Katiyar.nitie2017@gmail.com+91 7045813717

Sagar DasPGDIE 45BSagar.Das.nitie2017@gmail.com+91 7045372251

Banking sector overview• Number of Bank branches in India :: 1,15,082• Number of ATMs in India :: 1,60,055

Rural15%

Urban85%

Distribution of ATMs in India

Ru-ral

38%

Ur-ban62%

Distribution of Banks in India

Payment Banks

The Payment banks licensed by RBI :

1. Aditya Birla Nuvo2. Airtel M Commerce Service3. Cholamandalam Distribution Service4. Department of Post5. FINO PayTech6. National Securities Depositor7. Reliance Industries8. Dilip Shanghvi, (founder of Sun Pharmaceuticals)9. Vijay Shekhar Sharma, (CEO of Paytm)10.Tech Mahindra11. Vodafone M-Pesa

Payment Bank can only receive deposits and provide remittances. It cannot carry out lending activities. Payment Banks can issue ATM/debit cards, but can not issue credit cards as they are not empowered to carry out lending activities.

Identify major areas where payment banks are going to impact traditional banking business

1. India Post’s reach, with 139,000 post offices, significantly exceeds the number of bank branches at around 44,700 in rural areas. Since payment banks are allowed to take deposits up to Rs.1 lakh, public sector banks could lose out on customers who might open savings accounts with the post office.

2. Small and medium public sector banks will be impacted as incremental deposit growth and market share will see some impact from payment banks, especially in the rural and semi-urban areas.

3. Payment banks are backed by digital platforms, adequate capital, zero legacy issues, and low-cost innovative and convenient services.

4. Payment banks will bridge the last mile (or last 10-20 miles) between bank branches and the remote customer living in a rural hamlet

5. You could have a system using QR codes to help people select what they want and make the payment without lining up in a queue, which is something the retailers also want. Or we could give an auto guy a printed QR code to keep in his rickshaw, and when it's time to pay, you scan the code, enter the amount, and his account gets a credit instantly

What are the key advantages payment banks enjoy over nationalized banks

• These banks are likely to help expand banking services to the remotest corner of the country. All that is needed is a smart phone with internet connection, some unique identification number (such as Aadhaar); and a linked bank account.

• Indian Postal Service had 154,866 post offices, of which 139,040 (89.78 percent) were in rural areas and 15,826 (10.22 percent) in urban areas.

• In Mumbai, daily wage labourers and migrant workers use the FINO Paytech’s facilities primarily for remitting money to their families in far flung regions of the country such as Uttar Pradesh, Bihar and West Bengal. Payment technologies have proved hugely popular in other developing countries. In Kenya, the most cited success story, Vodafone’s M-Pesa is used by two in three of adults to store money, make purchases and transfer funds to friends and relatives.

• Airtel, Vodafone and Idea, which are mobile service providers, already have a customer base of over 580 million potential customers. PayTM already has 25 million e-wallet customers, who are all potential targets for its payment bank.

What should be key focus areas of bank X to face challenges posed by the payment banks

• Bank X should make strong investments in technology contactless payment enabled through usage of near field communication (NFC) technology

• Bank X can tie up with some of the companies that have got approval for setting up payment banks like State Bank of India (SBI) and Kotak Mahindra Bank (KMB) have already teamed up with licensees—the former with Reliance Industries and the latter with Bharti Airtel—to make sure they get a share of the action.

• E-commerce players have been leveraging the payment facility of banks so Bank X should collaborate with e-commerce firms to provide wallet services to ensure faster transactions.

• Bank X should invest on smartphone apps to make them more easy to use and advertise these apps.

What channels bank X should tap for customer retention and new customer acquisition

• Improvement in Employee Productivity

• Corporate Social Responsibility

• Scouting applications from customers via banking correspondents for people residing in remote unbanked areas and bringing them into the banking fold.

• Speeding the Loan sanction process

• Improving the present internet banking experience

• Continuous modernization of services with the help of customer feedback

• Loyalty scheme programs and customized services for customers

Thank You !!