surbhi final project

8/4/2019 Surbhi Final Project

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EXECUTIVE SUMMARYWithout a sound and effective banking system in India, it cannot have a healthy

economy. The banking system of India should not only be hassle free but it should

be able to meet new challenges posed by the technology and any other external andinternal factors. For the past three decades India's banking system has several

outstanding achievements to its credit. The most striking is its extensive reach. It is

no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian

banking system has reached even to the remote corners of the country. This is one

of the main reasons of India's growth process. The government's regular policy for

Indian bank since 1969 has paid rich dividends with the nationalization of 14 major

private banks of India. Not long ago, an account holder had to wait for hours at the

bank counters for getting a draft or for withdrawing his own money. Today, he has

a choice. Gone are days when the most efficient bank transferred money from one

branch to other in two days. Now it is simple as instant messaging or dial a pizza.

Money has become the order of the day. The first bank in India, though

conservative, was established in 1786. From 1786 till today, the journey of Indian

Banking System can be commendable.

With years, banks are also adding services to their customers. The Indian banking

industry is passing through a phase of customers market. The customers have more

choices in choosing their banks. A competition has been established within the

banks operating in India. With stiff competition and advancement of technology,

the service provided by banks has become more easy and convenient. The past

days are witness to an hour wait before withdrawing cash from accounts or a

cheque from north of the country being cleared in one month in the south. This

section of banking deals with the latest discovery in the banking instruments along

with the polished version of their old systems.


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CHAPTER 1

INTRODUCTION

Indian Banking

The Indian banking can be broadly categorized into nationalized (government

owned), private banks and commercial banking institutions. The Reserve Bank of

India acts a centralized body monitoring any discrepancies and shortcoming in the

system. Since the nationalization of banks in 1969, the public sector banks or the

nationalized banks have acquired a place of prominence and has since then seen

tremendous progress. The need to become highly customer focused has forced theslow-moving public sector banks to adopt a fast track approach. The unleashing of

products and services through the net has galvanized players at all levels of the

banking and financial institutions market grid to look anew at their existing

portfolio offering. Conservative banking practices allowed Indian banks to be

insulated partially from the Asian currency crisis. Indian banks are now quoting al

higher valuation when compared to banks in other Asian countries (viz. Hong

Kong, Singapore, Philippines etc.) that have major problems linked to huge Non

Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble

footed in approach and armed with efficient branch networks focus primarily on

the high revenue niche retail segments.

The Indian banking has finally worked up to the competitive dynamics of the

new Indian market and is addressing the relevant issues to take on the

multifarious challenges of globalization. Banks that employ IT solutions are

perceived to be futuristic and proactive players capable of meeting the

multifarious requirements of the large customers base. Private Banks have been

fast on the uptake and are reorienting their strategies using the internet as a


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medium The Internet has emerged as the new and challenging frontier of

marketing with the conventional physical world tenets being just as applicable like

in any other marketing medium.

The Indian banking has come from a long way from being a sleepy business

institution to a highly proactive and dynamic entity. This transformation has been

largely brought about by the large dose of liberalization and economic reforms

that allowed banks to explore new business opportunities rather than generating

revenues from conventional streams (i.e. borrowing and lending). The banking in

India is highly fragmented with 30 banking units contributing to almost 50% of

deposits and 60% of advances. Indian nationalized banks (banks owned by the

government) continue to be the major lenders in the economy due to their sheersize and penetrative networks which assures them high deposit mobilization. The

Indian banking can be broadly categorized into nationalized, private banks and

specialized banking institutions.

The Reserve Bank of India acts as a centralized body monitoring any

discrepancies and shortcoming in the system. It is the foremost monitoring body

in the Indian financial sector. The nationalized banks (i.e. government-ownedbanks) continue to dominate the Indian banking arena. Industry estimates indicate

that out of 274 commercial banks operating in India, 223 banks are in the public

sector and 51 are in the private sector. The private sector bank grid also includes

24 foreign banks that have started their operations here. Under the ambit of the

nationalized banks come the specialized banking institutions. These co-

operatives, rural banks focus on areas of agriculture, rural development etc.,

unlike commercial banks these co-operative banks do not lend on the basis of a

prime lending rate. They also have various tax sops because of their holding

pattern and lending structure and hence have lower overheads. This enables them

to give a marginally higher percentage on savings deposits. Many of these


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cooperative banks diversified into specialized areas (catering to the vast retail

audience) like car finance, housing loans, truck finance etc. in order to keep pace

with their public sector and private counterparts, the co-operative banks too have

invested heavily in information technology to offer high-end computerized

banking services to its clients.

Traditional Banking

Banking in India originated in the last decades of the 18 th century. The first banks

were The General Bank of India which started in 1786, and the Bank of

Hindustan, both of which are now defunct. The oldest bank in existence in India is

the State Bank of India, which originated in the Bank of Calcutta in June 1806,

which almost immediately became the Bank of Bengal. This was one of the three

presidency banks, the other two being the Bank of Bombay and the Bank of

Madras, all three of which were established under charters from the British East

India Company. For many years the Presidency banks acted as quasi-central

banks, as did their successors. The three banks merged in 1921 to form

the Imperial Bank of India, which, upon Indias independence, became the State

Bank of India.

In traditional banking banks had only four employees i.e. a Manager, an

Accountant, a clerk and a Peon. Till 1950s there was no Token System. The

clerk would call the name of the client. There would be only one counter for

depositing, withdrawal and for enquire. There were only two A/c i.e. Saving A/c

and Current A/c. To open an A/c it was very easy as there were not much

customers.

From 1950s onward the staff and branches increased as there was increased in

the customers. Then only the Token System started which helped the customer as

they didnt need to wait for a longer period. As there was no computer the clerk
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had to go through ledger before giving the money to the customer. The customer

would be given only a slip at this time as there was no passbook system which

could record the customers transaction.

Fixed deposit started by 1960s and Recurring deposit from 1965 only before that

only Saving account & Current account were there. Loans were started only after

1960s for business man & farmers before that they would be investing in

different firms. Cheques book started only by 1950s before that only slip were

provided & the customer have to update their passbook otherwise, the bank

employee would shout at the respective customer. Lockers started in 1970s

&Canara Bank was the 1st bank to start it.

In 1970s the banking services became still easier because of computers which

did the work of the staff doing manual work. But many a times the bank would be

out-of-stock & the people had to wait till the bank gets the amount from RBI.

Modern Banking

The Indian banks are changing towards modern banking system. Modernization in

banking is changing banking services, products and operational methods of

banking. Traditional banking system in depends up on man force but modern

banking is partially or totally machine and technology based banking. All these

developments are lead to facilities to customers delight as well as operational

efficiency of banks and reducing operational expenses of banking services.

