RETAIL BANKING OF SYNDICATE BANK

Synopsis

Submitted to Amity University for the registration of the topic for MBA (Insurance & Banking) in ASIBAS
Session: 2011-2013

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CONTENTS Chapters 1. 2. 3. 4. 5. 6. 7. 8. Introduction Literature Review Need of the Study Scope of the Study Objectives of the Study Research Methodology Tentative Chapter Scheme Bibliography Page No.

INTRODUCTION
The banking sector has been undergoing a complex, but comprehensive phase of restructuring since 1991, with a view to make it sound, efficient, and at the same time forging its links firmly with the real sector for promotion of savings, investment and growth. Retail banking is quite broad in nature - it refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet. Fixed, current / savings accounts on the liabilities side; and mortgages, loans (e.g., personal, housing, auto, and educational) on the assets side, are the more important of the products offered by banks. Related ancillary services include credit cards, or depository services. Indian retail banking is up and kicking. During 2004-05 retail contributed 42% of overall credit growth. Growing at the CAGR of 35% over last 5 years the retail asset touched Rs1,89,000crore. Major product segments of retail credit include housing finance, auto finance, personal loans, consumer durable loan and credit cards to name a few. Housing constitutes the biggest segment of 48% of the entire retail credit; followed by the auto loans segment which constitutes almost 27.8%. While the balance retail credit is used by consumer durables at 7.2%, educational and other personal loans take the remaining 16%. In India, all the retail banking segments are expected to witness a tremendous growth owing to the low cost of borrowing, changing customer attitudes towards borrowing and optimism regarding economic growth. Retail lending constitutes just 12.36% of the Indian banking system. Given this macroeconomic scenario, the share of retail banking will grow dramatically and it is expected that about 35% of the incremental growth in net credit will come from retail banking. In the next five years, retail banking is expected to grow by a CAGR of 25% to touch the figure of Rs575,000 crore. This requires expansion and diversification of retail banking product portfolio, better penetration and faster service mechanism. Hitherto, the growth had come from metros and tier I cities. While the loan requirement from larger cities will continue

to grow, explosive growth in credit is expected to register in tier II cities, semi-urban and rural areas. Todays retail banking sector is characterized by three basic characteristics: multiple products (deposits, credit cards, insurance, investments and securities); multiple channels of distribution (call centre, branch, Internet and kiosk); and multiple customer groups (consumer, small business, and corporate).

What is the nature of retail banking? In a recent book, retail banking has been described as hotter than vindaloo. Considering the fact that vindaloo, the Indian-English innovative curry available in umpteen numbers of restaurants of London, is indeed very hot and spicy, it seems that retail banking is perceived to be the in-thing in todays world of banking. Retail banking has immense opportunities in a growing economy like India. India has been recently identified as the "second most attractive retail destination" of 30 emergent markets by A. T. Kearney. It includes exposures to individuals or small businesses. Retail banking activities are identified based on four criteria of orientation, granularity, product criterion and low value of individual exposures. In essence, these qualifiers imply that retail exposures should be to individuals or small businesses (whose annual turnover is limited to Rs. 0.50 billion) and could take any form of credit like cash credit, overdrafts etc. Retail banking exposures to one entity is limited to the extent of 0.2% of the total retail portfolio of the bank or the absolute limit of Rs. 50 million. Retail banking products on the liability side includes all types of deposit accounts and mortgages and loans (personal, housing, educational etc) on the assets side of banks. It also includes other ancillary products and services like credit cards, demat accounts etc. The retail portfolio of banks accounted for around 21.3% of the total loans and advances of SCBs at end-March 2009. The major component of the retail portfolio of banks is housing loans, followed by auto loans. Retail banking segment is a well diversified business segment.

Most banks have a significant portion of their business contributed by retail banking activities. The largest players in retail banking in India are ICICI Bank, SBI, PNB, HDFC bank and Axis bank. Among the large banks, ICICI bank is a major player in the retail banking space which has had definitive strategies in place to boost its retail portfolio. It has a strong focus on movement towards cheaper channels of distribution, which is vital for the transaction intensive retail business. SBIs retail business is also fast growing and a strategic business unit for the bank. Among the smaller banks, many have a visible presence especially in the auto loans business. Among these banks the reliance on their respective retail portfolio is high, as many of these banks have advance portfolios that are concentrated in certain usages, such as auto or consumer durables. Foreign banks have had a somewhat restricted retail portfolio till recently. However, they are fast expanding in this business segment. The retail banking industry is likely to see a high competition scenario in the near future. The rise of the Indian middle class is an important contributory factor in this regard. The percentage of middle to high income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes toward personal debt, is contributing to India's retail banking segment. The combination of the above factors promises substantial growth in the retail sector, which at present is in the nascent stage. Due to bundling of services and delivery channels, the areas of potential conflicts of interest tend to increase in universal banks and financial conglomerates. Some of the key policy issues relevant to the retail banking sector are: financial inclusion, responsible lending, and access to finance, long-term savings, financial capability, consumer protection, regulation and financial crime prevention. Further, the researcher through the proposed study on retail banking at Syndicate Bank intends

