1. Executive SummaryBanks are entering into newer dimension of relationship with customers Customer wants new products which are inline with the technological advancement But Along with technologically advanced products, Customers are also looking for banking systems which are robust and have stability and valuePhysical bank branches still remain a vital element Physical banks are expected to play a shift in role from traditional transactional selling to enterprise selling Transactional operations would be shifted to digital while Physical bank infrastructure would be expected to boost customer confidence and increasecustomers wallet shareDigital Banking means enormous opportunities for cross selling Ease of application of predictive analytics and data intelligence on digital data would enable easy identification of customers present and futureneeds providing opportunities to cross sell Ease of maintaining long historical data about customer for accurate future predictionsDigital Banking as a means to capture the Long Tail In past Infrastructure cost of setting up a branch in rural areas made it expensive and infeasible to capture customers with lower average deposits butthe same can now be achieved digital banking The capture of long tail would not only provide greater market share but also access to additional low cost fundsTransition to Digital Banking from traditional model : A three phase process The three phase being Initiation (pressure for going digital), Implementation (Shape of digital banking) and Stability/Maturity The second most important aspect for making of this transformation is evaluation of speed vs. Efficiency/resultsING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah2

2. A total of 167 participants were surveyed for collecting data on various aspects of their decision making between traditional and digital bankingFrequency of using digital banking4%4%8%~50% are using digital banking for 2-5 times a week which gives bankincreased opportunity to interact and sell other products to customersPopulation classification based on their professionRespondents were selected from diverse background for the survey withhighest proportion being studentsUnderstanding Consumer Behavior: in BankingAge Group distribution of Survey Participants19%9%Maximum Responses were from age group of 26-35 and 36-45 who areor would be major user of banking systemYour Preferred Mode of Banking15%Digital banking has been the most preferred mode of banking with mobilebanking also forming substantial share. Also, those who prefer onlinebanking are customers of different age group and professionWould you recommend your bank to others?Maximum respondents are willing to recommend their bank to othersgiving banks an opportunity to capture new audience through existingWhich banking channel is most convenient for you?7%ING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah38%14% 50%18-2526-3536-4546-5555+17%50%4%8%5%once a week2-5 times in a weekonce in a month2-5 times in a monthOnce in a yearless than 5 times in a yearMore than 5 times in a yearI do not use mobile banking 94%6%YesNo77%5%6%5%Online/InternetMobileATMBranches or OfficeCall Center29%8%15% 14%12%5%9%8%StudentBusinessCommercial - Management CadreIT professionalTechnicalHousewifeRetiredOther52%22%11%Digital Banking OnlyMobile and DigitalBankingTraditional BankingMobile Banking OnlyDigital banking stands out to be the most convenient channel probablydue to convergence of products between traditional and online andthe increasingly fast life of the individuals at work 3. Expected Change in Pattern of using Bank Branches11%73% participants voting for less often visit to bank branches indicatedan expected change in trend and want to move towards digital bankingfrom traditional banking.Understanding Consumer Behavior: in Banking IIAre you working in a Bank?Participants working for a bank were helpful in providing Employeeperspective of the bank which was necessary to understand what theythink could be improved in the banking system for digital banking70605040302010In which bank do you hold your primary account?The respondents of survey had bank accounts in different banks giving ahealthy distribution with majority from ICICI Bank followed by Axis bankConsidering to switch your bank account?Reasons for Recommending Current Bank to Others91Product CustomizationToo much Hassle to SwitchStability of BankGood Branch ServiceServices accessed from banks other than primary17OtherLife InsurancePrivate BankingAuto LoanCollege LoanMoney Market InstrumentsING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah410%90%YesNo17%83%Yes No9 176018 257 11 6 140No. of CustomersBank6115291309160917510 20 40 60 80 100 120 140 160Good