Modern banks offer many services to attract a loyal client. Banks have grown from

simply being a place to keep your moneyto corporate giants with offerings across

the board. Checking accounts are just the beginning of the services. They come

with a variety of options from ATM and debit cards, low or no minimum balances,
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direct deposit, unlimited check writing and various methods of overdraft

protections. "Banks serve as custodians for Individual Retirement Accounts. They

often also operate trust departments, which provide useful fiduciary services to

customers, such as acting as trustee. Banks own and operate ATM networks that

provide convenient access to cash.

Savings accounts range from simple student and passbook accounts to money

market and bonds. Enough variable interest rates and maturation dates exist for

certificates of deposit so you can find the perfect one for your situation. Almost

every bank has lobby hours where you can schedule meetings with bank

employees to discuss any situation from retirement to college savings. Somebanking business, such as deposits or withdrawals can be done from your

automobile by using the drive thru services.

Banks offer many types of loans to help their customers. Automobile loans are a

common type. Banks have different auto loans depending on whether the

automobile is new or used, a lease or if the purchase price is over a certain dollar

figure. Length of the loan is also dependent on the type. One type of loan usually

offered is a signature or unsecured loan. This loan type may have a higher interest

rate because it is riskier for the bank. Home equity loans have been very popular in

the last few years. They allow a person to borrow against the equity in their house.

Some banks can offer this type because they also offer mortgage loans.

For those persons who are on the go, banks today offer online or Internet banking.

Many services are available over the computer, making it easy to check balances,

make online bill payments and balance your checkbook. Someone can apply for a

loan or even purchase savings bonds from your bank through your home computer.

With the large network of automated teller machines or ATMs available, you are
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never very far from your money. For certain types of accounts, some banks even

waive their fees for using an ATM from a different bank.

Some banks also make insurance and investment services available to their

customers through the use of subsidiary or affiliated companies. Banks offer

information and advice to help their customers achieve their financial aspirations.

They also provide other services such as safe deposit boxes, bill pay, wire

transfers, money orders, cashiers cheque, travelerscheque, etc.

Modern banking not only helps a bank to reduce costs but also helps it to retain its

valuable customers. And as far as customers are concerned, this facility enables the

customer to bank anywhere, at anytime and in any condition, definitely a boon if a

customer is stuck in the middle of nowhere and requires banking services as soon

as possible.

Thus modern banking helps both, the customer as well as the bank, to lighten the

burden of todays world and to save time, money and energy which is greatly

required and appreciated.
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CHAPTER 2

REVIEW OF LITERATURE

1.

Indian banks are diverting from their bread and butter business of lendingand accepting deposits to other related activities. To sustain the market share

and to maintain profitability, nationalized banks are also trying to

incorporate product diversity and with more focus on customer needs. More

and more banks are adopting the model of Universal Banking. Universal

banking means the banks have all the financial products and services for its

customers(The economic Times, July 1007)

2. Service quality hasbeen defined as customers overall impressions of an

organisations services in terms of relative superiority or inferiority

(Johnston, 1995).Further, service quality is considered to not only meet but

to exceed customer expectations, and should include a continuous

improvement process (Lloyd-Walker &Cheung, 1998).

3. Electronic banking was first introduced in the UK in the early 1980s and its

availability was the result of pressure from the increasingly competitive

business environment and customers demands. It was expected that

electronic banking would have a significant influence on the banking market

and substantially change the distribution channel of retail banking business.

(Daniel N C 1994)


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CHAPTER 3

METHODOLOGYObjectives of the study

The attempt has been made to achieve following objectives

To understand the importance of modern banking services in India

To study the various modern services provided by banks today.

To understand the need of modern banking services in the competitive

scenario.

Scope of the study

The concept of traditional banking and modern banking in India

The innumerable modern banking Services available today.

The challenges and future of banking and its services.

A SWOT analyses on the services of banking industry

The project also covers a case study on ICICI a leading private bank-its

modern technology and services

Hypothesis

Modern banking services have enhanced the functioning of the Indian

Banking system

Services provided by modern banks is essential in the competitive world and

leads to customer satisfaction

Data Collection

Secondary data is collected by undertaking extensive library research as well as

from various websites and reference books.


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CHAPTER 4MODERN BANKING SERVICES

With time, banking has emerged as a major sector which is constantly expanding

and is earning mammoth profit throughout the year. This industry is facing cut

throat competition with increasing involvement of common man in them who are

in turn attracted by the facilities they are being offered.

With the customers being offered the best services throughout the nation, the

banking services are indeed focusing on all the possible measures that can be

brought in so as to raise its standards in the country. This is certainly giving out

positive vibes which ensure the common man that his money will indeed get its

worth at any cost.

The services provided by the banks are experiencing a marked wind of change as

they are getting more easy and convenient with each day passing by. People who

experienced the bad days of banking services in India, where-in they were

supposed to wait for an hour before withdrawing cash from accounts or getting a

cheque from north of the country being cleared in one month to the southern areas

are certainly taking a sigh of relief now.


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Strategic issues in Banking services

Strategic Planning: is the process of analyzing the organizational external

and internal environments; developing the appropriate mission, vision, and

overall goals; identifying the general strategies to be pursued; and allocated

resources.

Mission is an organization's current purpose or reason for existing.

Vision is an organization's fundamental aspirations and purpose that

usually appeals to its member's hearts and minds.

Goals are what an organization is committed to achieving.

Strategies are the major courses of action that an organization takes

to achieves goals.

Resource Allocation is the earmarking of money, through budgets,

for various purposes.

Downsizing Strategy signals an organization's intent to rely on fewer

resources primarily human-to accomplish its goals.

Tactical Planning: is the process of making detailed decisions about what to

do, which will do it, and how to do it-with a normal time and horizon of one

year or less. The process generally includes:

Choosing specific goals and the means of implementing the

organization's strategic plan,

Deciding on courses of action for improving current operations, and

Developing budgets for each department, division and project.


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Role of Banking Services in a Developing Economy

Banks play a very useful and dynamic role in the economic life of every modern

state. A study of the economic history of western country shows that without the

evolution of commercial banks in the 18th and 19th centuries, the industrial

revolution would not have taken place in Europe. The economic importance of

commercial banks to the developing countries may be viewed thus:

1. Promoting capital formation

2. Encouraging innovation

3. Monetization

4. Influence economic activity

5. Facilitator of monetary policy

Above all view we can see in briefly, which are given below:

Promoting capital formation:-

A developing economy needs a high rate of capital formation to accelerate the

tempo of economic development, but the rate of capital formation depends upon

the rate of saving. Unfortunately, in underdeveloped countries, saving is very low.Banks afford facilities for saving and, thus encourage the habits of thrift and

industry in the community. They mobilize the ideal and dormant capital of the

country and make it available for productive purposes.

