• PAGE ONE
• INDEX
• HOME

Banking on the customer

Rukmani Vishwanath

`RELATIONSHIP MANAGEMENT' is the name of the game in the banking industry today and customers never had it so good before. In a savings-driven economy like ours, banks have finally come of age and the emphasis is now on making the customer feel that he i s the king.

With newer platforms emerging everyday to facilitate banking services, ranging from the, internet, mobile commerce to higher-end technology applications such as WAP etc, the traditional role of the bank which used to be that of `money lending' has assume d broader dimensions.

Public sector banks which are trying to shed their ancient garb often associated with bureaucracy and red-tapism, are going all out in becoming technology savvy and orienting their staff to be more customer friendly. There is no other way to face the gro wing competition from their private sector compatriots.

Banks are segregating their business in terms of retail and corporate customers. Some banks offer their high net worth depositors special services, for example ICICI Banks `Select', or HDFC Banks `preferred'. Lobby Managers to cater to the needs to these clients are trained to service all their banking requirements at the earliest.

Consolidations within the banking industry with mergers and acquisitions between public and new private sector banks have heralded in a new age of business in the banking arena.

Among emerging trends, ` Bancassuarance' is the new buzzword for the marketing of insurance products by tapping the retail distribution network of banks. It is felt that banks can play a key role in the marketing of insurance products as they already hav e the infrastructure and organisational workforce in place.

Changes in consumer behaviour are evident from the significant growth in the use of `plastic' as against money in India. Card issuers are heavily promoting debit cards in a bid to discourage the need for carrying around paper money. India's debit card b ase which was three lakhs in March 2000 has now shot up to 4.9 lakh during the first half of 2000-01. Spends on debit cards have also risen by around 65 per cent to Rs 825 crore from Rs 500 crore in March. Smart cards and Credit cards are simultaneously being aggressively promoted.

Poor credit offtake in the year 2000-2001 spurred intense competition among banks in the retail banking segment.For example public sector bank Union Bank of India's thrust is now on the retail segment for 2001-2002.

The bank which has targetted a growth of 20 per cent in its business during the current year is firing on all four cylinders to achieve its objective. Bank officials said that the bank is introducing new schemes zeroing in on professionals like doctors e tc and offering a range of new products including educational loan schemes. It is also promoting retailing of government securities for individuals as well as institutions like PF trustees.

The focus now for most public sector banks to promote retail banking activity and augment their fee based income.

Banks these days finance almost anything from homes to cars, consumer durables, education, schemes for senior citizens, schemes for children etc, and also retail mutual funds and insurance thereby converting into a one stop financial services supermarket .

Bank of Baroda, the country's second largest public sector bank has taken the business of `keeping pace with times' very seriously. Engaging `Gartner' an international IT consultancy firm as its Technology consultant, was part of the banks initiatives, f or evolving business and IT strategies for the bank in the millennium. The bank intends to expand its activities in core-banking,internet banking, myriad of delivery channels, like ATMs and Kiosks, reaching to customers through several touch points, usin g wide area networking.

Services designed for customer conveniences like `BillDesk' offering universal electronic bill presentment and payment services that will allow customers to receive, review, pay and organise bills online, is part of the banks initiatives to corner a port ion of the urban customers loyalties.

Similarly Dena Bank Ltd entered into a strategic alliance with the new private sector HDFC Bank Ltd earlier this year to launch a co-branded debit card and share of ATM facilities. One of the key areas of focus that emerged from this alliance was ATM exp ansion and availing the existing ATM facilities to the mutual benefit of both the banks.

The other areas that the tie up included is DD sharing facilities for remittances and cash management services. Dena also offers cash management product services which is primarily targeted at corporate clients. Dena Bank is also offering its customers o nline trading services.

ICICI Bank Ltd's customer base grew three fold in the past one year from 6.5 lakhs in March 2000 to over 2 million by March 2001, after its merger with old private sector player Bank of Madura.

Bank officials said that to cope with the sudden growth they simultaneously started putting in place mechanisms to handle the growing transaction volumes with the key focus on operational efficiency and upgradation of service quality.

As part of its retail banking initiatives after the merger, the bank conducted a product mapping exercise in both banks and picked an array of products, retaining some and discontinuing others to avoid overlaps.

The bank has a strong NRI focus and in keeping with this has recently acquired approval from the RBI to set up a representative office in the US, to help with among other things its whole sale and retail business.

Another major private sector player HDFC Bank has also achieved strong growth on the basis of its retail thrust. The bank which acquired Times Bank Ltd, in 1999-2000, is set to increase its branch network, customer base, opportunities to cross-sell and l everage alternative delivery channels.

The banks focus has been aggressive on deposit mobilisation and to this end has made significant forays into the internet banking revolution. The wholesale banking business of HDFC Bank, caters to mainly corporate and institutional customers. It has expa nded its retail loan products to include car loans, personal loans and consumer durable loans and has extended these offerings to a large number of cities.

However, it has become increasingly evident over the past couple of years, with intensifying competition among various banks, that the focus must now shift to `services' rather than mere `products'. The need of the hour is to identify and anticipate cust omer requirements and develop capability of servicing those needs.

Software such as `CRM' (customer relationship management) which enable heaps of relevant customer information to be stored in computers and to be retrieved at the click of a button, are becoming popular among public, private and foreign banks as it enabl es them to `know' their customer better.

In an ever changing environment where loyalties are fickle and competition is fierce, banks are trying to prove their worth by wooing customers with a plethora of `value added' services as now the race is to be better than the best.