no. of branches nearbyNo. of Customers74150 0150321504 400 20 40 60 80Checking Savings16%73%More OftenLess OftenNo ChangeMajority of respondents surveyed for the exercise were satisfied withtheir current bank and its facilitiesGood online banking facilities (152), Stability of the bank (91), Trust andValues (91) are the major reasons for recommending the bank. Banksneeds to include these messages in their overall communication strategy.Apart from secondary savings account, home loans and credit cardfacility are major products which customer buy from other banks 4. Lockers, Cheques andCash deposits form themajor reasons for whycustomers like to visitthe bank physically butfor other servicescustomers areswitching to onlinebanking RBIs initiative topromote a less cashsociety could helppromote customerawareness about digitalbankingUnderstanding Consumer Behavior: in Banking - III Major reason forswitching is the branchnetwork of the bank asmost of customers stillvisit branches forproducts which are notor cannot be digitized. Information fromvarious sources andconvenience to haveeverything at one placeforms other importantreason for closing downthe accountsWhy People closed accounts in primary banks?2331Information provided by NewsInformation Provided by friend or relativeAccess to Branches or banking servicesMore Convenient to have everything atBranch or Office LocationExperience with the Bank wasServices accessed through Primary bank3OtherLife InsurancePrivate BankingAuto LoanCollege LoanMoney Market Instruments101Why do you go to Bank Branch?272824OtherTo inquire more about new productsYou feel better when talking to a personAdvisory on your additional BalanceLockersSecurity as you feel that Transfer overAccount StatementOpening an AccountCash Deposit9897Othere-StatementPrepaid Recharge, ScheduledOpening of Online FD and other servicesOnline Account Management,ATM FacilityIMPSING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah522353236300 5 10 15 20 25 30 35 40Rates/Fees11528851305211396011400 20 40 60 80 100 120 140Checking Savings87103266130140 20 40 60 80 100 120Cheque Deposit117599071105490 20 40 60 80 100 120 140RGTS, NEFT etc. - Online TransferNo. of CustomersFacilityWhy do you use: Digital or Mobile Banking? Checking savings formsthe major componentof the primary bankproduct with almost75% of surveyedparticipants using it Private banking, Homeloans are otherproducts providingtransactionalinformation aboutcustomers & also givingopportunities toidentify and cross sell. Most of the earlierpaper based servicesare now movedtowards onlinebanking or aresuccessfullyreplicated and usedon the digital spacelike Online FD, DDover internet etc. 5. Consumer Behavior Study: InferencesING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah6Significant Surge in customer demand for digital banking and mobile banking products With improved security features and popularity of ATMs, RTGS and NEFT transfers The banking industry has been witnessing rapid transformation and innovation in digital technology as never before The initiatives are also inline with the regulators aim for a less cash society as part of Payment and Settlement Systems Act, 2007Digital Medium: A symbiotic relationship between customers and banks To the banks it gives increased touch points and ability to serve customers post regular hours which means more revenue It also means cost effective operations for the banks as in the digital medium the per unit transaction costs comes down significantly For the consumers the most important benefit is personalized offerings, anytime banking and that too with great convenienceThree major drivers for shift in customers interest from Traditional Banking to Digital Banking Product customization and ease of buying relevant particularly in the fast moving life Efficiency in digital services with very low probability of errors due to limited human intervention Customer Centric view with tremendous analytical ability to suggest the desired products for each customerBrand Name and Stability of Bank: Major factors in customer decision making process Apart from the interest rates, features and customer services, banks brand name and stability of the bank has been an important factor which goesinto the decision making process of the customer In the survey, it was found that 55% of the customers suggested brand name, trust and values of the bank to be the major reason to keep holdingthe bank account with the primary bankTalking to a person rather than an automated system for advisory: Major reason for branch banking Apart from the operational needs of completing cash and cheque transactions, most customers felt the need of traditional banking because of thepersonalized