Encouraging innovation:-

Innovation is another factor responsible for economic development. The

entrepreneur in innovation is largely dependent on the manner in which bank credit

is allocated and utilized in the process of economic growth. Bank credit enables

entrepreneurs to innovate and invest, and thus uplift economic activity and

progress.


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Monetization:-

Banks are the manufactures of money and they allow many to play its role freely in

the economy. Banks monetize debts and also assist the backward subsistence

sector of the rural economy by extending their branches in to the rural areas. They

must be replaced by the modern commercial banks branches.

Influence economic activity:-

Banks are in a position to influence economic activity in a country by their

influence on the rate interest. They can influence the rate of interest in the money

market through its supply of funds. Banks may follow a cheap money policy withlow interest rates which will tend to stimulate economic activity.

Facilitator of monetary policy:-

Thus monetary policy of a country should be conductive to economic

development. But a well-developed banking system is on essential pre-condition to

the effective implementation of monetary policy. Under-developed countries

cannot afford to ignore this fact. A fine, an efficient and comprehensive banking

system is a crucial factor of the developmental process.

Modern Services provided by Banks

Innovation drives organizations to grow, prosper and transform in sync with the

changes in the environment, both internal and external. Banking is no exception tothis. In fact, this sector has witnessed radical transformation of late, based on many

innovations in products, processes, services, systems, business models, technology,

governance and regulation. A liberalized and globalize financial infrastructure has


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provided an additional impetus to this gigantic effort. The pervasive influence of in

formation technology has revolutionalized banking.

Banking has become boundary less and virtual with a 24 * 7 model. Banks who

strongly rely on the merits of relationship banking as a time tested way of

targeting and serving clients, have readily embraced Customer Relationship

Management (CRM), with sharp focus on customer centricity, facilitated by the

availability of superior technology. CRM has, therefore, become the new mantra in

customer service management, which is both relationship based and information

intensive.

The various modern services provided by banks are explained below:

ATM BANCASSURANCE

DEBIT CARD CREDIT CARD

MOBILE BANKING ONLINE BANKING

MUTUAL FUNDS MERCHANT BANKING

WIRE TRASFER BILL DISCOUNTING

LOANS FACTORING

DEMAT A/C CORE BANKING

1.ATM (Automated Teller Machine):An automated teller machine (ATM), also known as automatic banking

machine (ABM), Cash Machine, or Cash point, is a computerized

telecommunications device that provides the clientsof afinancial institutionwith

access to financial transactions in a public space without the need for a cashier,
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human clerk orbank teller. On most modern ATMs, the customer is identified by

inserting a plasticATM cardwith amagnetic stripeor a plasticsmart cardwith a

chip, that contains a unique card number and some security information such as an

expiration date or CVVC (CVV). Authentication is provided by the customer

entering apersonal identification number(PIN).

A block diagram of an ATM

Use of ATMs:

Cash Withdrawal and Balance Enquiry:

In spite of a number of innovative services being made available at many ATMs,

cash withdrawal stills remains the most accessed service at ATMs. However, themigration of routine bank transactions like cash withdrawals and balance enquiries

from teller counters to ATMs significantly raises the potential for savings in

employee costs and greater employee focus on value-added revenue-enhancing
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activities such as selling other financial products and advisory services to

customers.

Cash /Cheque Deposit:

Again, due to the strong cash culture in India, cash deposits are most likely higher

than in other markets, especially cash deposits made by commercial customers

such as retail shopkeepers and those whose work involves substantial travelling. A

high cash withdrawal rate results in higher ATM servicing costs due to frequent

cash replenishment requirements. Recent developments in ATM technology have

made it possible to recycle cash in ATMs. Currency notes received as cash

deposits are counted; soiled notes separated and deposited cash dispensed to fulfill

withdrawal transactions.

ATM with Cheque deposit facility is not picking up in India, like other countries.

One of the reasons is the delay in collection of the cheques deposited in ATMs.

Cheque deposited in ATMs is to be collected and deposited in the designated

branch for collection. Another reason is the introduction of cheques deposit Kiosks

by various Banks especially Private sector ones. These are kept at each some

important locations/branches where customers can deposit there cheques which are

collected at intervals which may be difficult in ATMs.

Bill Payments:

Most utilities have inadequate infrastructure for receiving bill payments resulting

in long queues at collection centers. Hence, bill payment at ATMs has achievednoticeable acceptance by bank customers. Most banks provide this service through

bi-lateral arrangements with bill-payment service providers. ATM users register

their water, electricity and telephone utility accounts with banks, check their dues

at ATMs, approve bill payments that are debited to their bank accounts and receive


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printed receipts for the transactions. This service has the effect of improving

customer satisfaction for both the bank as well as the bill-payment service

providers. Some Banks ATMs even accept charitable contributions to Temples.

Sale of Paper Based Products:

ATMs are ideally suited to sell paper-based products and services such as tickets,

wireless phone recharge cards, financial products, etc. The screen interface allows

browsing and customization, access to bank accounts facilitate payments and

printing capabilities produce the actual product/service.

A number of banks including ICICI Bank, SBI and PNB have ATMs at Mumbais

local railway stations to dispense season tickets to commuters. Own-bank

customers pay no extra charge while other bank customers pay a fee of Rs. 50 for

this extremely useful service of anytime ticket purchase. Railway season tickets

represent a high-volume mass-appeal product. As technical standards get

established and product/service sellers become aware of the ATM sales channel,

niche-appeal high-margin products like entertainment tickets will join the fray.

Kiosks:

Information Kiosks has been introduced by many Banks and also by PSUs like

Railways, Tourist centers etc. While the revenue-producing capacity of non-

emergency type of information at ATMs as a stand-alone product is doubtful,

many customers may be willing to pay a nominal fee for information having

impulsive demand such as cricket scores while they wait for their transactions to

be processed. To be sure, providing information, whether priced or free, will

appeal to some customers and increase customer satisfaction.


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Union Bank has used technology to establish Village Knowledge Centers (VKCs),

which have proved to be a success in the 198 centers, where they have been set up.

VKCs empower the local rural population by giving them information on various

vital inputs such as weather, fertilizers, prices of crops, etc. The bank is also

operating financial education centers offering counseling at 51 of these VKCs.

Third Party Advertising:

In India, ATM advertising for third-party products is currently not allowed by

Regulatory authorities. However, the wait time at ATMs can be effectively used by

banks to promote their own brands, product and services. Furthermore, banks can

tailor advertising messages based on customer information easily available in their

accounting and CRM databases. Customer wait-time at ATMs while transactions

get processed, typically between 10 to 25 seconds, has been profitably used by

many banks for their own advertising.