to assess empirically and combine it with the on the job experience.

LITERATURE REVIEW
Investopedia explains 'Retail Banking' Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties (often for regulatory reasons), they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance. 1.) Dr.Chaisomphol Chaoprasert in his article LITERATURE REVIEW OF SERVICE QUALITY IMPROVEMENT IN THE RETAIL BANKING INDUSTRY talks about the importance of Service Quality Improvement. The paper analyzes past studies regarding service quality improvement in the retail banking industry. The continuing trend to a model of service quality improvement, from personnel counter services to electronic services, is demonstrated. Improved service quality should be adopted to maintain the core competence and this paper contributes knowledge and background for banks to apply these findings to better shape and focus their positions in the market and also to provide service quality to customers. 2.) Innovation in Retail Banking by Frances X. Frei Patrick T. Harker Larry W. Hunter Reviews about, how does a retail bank innovate? Traditional innovation literature would suggest that organizations innovate by getting new and/or improved products to market. However, in a service, the product is the process. Thus, innovation in banking lies more in process and organizational changes than in new product development in a traditional sense.

This paper reviews a multi-year research effort on innovation and efficiency in retail banking, and discusses both the means by which innovation occurs along with the factors that make one institution better than another in innovation. Implications of these results to the study of the broader service sector will be drawn as well. 3.) Keynote address by Ms Shyamala Gopinath, Deputy Governor of the Reserve Bank of India, at the IBA - Banking Frontiers International Conference on Retail Banking Directions: Opportunities & Challenges, Mumbai, 28 May 2005. The issue of retail banking is extremely important and topical. Across the globe, retail lending has been a spectacular innovation in the commercial banking sector in recent years. The growth of retail lending, especially, in emerging economies, is attributable to the rapid advances in information technology, the evolving macroeconomic environment, financial market reform, and several micro-level demand and supply side factors. India too experienced a surge in retail banking. There are various pointers towards this. Retail loan is estimated to have accounted for nearly one-fifth of all bank credit. Housing sector is experiencing a boom in its credit. The retail loan market has decisively got transformed from a sellers market to a buyers market. Gone are the days where getting a retail loan was somewhat cumbersome. All these emphasize the momentum that retail banking is experiencing in the Indian economy in recent years. There is a need of constant innovation in retail banking. In bracing for tomorrow, a paradigm shift in bank financing through innovative products and mechanisms involving constant upgradation and revalidation of the banks internal systems and processes is called for. Banks now need to use retail as a growth trigger. This requires product development and differentiation, innovation and business process reengineering, micro-planning, marketing, prudent pricing, customisation, technological upgradation, home / electronic / mobile banking, cost reduction and cross-selling. While retail banking offers phenomenal opportunities for growth, the challenges are equally daunting. How far the retail banking is able to lead growth

of the banking industry in future would depend upon the capacity building of the banks to meet the challenges and make use of the opportunities profitably. However, the kind of technology used and the efficiency of operations would provide the much needed competitive edge for success in retail banking business. Furthermore, in all these customers interest is of paramount importance. The banking sector in India is demonstrating this and I do hope they would continue to chart in this traded path. 4.) Customer relationship management in retail banking from eds.com Author Pat Russ Global Practice Leader, Financial Services Industry EDS Business Transformation Outsourcing, CRM Services Retail banks are facing greater challenges than ever before in executing their customer management strategies. Intensifying competition, proliferating customer contact channels, escalating attacks on customer information, rising customer expectations and capitalizing on new market opportunities are at the top of every bank executives agenda. In looking for ways to drive growth, banks need to evaluate their customer management strategy. Do they currently have a CRM solution that is capable of delivering? Consistent and cost-effective customer service? Customer-aligned products and services? Enhanced customer loyalty and long-term value?

