conservatism or infrastructure bottleneck?
Atul: Earlier the national banks were lending only to the corporate and large companies. The eye opener for us was when the private and foreign banks focused on them. Then the banks went into cross-selling, targeting their own customers, etc. There was a time when we after haVing lent a corporate Rs 50 crore, he would go to another bank for a Rs 20 lakh car loan.
Nandan: Post liberalization, the purchasing power of the middle class was always there, but the spending pattern was different. People were not keen on spending as much as they are tOday. Those banks that started the retail race had probably forgotten about the quality. Public sector did not compromise on a lot of things. If you grow at 25<)1), that's a decent growth. In future, growth may go up to 30%. High growth could also mean that banks might compromise on quality. But there is a realization that bottom lines do matter. I think growth should come with caution.
Karthikeyan: For SBl, retail banking also included personal banking and small business and agriculture. It is only in the last five years that retail banking margins are found to be much higher. Private banks were focusing on the core customers of the PSU banks. So PSU banks had no option but to step into retail banking, because their share of customers was being targeted by the new wave of banks.
Girish: There is never appropriate growth. More growth seems to be better. But from a risk perspective, when something is doing too well, you have to really focus on it or else you will sell out everything and what happened in the world was exactly that. Certain things went on a very high growth target and what goes up must come down. But what we need as bankers is to moderate the growth with caution. Quality is what we need to look for.
Chopra: Yes, retail banking was a byproduct of the economic liberalization. But to me technological innovation has contributed to the retail growth. It is this that has led to the potential for the retail banking.
KK Sharma: Retail banking is not just about projects and advances only. We always regarded a consumer as either a depositor or a borrower. But we forgot that he requires life insurance, a demat account, credit card, etc. This is where growth will come from. So you will see multiple revenue streams coming from the same customer which was not happening earlier. Life insurance has not yet been exploited. Franking of documents is another area not tapped by banks.
Sarang: Technology plays an important part in retail banking.
I will touch upon two things - potential of retail banking and ability to tap this potential. In terms of potential, I was reading a survey and it said that 35% of Indian citizens today come under the banking services network which actually means there is a huge untapped potential. Now let's look at our ability to tap this potential. Today's technology had taken a huge leap from the one in the 90s. In early 90s, telecom infrastructure was not available beyond 83 locations. Today it is available in 2000 cities and 1000s of villages across the country. The data network reqUired to connect an ATM or a branch to a CBS is available easily. Second, we used the bank branch as a front-end to service the customers. But the ATM revolution and other technologies have helped us to approach the customer after banking hours. With so many facilities, banking has become a 24x7 service.
Avinash: If you stress on one retail product, the other products come as by-products. For eg, with car loan, insurance will come as a by-product. With online trading, the demat account comes as a by-product.
Manoj: In the last few years, ATMs have been the cornerstone of retail banking strategy for the public sector banks. That is one of the reasons why the common man continues to bank with a public sector bank. But also what has happened is that phone connections have grown exponentially. Indian cellular growth is the fastest in the world. Should phone banking become a key banking channel?
KK Sharma: Usage comes in due course. People need time to adopt technology. People were earlier hesitant about using ATMs. Now they are used all the time. The convenience of 24x7 was good. ATMs have been able to create huge capacity. Phones and cell phones are slowly getting used to the banking system. Mobile penetration has grown vastly. This is how technology adoption grows by leaps. We need to prOVide impetus, make things easier and the volumes will come.
Manoj: My concern is that there is demand for so many products, but the ATM fulfils only one. This should become a constraint if you are trying to evolve a basket of products. So do we see other channels help banks proliferate products?
Vikram Kakde: There are lots of banking channels available now. The question is the future of phone banking and whether PSU banks should seize this opportunity. We should first find out whether phone banking is cost effective. But there are some who still prefer to walk in and seek an entry into the pass book. This mindset needs to change.
andan: The psyche of the customer also has to be kept in mind.