Money Transfers:

Indians, who have migrated abroad or to cities, regularly use money orders and

wire transfers to send money to their families back home. ATM growth, especially

in rural India, will capture substantial business from the expensive wire transfer

agents network and the customer-service lacking postal network. In line with

international trends, ATMs can be made capable to dispense printed money orders

or initiate wire transfers against a charge on customers bank accounts. After

addressing regulatory hurdles, these services can even be made available to non-

account holders through cash payments using the currency acceptors built intoATMs. ATMs can also facilitate the encashment of wire transfer amounts by

allowing even non-account holders to withdraw cash based on PINs or previously

mailed special-purpose ATM cards.


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Recharge Mobiles via ATMs:

ATMs are also used to recharge mobile phones. Initiated in 2004 by ICICI Bank,

now most ATM/Debit Cardholders are able to recharge their pre-paid subscriptions

of most mobile service providers from anywhere in the country using their banks

ATMs or by sending a SMS.

The amount for recharging the mobile phone would be debited from the

subscribers Bank account and the subscription would be directly recharged

accordingly. The mobile top-up facility provides convenience on ATMs and

through mobile phones using SMS.

SBI Group 5000

ICICI 2400(app.)

UTI 2428

HDFC 1663

PNB 830

Andhra Bank 685

Indian Bank 150

Bank of Punjab 382

2.BANCASSURANCE:Bancassurance simply means selling of insurance products by banks. In this

arrangement, insurance companies and banks undergo a tie-up, thereby allowing

banks to sell the insurance products to its customers. This is a system in which a

bank has a corporate agency with one insurance company to sell its products. By

selling insurance policies bank earns a revenue stream apart from interest. It is

called as fee-based income. This income is purely risk free for the bank since the


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bank simply plays the role of an intermediary for sourcing business to the

insurance company.

Coming to India, Bancassurance is a new buzzword in India. It originated in India

in the year 2000 when the Government issued notification under Banking

Regulation Act which allowed Indian Banks to do insurance distribution. It started

picking up after Insurance Regulatory and Development Authority (IRDA) passed

a notification in October 2002 on 'Corporate Agency' regulations. As per the

concept of Corporate Agency, banks can act as an agent of one life and one non-

life insurer. Currently bancassurance accounts for a share of almost 25-30% of the

premium income amongst the private players in India.

Bancassurance provides various advantages to banks, insurers and the customers.

For the banks, income from bancassurance is the only non-interest based income.

Interest is market driven and fluctuating and quite narrowing these days. Banks do

not get great margins because of the competition. This is why more and more

banks are getting into bancassurance so as to improve their incomes. Increased

competition also makes it difficult for banks to retain their customers.

Bancassurance comes as a help in this direction also. Providing multiple services at

one place to the customers means enhanced customer satisfaction. For example,

through bancassurance a customer gets home loans along with insurance at one

single place as a combined product. Another important advantage that

bancassurance brings about in banks is development of sales culture in their

employees.

The penetration level of life insurance in the Indian market is abysmally low at

2.3% of GDP with only 8% of the total population currently insured. With almost

half of the population likely to be in the 'wage earner' bracket by 2010, there is

every reason to be optimistic that bancassurance in India will play a long inning.


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3.DEBIT CARD:A debit card (also known as a bank card or check card) is a plastic card that

provides an alternative payment method to cash when making purchases.

Functionally, it can be called electronic cheques, as the funds are withdrawndirectly from either the bank account, or from the remaining balance on the card.

In some cases, the cards are designed exclusively for use on the Internet, and so

there is no physical card.

Debit cards may also allow for instant withdrawal of cash, acting as the ATM card

for withdrawing cash and as a cheque guarantee card. Merchants may also offer

cash backfacilities to customers, where a customer can withdraw cash along with

their purchase.

Benefits to customer:

A consumer who is not credit worthy and may find it difficult or impossible

to obtain a credit card can more easily obtain a debit card, allowing him/her to

make plastic transactions.

For most transactions, a check card can be used to avoid check writing

altogether. Check cards debit funds from the user's account on the spot, thereby

finalizing the transaction at the time of purchase, and bypassing the requirement to

pay a credit card bill at a later date, or to write an insecure check containing the

account holder's personal information.

Debit cards are accepted by merchants with less identification and scrutiny

than personal checks, thereby making transactions quicker and less intrusive.

Unlike personal checks, merchants generally do not believe that a payment via a

debit card may be later dishonored.
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Debit card may be used to obtain cash from an ATM or a PIN-based

transaction at no extra charge, other than a foreign ATM fee.

4.CREDIT CARD:A credit card is a small plastic card issued to users as a system of payment. It

allows its holder to buy goods and services based on the holder's promise to pay for

these goods and services.[1] The issuer of the card grants a line of credit to the

consumer (or the user) from which the user can borrow money for payment to a

merchant or as a cash advance to the user. Usage of the term "credit card" to imply

a credit card account is a metonym.

A credit card is different from a charge card: a charge card requires the balance to

be paid in full each month. In contrast, credit cards allow the consumers a

continuing balance of debt, subject to interest being charged. Most credit cards are

issued by banks or credit unions, and are the shape and size specified by the

ISO/IEC 7810 standard as ID-1. This is defined as 85.60 53.98 mm

(3.370 2.125 in) (33/8 21/8 in) in size.

Benefits to customers:

The main benefit to each customer is convenience. Compared to debit cards and

cheques, a credit card allows small short-term loans to be quickly made to a

customer who need not calculate a balance remaining before every transaction,

provided the total charges do not exceed the maximum credit line for the card.

Credit cards also provide more fraud protection than debit cards.

Many credit cards offer rewards and benefits packages, such as offering enhanced

product warranties at no cost, free loss/damage coverage on new purchases, and

points which may be redeemed for cash, products, or airline tickets. Additionally,
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carrying a credit card may be a convenience to some customers as it eliminates the

need to carry any cash for most purposes.

5.MOBILE BANKING:Mobile banking is a way for the customer to perform banking actions on his or her

cell phone or other mobile device. It is a quite popular method of banking that fits

in well with a busy, technologically oriented lifestyle. It might also be referred to

as M-banking or SMS banking.

The amount of banking you are able to do on your cell phone varies depending on

the banking institution you use. Some banks offer only the option of text alerts,

which are messages sent to your cell phone that alert you to activity on your

account such as deposits, withdrawals, and ATM or credit card use. This is the

most basic type of mobile banking. A more involved type of mobile banking

allows the user to log into his or her account from a cell phone, and then use the

phone to make payments, check balances, transfer money between accounts, notify

the bank of a lost or stolen credit card, stop payment on a check, receive a new

PIN, or view a monthly statement, among other transactions. This type of banking

is meant to be more convenient for the consumer than having to physically go into

a bank, log on from their home computer, or make a phone call. While all of this is

true, some are concerned about the security of mobile banking.