advisory and satisfaction which they receive taking to a person rather than a machine on the online system Traditional banking improves customers confidence in the bank and thereby promotes acceptability of its digital products 6. SWOT Analysis Traditional BankingING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah7THREATS Emergence of new technologies which are getting more and moreaccepted amongst the people Changing lifestyle of people has led to demand for high speed operations which issometimes not possible in traditional banking Analytics and artificial intelligence taking shape in providing ability to offerindividual level customization Robbery etc. which can led to huge losses for the banks reputation (Tangible assetswould be insured but not the Brand)STRENGTHS Personal Relationship between the customer and banker meaning betterunderstanding of the client needs Safety of transaction as perceived by the customers due to trust and assurance Knowledgeable employees who are able to leverage experience to handleexceptions and issues Better Positioning of the banks brand due to Physical presence near to customers Immediate helping hand to customers for uncommon issues for which systemscant be programmedOPPORTUNITIES Rural population still has high acceptability of traditional banking ascompared to the digital banking due to Personal relationship Still large volume transactions are done through cash and cheques rather thanonline which forms about 40% of the countrys GDP Insecurity from spammers, hackers is still a big challenge for acceptance of digitalbanking Certain facilities like Lockers, personalized advisory etc. cant be provided online forall kinds productsWEAKNESS Huge Infrastructure and Maintenance cost for the bank Even for the basic operations customer has to visit to the bank branch Pace of operations is very slow when compared to modern forms of banking Fixed work timings Document management and cash management challenging and concern of safety High chances of error due to manual intervention in operation Accessibility only in places where branches are physically present and henceaccessibility is limited 7. SWOT Analysis Digital BankingING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah8THREATS Changes in the government regulations may led to high costsfor system upgrades Threats from Hackers, spammers etc. which can disrupt the system catering tomajor segments of the business Low comparison cost and switching cost between competitors leading to lowcustomer loyalty and a loss in revenueSTRENGTHS Advantages in terms of the cost per transaction as well as infrastructure cost Efficiency and accuracy of transactions Ability to influence cross selling through offerings as detected by analytics onprevious transactions Easy and self guided mode of operations makes transactions frequent (source forfee based revenue) Ability to serve for longer duration as time limits are virtually not applicable Uniform Customer experience across transactions due to the nature of mediumOPPORTUNITIES Quick and online marketing with multiple touch points leading toa higher probability of selling and cross selling New services and new category of products like e-Locker, online gift cards etc.provides an edge to compete on new platform The information about customer is available across organization through systemrather than just the few people who interact with him in traditional format Able to cater to a wide geography without incurring huge infrastructure costWEAKNESS All the problems faced by customer may not be programmable andhuman intervention may become important Lack of personal touch which leads to plain business not exciting for customers May not be possible to offer all the products online or though ATMs Robustness of system dependent upon third party network and services which aresometimes not in banks control 8. Road Map for ING Vysya to move towards Digital Banking The road map for moving towards digital banking consists of three major phases:Phase1:InitiationPressure for going Digital Pressure from Customers: Most of the customers (~74% ) in banking have a preference for digital banking or digital as well as mobile banking, the switching costs today forcustomers are also coming down making it easy for the customer to move their business to another bank if quick digitization is not done Pressure from Employees: Most of the employees are typically trained towards working in a competitive environment and on a robust technology which keeps them up to dateand also improves their efficiencyEvaluating speed vs. impact of going Digital Organizational Challenges: Though most of the customer and employees may push organization on going for digitization, the