5.)Banking on Growth by Rajeshwari Adappa Thakur With the Indian economy growing at a brisk clip of nine-plus percent per annum, there is growing global and domestic interest in the nations banking industry. Experts have also projected that India would emerge as the third largest banking hub in the world by 2040. Rajeshwari Adappa Thakur writes about the buoyant sector He also has a highlight on the Retail Banking sector as a new buzzword in the Indian banking sector. He says If retail banking is a buzzword in India today, the reason is not far to see. After all, margins in retail banking are higher than corporate banking and the growth too is faster. Several banks that were not very active in retail banking are now eyeing this sector. Looking at the above mentioned reviews, there is a clear understanding on the main aspects of retail banking and also the importance of this sector. In my report A study on retail banking in Syndicate Bank, I would try to use these studies to understand whether or not Syndicate bank has taken consideration of such aspects in retail banking, and to what extent is it going to tap this upcoming sector whether it is technology wise, service wise or any other form.

NEED OF THE STUDY

Retail banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so The Retail Banking environment today is changing fast .The changing customer demographics demands to create a differentiated application based on scalable technology, improved service and banking convenience. Higher penetration of technology and increase in global literacy levels has set up the expectations of the customer higher than never before. Increasing use of modern technology has further enhanced reach and accessibility.

The market today gives us a challenge to provide multiple and innovative contemporary services to the customer through a consolidated window as so to ensure that the banks customer gets Uniformity and Consistency of service delivery across time and at every touch point across all channels. The pace of innovation is accelerating and security threat has become prime of all electronic transactions. High cost structure rendering mass-market servicing is prohibitively expensive. Present day tech-savvy bankers are now more looking at reduction in their operating costs by adopting scalable and secure technology thereby reducing the response time to their customers so as to improve their client base and economies of scale.

The solution lies to market demands and challenges lies in innovation of new offering with minimum dependence on branches ' a multi-channel bank and to eliminate the disadvantage of an inadequate branch network. Generation of leads to cross sell and creating additional revenues with outmost customer satisfaction has become focal point worldwide for the success of a Bank.

SCOPE OF THE STUDY

The study will be limited to retail banking products of Syndicate bank and specific branch of Syndicate Bank. The scope of the study will be limited to: Evaluation of the level of awareness about various products of Syndicate Bank he satisfactory levels of existing customers The location advantages to customer

OBJECTIVES OF THE STUDY

The proposed research study is to be centered on fulfilling the following objectives: To study the Indian Banking scenario and emerging trends and history of public and private sector banks with special emphasis on retail banking in India. To study and analyze the performance of Syndicate Bank in the retail banking segment banks and enlist the roadmap for their future growth. To undertake a study by comparing the performance of Syndicate Bank based on: Business Model Business Performance under various retail segments Top of mind awareness of consumers for banks offering various retail products. Factors influencing their purchase decision.

To analyze the consumer behavior with expectations towards various retail banking products of Syndicate Bank and designing the expansion plan basis on consumer / business requirement.

RESEARCH METHODOLOGY
An exploratory research will be conducted in order the study the consumer perception about retail products of Syndicate Bank. Sources for Data Collection: Primary Data For obtaining the primary data for my project, I propose to use of two research instruments i.e. Questionnaire and Structured Interview. Questionnaire i) ii) Sample Size Sample composition Banking Customers Structured Interview i) ii) Sample Size Sample composition Managers/Employees at Syndicate Bank Secondary Data I propose to get sampling data from: a) In house studies done at Syndicate Bank. b) Books/Journals/Articles on Retail banking. The information collected through above methods will be tabulated, analysed and interpreted. 10 10 100 100

TENTATIVE CHAPTER SCHEME

Preface Chapter-1 Chapter-2 Chapter-3 Chapter-4 Chapter-5 Chapter-6 Chapter-7 Chapter-8 Chapter-9 Bibliography Annexures Introduction Objective and Scope Theoretical perspective/organization profile Methodology Data collection Data analysis Findings of the study Recommendations Conclusion

BIBLIOGRAPHY
BOOKS: Commercial Banking (Sep- 2011), ICFAI (Page no. 34-37 and 39) Banking and financial services- Renu Sobti.

WEBSITE: www.google.com (Retail banking) (Banking in India) www. Go2.com (Retail Banking in India) www.icfaipress.org ww.indiainfolinne.com www.wikipedia.com www.fotoshop.com