Most experts advise against performing any large transactions over mobile

banking, which is good advice. However, it is equally important to use an

alphanumeric password and to keep your PIN safe. Change your password often,

and do not use your pets' names, your child's name, or any birthdays. This advice

applies to all passwords, not just those used for mobile banking. Though you are

logging on to a secure server at the bank through your cell phone, you need to do
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your part to protect your information. For this reason, many banks are now sending

one-time use passwords for an extra step in security.

Mobile banking can offer services such as the following:

Account Information

1. Mini-statements and checking of account history.

2. Alerts on account activity or passing of set thresholds.

3. Monitoring of term deposits.

4. Access to loan statements.

5. Access to card statements.

6. Mutual funds/ equity statements.

7. Insurance policy management.

8. Pension plan management.

9. Status on cheque, stop payment on cheque.

10.Ordering cheque books.

11.Balance checking in the account.

12.

Recent transactions.

13.Due date of payment (functionality for stop, change and deleting of payments).

14.PIN provision, Change of PIN and reminder over the Internet.

15.Blocking of (lost, stolen) cards.

Payments, Deposits, Withdrawals, and Transfers

1.

Domestic and international fund transfers.

2. Micro-payment handling.

3. Mobile recharging.

4. Commercial payment processing.

5. Bill payment processing.
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6. Peer to Peer payments.

7. Withdrawal atbanking agent.

8. Deposit atbanking agent.

Investments

1. Portfolio management services.

2. Real-time stock quotes.

3. Personalized alerts and notifications on security prices.

4. Mobile banking.

Support

1.Status of requests for credit, including mortgage approval, and insurance

coverage.

2. Check (cheque) book and card requests.

3.Exchange of data messages and email, including complaint submission and

tracking.

4.

ATM Location

6.ONLINE BANKING:

If you look into the modern age of banking, online banks or net banking made

things much easier for the people and saves lot of time. The traditional way of

standing in the queue and filling up all the forms, now its no hassle for making
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any transaction with the banks. Internet banking is a cost-effective delivery

channel for financial institutions. Consumers are embracing the many benefits of

Internet banking. Access to ones accounts at any time and from any location via

the World Wide Web is a convenience unknown a short time ago. Thus, a banks

Internet presence transforms from brouchreware status to Internet banking

status once the bank goes through a technology integration effort to enable the

customer to access information about his or her specific account relationship.

In the current scenario, every bank in India has the internet banking facility.

Recently the banks are extending their presence in rural areas to lure more

customers and show them the advantages of internet making by educating into the

new system. This gives the countries entire population to get the benefit of

technology advancement. As I said, still it is evolving and not all the banks provide

very advanced features. In our article I will take few leading banks and explain the

features they are offering. Note that, the online banking can be for managing your

Savings Accounts,Credit Cards,Fixed Deposit, Insurance, etc. The following are

the list of banks and their online website address.

ICICI Net Banking

HDFC Net Banking

SBI Cards

LIC India

Citibank Login

The six primary drivers of Internet banking includes, in order of primacy are:

Improve customer access

Facilitate the offering of more services

Increase customer loyalty
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Attract new customers

Provide services offered by competitors

Reduce customer attrition

7.MUTUAL FUNDS:

Financial experts believe that the future of Mutual Funds in India will be very

bright. It has been estimated that by March-end of 2010, the mutual fund industry

of India will reach Rs. 40,90,000 crore, taking into account the total assets of the

Indian commercial banks. The estimation was based on the December 2004 asset

value of Rs 1,50,537crore. In the coming 10 years the annual composite growth

rate is expected to go up by 13.4%. Since the last 5 years, the growth rate was

recorded as 9% annually. Based on the current rate of growth, it can be forecasted

that the mutual fund assets will be double by 2010.

Indian Mutual Funds Future - Growth Facts:

In the past 6 years, Mutual Funds in India have recorded a growth of 100 %.

In India, the rate of saving is 23 %. In the future, there lies a big scope for the Indian Mutual Funds industry to

expand.

Several asset management companies which are foreign based are now entering

the Indian markets.

A number of commodity Mutual Funds will be introduced in the future. The

SEBI (Securities Exchange Board of India) has granted the permission for the

same.

More emphasis is put on the effective Mutual Funds governance.

There is also enough scope for the Indian Mutual funds to enter into the semi-

urban and rural areas.


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Financial planners will play a major role in the Mutual Funds market by

providing people with proper financial planning.

Looking at the past developments and combining it with the current trends it can

be concluded that the future of Mutual Funds in India has lot of positive things to

offer to its investors.

8.MERCHANT BANKING:In banking, a merchant bank is a financial institution primarily engaged in

offering financial services and advice to corporations and to wealthy individuals.

The term can also be used to describe theprivate equityactivities of banking. The

chief distinction between an investment bank and a merchant bank is that a

merchant bank invests its own capital in a client company whereas an investment

bank purely distributes (and trades) the securities of that company in its capital

raising role. Both merchant banks and investment banks provide fee based

corporate advisory services, including in relation to mergers and acquisitions.

Many of the largest banks have both a retail division and a merchant bank division.The divisions are generally very separate entities, as there is little similarity

betweenretail bankingand what goes on in a merchant bank. Although the lives of

most people are probably affected every day in some way by decisions made in a

merchant bank, many people are unlikely ever to visit or deal directly with one.

Merchant banks usually operate behind the scenes and away from the spotlight.

The most familiar role of the merchant bank is stock underwriting. A large

company that wishes to raise money from investors through the stock marketcan

hire a merchant bank to implement and underwrite the process. The merchant bank

determines the number of stocks to be issued, the price at which the stock will be

issued, and the timing of the release of this new stock. The bank then files all the
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paperwork required with the various market authorities, and is also frequently

responsible for marketing the new stock, though this may be a joint effort with the

company and managed by the merchant bank. For very large stock offerings,

several merchant banks may work together, with one being the leadunderwriter.

By limiting their scope to the needs of large companies, merchant banks can focus

their knowledge and be of specific use to such clients. Some merchant banks

specialize in a single area, such as underwriting or international finance.

9.WIRE TRANSFER:Wire transfer or credit transfer is a method of transferring money from one

person or institution (entity) to another. A wire transfer can be made from one bank

account to another bank account or through a transfer of cash at a cash office.

Bank wire transfers are often the most expedient method for transferring funds

between bank accounts.

A bank wire transfer is affected as follows:

1.The entity wishing to do a transfer approaches a bank and gives the bank the

order to transfer a certain amount of money. IBAN and BIC codes are given as

well so the bank knows where the money needs to be sent.