technology used by the bank may not beacceptable to all. It is therefore important for the bank to implement changes at a pace at which the employees could adopt and accept the same but also keep a check oncompetition as once a customer is lost, there are very few customers (~17%) who are willing to change Cost Optimization: It is better to be a late mover in technology adoption for going digital considering the high risk of technology failure which can bring the business to astandstill, therefore it is better for the bank to adopt a tested solution suiting its requirements rather than trying something disruptiveING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah9Phase1:InitiationPressure for going DigitalEvaluating the speed vs. impact ofgoing DigitalPhase2:ImplementationShape of digital banking Digitizing customer experience Digitizing operational processes Digitizing Business modelsPhase3:OptimizationDigital Technology Stabilization andusageAccessing Digital banking Maturity 9. Phase2: Shape of Digital BankingING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah10Road Map for ING Vysya to move towards Digital Banking - IICustomerExperienceOperational Process Business ModelCustomer Understanding Data Analytics based Segmentation for facilitatingbetter needs Socially Informed Knowledge through spending andusage patternProcess Digitization Performance Improvement New Products eLockers etc. New FeaturesDigitally Modified Business Product/Service Augmentation Transitioning Physical to Digital From Cash to Non-cash transaction facilitationCustomer Touch Points Customer Service extended almost 24*7 Cross Channel coherence Self Service and Guided InterfacePerformance Management Operational Transparency Data Driven decision making Stringent deadlines and robust systems to achieve thesameNew Business Avenues New Digital Products Online FDs, Online RDs etc. Extending the organizational boundaries at multiplefronts like channels, products, services etc. Customer Behavior and Product customizationGrowth in Revenues Predictive Marketing and Digitally enhanced selling Streamlined customer processes Centralized system leading to uniform customerexperienceWorker Enablement Broader and faster communication across levels Organization wide knowledge sharing platforms Faster and interactive working with availability of helpthrough system expertsDigital Globalization Enterprise integration across geographical boundaries Redistribution of decision authority providingcentralization as well as responsiveness Shared digital servicesUnified data and ProcessesAnalytics Capability Digital Capabilities Business Solution & IT IntegrationSolution Delivery 10. Road Map for ING Vysya to move towards Digital Banking - IIIPhase 3: Optimization: Digital Technology Stabilization and UsageING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah11Pillars of Digital Technology StabilizationEfficiency: In terms of no. of bankingtransactions per unit of timeEffectiveness: Till what unit of customersegment the solution is customized. Ideally itshould be customizable at individual level buteach level of customization has associatedcosts which implies striking the right balanceAdaptability: The solution should be adoptableto all the stakeholders viz. the employees, thecustomers (in terms of offering produced) andmost importantly to the regulatorsTechnology and their Usage Business Intelligence for Sales and Marketing Offering right product to right customer at theright time Common Prospect: Identifying the cross product needs of customers by studying their alreadypurchased offerings and the offerings avoided by the customer over a period of time Customer Acquisition: In one of the competitive environments acquisition of customers is not onlydifficult but also expensive and hence targeting the right customer through customer profileanalysis becomes important Enterprise Intelligence and corporate performance management: Budgeting, planning andforecasting, profitability and risk vs. return optimization through scenario planning and testingwhich can be easily and accurately be performed on the data collected through the digital medium Always connect and Anywhere Banking: Easy to use mobile banking facility through friendlymobile applications, network of ATMs, limited functionality branches at selected location based onthe prospect business Capturing the Long Tail: Most of the banks have not been able to leverage on technology topenetrate remote areas, with the implementation of Financial Inclusion program by the Regulatorleveraging on technology to provide innovative and wide scale catering products will help tocapture new marketsBusiness IntelligenceCommon ProspectCustomer Acquisition &Enterprise