When we talk about financial inclusion, let us keep the low fees in mind. There are instances where banks are charging customers for services. The segment of a pensioner, which is sizeable for any PSU bank, has an entirely different psyche. Now the demand is for
Atul: Earlier the national banks were lending only to the corporate and large companies. The eye opener for us was when the private and foreign banks focused on them. Then the banks went into cross-selling, targeting their own customers, etc. There was a time when we after haVing lent a corporate Rs 50 crore, he would go to another bank for a Rs 20 lakh car loan.
Nandan: Post liberalization, the purchasing power of the middle class was always there, but the spending pattern was different. People were not keen on spending as much as they are tOday. Those banks that started the retail race had probably forgotten about the quality. Public sector did not compromise on a lot of things. If you grow at 25<)1), that's a decent growth. In future, growth may go up to 30%. High growth could also mean that banks might compromise on quality. But there is a realization that bottom lines do matter. I think growth should come with caution.
Karthikeyan: For SBl, retail banking also included personal banking and small business and agriculture. It is only in the last five years that retail banking margins are found to be much higher. Private banks were focusing on the core customers of the PSU banks. So PSU banks had no option but to step into retail banking, because their share of customers was being targeted by the new wave of banks.
Girish: There is never appropriate growth. More growth seems to be better. But from a risk perspective, when something is doing too well, you have to really focus on it or else you will sell out everything and what happened in the world was exactly that. Certain things went on a very high growth target and what goes up must come down. But what we need as bankers is to moderate the growth with caution. Quality is what we need to look for.
Chopra: Yes, retail banking was a byproduct of the economic liberalization. But to me technological innovation has contributed to the retail growth. It is this that has led to the potential for the retail banking.
KK Sharma: Retail banking is not just about projects and advances only. We always regarded a consumer as either a depositor or a borrower. But we forgot that he requires life insurance, a demat account, credit card, etc. This is where growth will come from. So you will see multiple revenue streams coming from the same customer which was not happening earlier. Life insurance has not yet been exploited. Franking of documents is another area not tapped by banks.
Sarang: Technology plays an important part in retail banking.
I will touch upon two things - potential of retail banking and ability to tap this potential. In terms of potential, I was reading a survey and it said that 35% of Indian citizens today come under the banking services network which actually means there is a huge untapped potential. Now let's look at our ability to tap this potential. Today's technology had taken a huge leap from the one in the 90s. In early 90s, telecom infrastructure was not available beyond 83 locations. Today it is available in 2000 cities and 1000s of villages across the country. The data network reqUired to connect an ATM or a branch to a CBS is available easily. Second, we used the bank branch as a front-end to service the customers. But the ATM revolution and other technologies have helped us to approach the customer after banking hours. With so many facilities, banking has become a 24x7 service.
Avinash: If you stress on one retail product, the other products come as by-products. For eg, with car loan, insurance will come as a by-product. With online trading, the demat account comes as a by-product.
Manoj: In the last few years, ATMs have been the cornerstone of retail banking strategy for the public sector banks. That is one of the reasons why the common man continues to bank with a public sector bank. But also what has happened is that phone connections have grown exponentially. Indian cellular growth is the fastest in the world. Should phone banking become a key banking channel?
KK Sharma: Usage comes in due course. People need time to adopt technology. People were earlier hesitant about using ATMs. Now they are used all the time. The convenience of 24x7 was good. ATMs have been able to create huge capacity. Phones and cell phones are slowly getting used to the banking system. Mobile penetration has grown vastly. This is how technology adoption grows by leaps. We need to prOVide impetus, make things easier and the volumes will come.
Manoj: My concern is that there is demand for so many products, but the ATM fulfils only one. This should become a constraint if you are trying to evolve a basket of products. So do we see other channels help banks proliferate products?
Vikram Kakde: There are lots of banking channels available now. The question is the future of phone banking and whether PSU banks should seize this opportunity. We should first find out whether phone banking is cost effective. But there are some who still prefer to walk in and seek an entry into the pass book. This mindset needs to change.
andan: The psyche of the customer also has to be kept in mind.
When we talk about financial inclusion, let us keep the low fees in mind. There are instances where banks are charging customers for services. The segment of a pensioner, which is sizeable for any PSU bank, has an entirely different psyche. Now the demand is for
Posts
No comments:
Post a Comment