2.The sending bank transmits a message, via a secure system (such as SWIFTor

Fedwire), to the receiving bank, requesting that it effect payment according to the

instructions given.3.The message also includes settlement instructions. The actual transfer is not

instantaneous: funds may take several hours or even days to move from the

sender's account to the receiver's account.
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4.Either the banks involved must hold a reciprocal account with each other, or the

payment must be sent to a bank with such an account, a correspondent bank, for

further benefit to the ultimate recipient.

Banks collect payment for the service from the sender as well as from the recipient.

The sending bank typically collects a fee separate from the funds being transferred,

while the receiving bank and intermediate banks through which the transfer travels

deduct fees from the money being transferred so that the recipient receives less

than what the sender sent.

10.BILL DISCOUNTING:Bill discounting is a major activity with some of the smaller Banks. Under

this type of lending, Bank takes the bill drawn by borrower on

his(borrower's) customer and pays him immediately deducting some amount

as discount/commission. The Bank then presents the Bill to the borrower's

customer on the due date of the Bill and collects the total amount. If the bill

is delayed, the borrower or his customer pays the Bank a pre-determined

interest depending upon the terms of transaction.

Benefits to customer:

Competitive advantage, thanks to the possibility to offer your trade partners more

attractive forms of payment, with longer terms

Improved financial liquidity and economic ratios thanks to earlier transfers of

receivables

Replacement of the credit-based sales (commercial loan) with cash sales

(discount)

Possibility to obtain off-balance sheet financing

Limitation of the risk related to unreliability of debtors
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Financing without recourse allows to use credit lines for other transactions

Elimination of the risk of debtor's insolvency of in case of discount without

recourse

Maintenance of the existing business relations in a situation of transient problems

with financial liquidity regarding commercial partners

11.LOANS:A loan is a type ofdebt. Like all debt instruments, a loan entails the redistribution

of financialassetsover time, between thelenderand theborrower.

Banks Loan are bifurcated into:

Priority sector lending:

The Government of India through the instrument of Reserve Bank of India (RBI)

mandates certain type of lending on the Banks operating in India irrespective of

their origin. RBI sets targets in terms of percentage (of total money lent by the

Banks) to be lent to certain sectors, which in RBI's perception would not have had

access to organized lending market or could not afford to pay the interest at the

commercial rate. This type of lending is called Priority Sector Lending. Financing

of Small Scale Industry, Small business, Agricultural Activities and Export

activities fall under this category. This is also called directed credit in Indian

Banking system.

Financing Priority Sector in the economy is not strictly on commercial basis as notonly the general approach is liberal but also the rate of interest charged on such

loans is less. Export finance is, in fact, available at a discount of 20% or more on

the normal rate of interest to Indian corporates. Part of the cost of this concession

is borne by RBI by means of refinancing such loans at concessional rate. Indian
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Banks, therefore, contribute towards economic development of the country by

subsidizing the business activities undertaken by entrepreneurs in the areas which

are considering "priority sector" by RBI.

Commercial lending:

This is the mainstay of Indian Banking - its bread and butter activity. Although

historically, this activity had been relegated to a secondary position as banks were

driven by the desire to excel themselves in what is known as "priority sector

banking" yet it is this part of their loan portfolio which has kept them afloat and

help meet the costs. This activity survived despite a number of restrictions imposed

on it in the past. With financial sector reforms, the focus has shifted from "priority

sector banking" and commercial lending has been reinstated to its rightful place.

Today many banks focus on this activity for improving their bottom lines. Fresh

and innovative products are being launched to facilitate the corporate customer

who forms the core of this business. There is big competition among banks to

secure bigger share of this business

At present, commercial loans are available for practically any kind of activity and

also for both long and short tenures. Based on customer profile, these loans are of

two types:

a) Corporate Loans:

These loans are meant for corporate bodies (and bigger ones among other

entities like proprietorships, partnerships and HUFs) engaged in any legal

activity with the object of making profit. Banks lend to such entities on the

strength of their balance sheet, the length of cash cycle and depending upon

the products available with individual banks.
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There are many type of loan products available for corporate clients in India.

The loans are structured depending upon the need of the client and the

product available with the lending Bank.

b) Retail Loans:

This type of lending is meant for very small entrepreneurs as well as

individuals who are engaged in gainful commercial activity and have the

capacity to repay the loan. Loans are given on the strength of the means of

the borrower with an eye on the repaying capacity. The latter is judged

through the cash streams (income) available with the borrower for

repayment of the loan.

12. FACTORING:Bank factoring generally refers to the process in which a bank buys a business's

account receivables instead of lending against them. Most major banks and a

growing number of smaller banks are involved in factoring. Traditionally,

however, a separate agency usually provides factoring programs because of tightgovernmental restrictions on banks that curtail lending limits.

To be considered for bank factoring, a business owner must accept and process

credit card payments from its customers. Once a bank buys the company's accounts

receivables, it calculates the amount of advanced funds to be provided to the

owner, and then collects that amount from the customers. The bank earns a certain

percentage off the accounts every month. Once the entire balance is paid off, the

bank subtracts the original amount of funds advanced and pays it back to the

business owner.
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Banks may also require certain other criteria to be met before considering an

individual for factoring. The most common criteria considered are a company's

sales volume, average invoice, gross profit, and credit terms available to

customers. Because their main focus is on the financial stability of a business's

customers, banks usually do not take into account restricted working capital or

prior losses determinants for approval of factoring.

Bank factoring offers many benefits to individuals in need of business capital:

Immediate deposit of funds.

Simplified billing processes.

Prompt payment of invoices.

13.DEMAT A/C:Demat refers to a dematerialized account. Demat account is just like a bank

account where actual money is replaced by shares. Just as a bank account is

required if we want to save money or make cheque payments, we need to open a

demat account in order to buy or sell shares. A Demat Account holds portfolio ofshares in electronic form and obviates the need to hold shares in physical form.

The account offers a secure and convenient way to keep track of shares and

investments without the hassle of handling physical documents that get mutilated

or lost in transit. The Securities and Exchange Board of India (SEBI) mandates a

demat account for share trading involving more than 500 shares.

Benefits of Demat Account:

Eliminates risks associated with physical certificates such as bad delivery, fake

securities, delays, forgery, counterfeiting, thefts and loss due to fire.

Reduces brokerage charges


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Pledging/Hypothecation of shares is easier

Enables quick ownership of securities on settlement thereby resulting in

increased liquidity

Reduction in paperwork involved in transfer of securities

Demat account obviates the need to pay stamp duty (in case of physical shares,

0.5 per cent stamp duty is payable).

There is no odd lot problem. Even one share can be bought or sold.