sellingATM &Anytime BankingStabilization Technology Usage 11. ING Vysya Product Portfolio: Comparative AnalysisPARTICULARS HDFC ICICI ING VysyaAccount NamePrivilegedPlatinumTitanium PlatinaQAB (QuarterlyAvailable Balance)2,00,000 75,000 +TRV of 5 to10 lac1,00,000DD/PO Wavier Availableupto 50,000N.A. Available upto50,000PAP Cheque books Unlimited Unlimited UnlimitedOne Lakh Cashwithdrawal fromany ATMN.A. N.A. Available*Cash Back Offer onShopping*N.A. N.A. 1 to 2 %Cash-net enabledcredit/debit cardN.A. N.A. AvailableING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah13Comparison of Privileged Savings Account Way forward for ING Vysya Products in the digital banking Model Most of the ING Vysya Banking Products viz. Cumulative Deposits, Fixed Deposits etc.can be transformed to digital banking directly with implementation of digital bankingsolution Check systems with data-mining on the transaction data of the consumers can providegreat opportunities for cross selling especially the products like insurance, loanproducts etc. Multiple accounts of the single customer can be linked together for having a SingleCustomer View which gives bank ability to customize product for each of its customer Offering customers with gifts and reward points for being loyal and thereby promotingexisting customer as a source for new customer acquisition Fully or semi customized services for managing customer finances through productslike money manager are other sources of revenue which ING should look forward totarget in the digital banking world 12. ConclusionCompetitive banking environment: Efficiency and Better Customer Experience are key to success Without efficiency banks are bound to hit a lower margins and become uncompetitive in the long run The way forward to achieve efficiency is through technology and going digitalCustomer moving business rather than switching accounts: Fight for wallet share Considering the ever increasing technology and plethora of new products hitting the market, customers tend to hold multiple accounts and thebusiness which banks can get from each customer can vary drastically if a bank lacks providing offers in one way or the other This gives rise to the challenge of moving up the value chain and making Enterprise selling as compared to Transaction based sellingDigital Banking: Journey from Money Managers to Value creators for the customers Through a distinctive portfolio of products and services by understanding customer needs Product should come from Analytics and understanding of the customer behavior rather than the gut feeling of the managersCross Selling: The Analytical way to achieve competitive edge More easy to implement in a digital world because of consistency of data & availability of powerful techniques for data analysis Provides multiple touch points and increased customer seek time through 24hrs banking and innovative product offeringsWorld of Digital Banking and Traditional Banking go hand in hand Traditional banking are necessary to support the entire banking ecosystem as they provide customer with real interface to work with Personalized services with human interface of these mode of banking is still preferred for many of the products in bankingING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah14 13. References and Data CollectionPrimary Data Collection: Survey form for Digital vs. Retail Banking: https://docs.google.com/forms/d/12_HONNSPt7OfZN6GYCompuqyqb6zN0t0R8W3eelr6CY/viewform Survey form for Data collection on Credit Card: https://docs.google.com/forms/d/1-ZiHasc6Wof1EZgNxvwfRfSUSss7bo_C0D9Wu0Q_22I/viewform?usp=send_formSecondary Data Collection: E&Y Global Consumer Banking Survey: http://www.ey.com/Publication/vwLUAssets/EY_-_Global_Consumer_Banking_Survey_2014/$FILE/EY-Global-Consumer-Banking-Survey-2014.pdf Mckinsey Report on Retail Banking in Asia:http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Financial%20Services/Latest%20thinking/Consumer%20and%20small%20business%20banking/Retail_banking_in_Asia_Actionable_insights_for_new_opportunities.ashx Bain Report on Customer Loyalty in Retail Banking: http://www.bain.com/Images/BAIN_REPORT_Customer_loyalty_in_retail_banking.pdf PWC Report on Consumer Behavior: http://www.pwc.com/en_US/us/financial-services/publications/viewpoints/assets/viewpoint-when-the-growing-gets-tough.pdf Draft for vision 2015 on Payment and Settlement Systems: http://www.rbi.org.in/scripts/PublicationVisionDocuments.aspx?ID=664 Website of Banks: http://www.rbi.org.in http://www.ingvysyabank.com/ https://www.sbi.co.in/ http://www.axisbank.com/ http://www.hdfcbank.com/ http://www.hsbc.co.in/1/2/homepage#ING VYSYA BANK LIMITED Indian Institute of Management, Shillong Hardik Shah15THANK YOU