Documents required for opening a Demat A/c:

You can open a demat account with a bank or a depository participant (DP). Banks

usually give preference to those customers who have a savings or current account

with the bank. Along with the application form, following documents are required:

A cancelled MICR cheque

Identity proof

Address proof

Copy of PAN card (mandatory)

Photograph of the applicant.

Procedure for Dematerialization:

For dematerialization of physical share certificate(s) you have to first fill the demat

request form (DRF). The form can be obtained from the DP with whom your

demat account is opened. Deface the share certificate(s) by writing across

Surrendered for dematerialisation. Submit the DRF & share certificate(s) to DP.

DP would forward them to the issuer. After dematerialisation, your depositoryaccount would be credited with the dematerialised securities.


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14.CORE BANKING:Core banking is a general term used to describe the services provided by a group

of networked bank branches. Bank customers may access their funds and other

simple transactions from any of the member branch offices.

Core Banking is normally defined as the business conducted by a banking

institution with its retail and small business customers. Many banks treat the retail

customers as their core banking customers, and have a separate line of business to

manage small businesses. Larger businesses are managed via the Corporate

Banking division of the institution. Core banking basically is depositing and

lending of money.

Nowadays, most banks use core banking applications to support their operations

where CORE stands for "Centralized Online Real-time Exchange". This basically

means that all the bank's branches access applications from centralized datacenters.

This means that the deposits made are reflected immediately on the bank's servers

and the customer can withdraw the deposited money from any of the bank's

branches throughout the world. These applications now also have the capability to

address the needs of corporate customers, providing a comprehensive banking

solution. A few decades ago it used to take at least a day for a transaction to reflect

in the account because each branch had their local servers, and the data from the

server in each branch was sent in a batch to the servers in the datacenter only at the

end of the day (EoD).

Normal core banking functions will include deposit accounts, loans, mortgages and

payments. Banks make these services available across multiple channels like

ATMs,Internet banking, and branches.
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While many Banks run core banking in-house, there are some which use

outsourced service providers as well.There are several Systems integrators like

IBM which implement these Core banking packages at Banks.


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CHAPTER 5Challenges and Future of Modern Banking

ServicesChallenges

The banking industry in India is undergoing a major transformation due to changes

in economic conditions and continuous deregulation. These multiple changes

happening one after other has a ripple effect on a bank trying to graduate from

completely regulated sellers market to completed deregulated customers market.

Deregulation:

This continuous deregulation has made the Banking market extremely competitive

with greater autonomy, operational flexibility, and decontrolled interest rate and

liberalized norms for foreign exchange. The deregulation of the industry coupled

with decontrol in interest rates has led to entry of a number of players in the


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banking industry. At the same time reduced corporate credit off take thanks to

sluggish economy has resulted in large number of competitors battling for the same

pie.

New rules:

As a result, the market place has been redefined with new rules of the game.

Banks are transforming to universal banking, adding new channels with lucrative

pricing and freebees to offer. Natural fall out of this has led to a series of

innovative product offerings catering to various customer segments, specifically

retail credit.

Efficiency:

This in turn has made it necessary to look for efficiencies in the business. Banks

need to access low cost funds and simultaneously improve the efficiency. The

banks are facing pricing pressure, squeeze on spread and have to give thrust on

retail assets

Diffused Customer loyalty:

This will definitely impact Customer preferences, as they are bound to react to the

value added offerings. Customers have become demanding and the loyalties are

diffused. There are multiple choices; the wallet share is reduced per bank with

demand on flexibility and customization. Given the relatively low switching costs;

customer retention calls for customized service and hassle free, flawless service

delivery.


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Misaligned mindset:

These changes are creating challenges, as employees are made to adapt to

changing conditions. There is resistance to change from employees and the Seller

market mindset is yet to be changed coupled with Fear of uncertainty and Control

orientation. Acceptance of technology is slowly creeping in but the utilization is

not maximized.

Competency Gap:

Placing the right skill at the right place will determine success. The competency

gap needs to be addressed simultaneously otherwise there will be missed

opportunities. The focus of people will be on doing work but not providing

solutions, on escalating problems rather than solving them and on disposing

customers instead of using the opportunity to cross sell.

Strategic options with banks to cope with the challenges

Leading players in the industry have embarked on a series of strategic and tacticalinitiatives to sustain leadership. The major initiatives include:

Investing in state of the art technology as the back bone of to ensure reliable

service delivery

Leveraging the branch network and sales structure to mobilize low cost current

and savings deposits

Making aggressive forays in the retail advances segment of home and personal

loans

Implementing organization wide initiatives involving people, process and

technology to reduce the fixed costs and the cost per transaction


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Focusing on fee based income to compensate for squeezed spread, (e.g. CMS,

trade services)

Innovating Products to capture customer mind share to begin with and later

the wallet share.

Future of Banking services

PRESENT DAYAPRIL 2011

The trends that emerged at the turn of the millennium will shape the financial

services world of 2020. Responding to those trends, which reflect larger

societal shifts, the financial services industry must establish new relationships

with its customers. This report examines four broad trends, and their influence

on the financial services industry.

A New Playing Field for Financial Services

Shifting Segments, Changing Markets

The New Customer Connection

Reputation and Relationships Rules

NEXT DECADE IN FINANCIAL SERVICES

Nontraditional competitors using new technology, business models

and, in some cases, regulatory advantages will target attractive

market segments.


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Scale and regulatory-driven industry consolidation will require most

financial institutions to decide whether to stay independent, be

acquired or become an acquirer.

Strategic partnering will increase, both as a way to gain scale and as an

alternative to consolidation.

Industry change will create growth opportunities. Financial institutions that

dont adapt are at risk of being relegated to highly regulated, low margin and

growth providers of commodity services.

FUTURE CHALLENGES

ChallengesCompetition

Customer Retention

Globalization

Shrinking Margin

Strong In-house research & market Intelligence

Focused marketing- Focus on region-specific campaigns rather than

national media

campaigns

The growth of the retail financial services sector has been a key development

on themarket front. Indian banks (both public and private) will not only be

keen to tap thedomestic market but also to compete in the global market place.

New foreign banks willbe equally keen to gain a foothold in the Indian market.


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MODERN BANKING SERVICES 2020

According to the Intuit 2020 Report The Future of Financial Services,

identifies and examines four key trend areas that will transform the financial

services industry over the next decade. These are:

1. A New Playing Field for Financial Services: Regulatory pressures will

increase and competition will grow from both traditional competitors and new

entrants. These forces will lead financial institutions to explore new business

models, collaboration and partnerships, and increased consolidation.

2. Shifting Segments, Changing Markets: Consumer demand for financial

services will increase across all age groups. The two largest contingents

aging baby boomers and GenYerswill demonstrate particularly acute shifts

in their needs and types of products and services they purchase.

Competition to serve mid-market businesses will intensify, slimming financial

institution margins. However, the overall small business sector will continue

expanding, with the total number of small and personal businesses increasingby more than 7 million over the next decade. Most of this growth will come

from micro and personal businesses (less than $1 million in revenue) creating

opportunities for financial institutions that can serve these firms efficiently.

3. The New Customer Connection: Technologys role in the customer

experience will take center stage. With increased cost pressures and a growing

demand for flexibility, accessibility and personalization, financial services

organizations will accelerate their use of technology to meet customer needs.

Cloud computing platforms and applications will combine with advanced

analytical tools, ever-larger data sets, and social and mobile computing to
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reshape the way the financial services industry designs and delivers value-

added products and services to customers.

4. Reputation and Relationships Rule: Institutions that use technology to

serve up useful customer insights will win. Over the next decade, the financial

service industry will shift its focus from transactions to customized value-

added services. Through a combination of both virtual and brick-and-mortar

branches, banks will develop stronger, more personal relationships with

businesses and consumers, helping them manage risk, build wealth, plan

retirement and anticipate health care expenses.


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Chapter 6SWOT ANALYSES

SWOT analysis is a strategic planning method used to evaluate the

Strengths, Weaknesses, Opportunities, and Threats.

Strengths:

Dedicated and well-trained manpower

Strong financials and with a clean slate i.e. without having to pursue NPAs

Fully computerized and techno-savvy

The vast networking & growing number of branches & ATM
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Weakness

Although highly networked, the number of branches is limited

More focus to banking in urban areas rather than rural areas

The employee turnover appears to be on higher side

The cost of intermediation remains high and bank penetration is limited to

only a few customer segments and geographies.

Opportunities

Banks enjoy high level of autonomy facilitating them for faster decisionmaking

To face stiff competition, they can innovate new products and services and

achieve high customer satisfaction

With full computerization, they can offer cost-effective services like ATMs,

Electronic

Threats

Threat of stability of the system

Expansion of foreign banks in the post WTO era poses severe competition

Frequent announcements of takeover / Mergers & Acquisitions

Strict regulations by way of monetary policy by RBI

Rise in inflation figures


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CHAPTER 7

ICICI BANK- A Case Study

Bank Profile

Established in 1994, ICICI Bank is today the second largest bank in India and

among the top 150 in the world. In less than a decade, the bank has become a

universal bank offering a well diversified portfolio of financial services. It

currently has assets of over US$ 79 billion and a market capitalization of US$ 9

billion and services over 14 million customers through a network of about 950

branches, 3300 ATM's and a 3200 seat call center (as of 2010). The hallmark of

this exponential growth is ICICI Banks unwavering focus on technology.

Key Business Drivers

ICICI Bank was set up when the process of deregulation and liberalization had just

begun in India and the Reserve Bank of India (Indias central bank) had paved the

way for private players in the banking sector, which at that time was dominated by

state-owned and foreign banks. Serving the majority of the countrys populace,

state owned banks had a large branch network, with minimal or no automation and

little focus on service. Foreign banks, on the other hand, deployed high-end

technology, had innovative product offerings, but had a very small branch network

that serviced only corporate's and individuals with high net-worth. Sensing an

untapped opportunity, ICICI Bank decided to target Indias burgeoning middle

class and corporate's by offering a high level of customer service and efficiency

that rivaled the foreign banks, on a much larger scale, at a lower cost. A crucial

aspect of this strategy was the emphasis on technology. ICICI Bank positioned

itself as technology-savvy customer friendly bank.
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To support its technology focused strategy, ICICI Bank needed a robust

technology platform that would help it achieve its business goals. After an intense

evaluation of several global vendors, ICICI Bank identified Infosys as its

technology partner and selected Finacle, the universal banking solution from

Infosys, as its core banking platform. An open systems approach and low TCO

(Total Cost of Ownership) were some of the key benefits Finacle offered the bank.

Unlike most banks of that era, ICICI Bank was automated from day one, when its

first branch opened in the city of Chennai. Some of the reasons cited by the bank

for its decision to select Finacle includeFinacles future-proof technology, best-of-

breed retail and corporate banking features, scalable architecture and provenimplementation track record.

Solution Overview

One of the biggest challenges for Finacle was ensuring straight through processing

(STP) of most of the financial transactions. With the ICICI group having several

companies under its umbrella, Finacle needed to seamlessly integrate with multiple

applications such as credit cards, mutual funds, brokerage, call center and data

warehousing systems. Another key challenge was managing transaction volumes.

ICICI Bank underwent a phase of organic and inorganic growth, first by acquiring

Bank of Madura followed by a reverse merger of the bank with its parent

organization, ICICI Limited. The scalable and open systems based architecture,

enabled Finacle to successfully manage the resultant increase in transaction levels

from 400,000 transactions a day in 2000 to nearly 2.1 million by 2005 with an

associated growth in peak volumes by 5.5 times. With Finacle, the bank currently

has the ability to process 0.27 million cheques per day and manage 7000

concurrent users.


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Over the years, the strategic partnership between ICICI Bank and Infosys that

started in 1994 has grown stronger and the close collaboration has resulted in many

innovations. For instance, in 1997, it was the first bank in India to offer Internet

banking with Finacles e-banking solution and established itself as a leader in the

Internet and eCommerce space. The bank followed it up with offering several e-

Commerce services like Bill Payments, Funds Transfers and Corporate Banking

over the net. The internet is a critical element of ICICI Banks award winningmulti-channel strategy that is one of the main engines of growth for the bank.

Between 2000 and 2004, the bank has been able to successfully move over 70

percent of routine banking transactions from the branch to the other delivery

channels, thus increasing overall efficiency. Currently, only 25 percent of all

transactions take place through branches and 75 percent through other delivery

channels. This reduction in routine transactions through the branch has enabled

ICICI Bank to aggressively use its branch network as customer acquisition units.

On an average, ICICI Bank adds 300,000 customers a month, which is among the

highest in the world.


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Reaping the Benefits

A powerful, scalable and flexible technology platform is essential for banks to

manage growth and compete successfully. And Finacle provides just the right

platform to ICICI Bank thus fueling its growth.

The bank has successfully leveraged the power of Finacle and has deployed the

solution in the areas of core banking, consumer e-banking, corporate e-banking and

CRM. With Finacle, ICICI Bank has also gained the flexibility to easily develop

new products targeted at specific segments such as ICICI Bank Young Stars- a

product targeting children, Women's Account addressing working women and

Bank@campus targeting students.

ICICI Bank is today recognized as a clear leader in the region and has won

numerous accolades worldwide for itstechnology-driven initiatives. In 2003, the

bank received the best multi-channel strategy award from The Banker magazine

and this year it was rated as the 2nd best retail bank in Asia by The Asian Banker

Journal. The bank has effectively used techno