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An Overview of Retail Banking: a Theoretical Perspective

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An Overview of Retail Banking: a Theoretical Perspective Compliance Engineering Journal ISSN NO: 0898-3577 An Overview of Retail Banking: A Theoretical Perspective Mr. Ranjansathya Das S *Dr.Aluregowda** Mr. Mahadevaswamy R M *** *Guest Faculty, Department of Commerce, Govt. First Grade College for Women, Maddur, Mandya, Karnataka, India. ** Associate Professor, Department of Management Studies and Research Centre, PES College of Engineering, Mandya, Karnataka, Insdia. *** Guest Faculty, Department of Business Administration, Govt. First Grade College, Siddartha Nagara, Mysore, Karnataka, India The Indian retail banking is one of the fastest growing sectors in Indian economy with innovation and upgradition of products and services in the market place. The adoption of technology and change of technology in the retail banking has attractive tool in the retail banking services. Retail banking services largely depends on services offered by banks and effectiveness of the bank personnel to interact with customers and educating the existing and new customers to investment plans and also introduce new product services to meet the changing needs of the customers through internet banking and digitalization of retail bank services to convenient time and flexible hours. The present study emphasizes on retail banking features, advantages and strategies of retail banking in the changing scenario of banking industry. Keywords: Banking strategy, Digital services, Indian banking sector, retail banking INTRODUCTION One of the spectacular innovations in the commercial banking sector is the retail banking. The fastest growing division in the banking sector is the retail sector. Retail banking refers to banking in which banks undergo transactions directly with consumers rather than with corporate or other banks. Consumer credit is the heart of retail banks and it provide services to individuals and small business concerns and the dealings are in large volumes and low values. The retail banking portfolio encompasses deposits and assets linked products as well as other financial services offered to individuals for personal consumption. Retail banking is increasingly viewed by banks as an attractive market segment with opportunities for growth and profit. It is a system of providing soft loans to the general public like family loans, house loans, personal loans, loans against property, car loans, auto loans etc. The products are backed by world-class service standards and delivered to the customers through the growing branch network, as well as through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking. Today’s retail banking sector is characterized by three basic features namely multiple products includes deposits, credit cards, insurance, investment and securities, multiple channels of distribution includes call centre, branch, internet and multiple customer groups consists consumer, small business and corporate. Volume 11, Issue 6, 2020 Page No: 103 Compliance Engineering Journal ISSN NO: 0898-3577 LITERATURE REVIEW Dr. R Srinivasa (2014), has tried to bring light on role and prosper of retail bank sector in India and its future role in country’s development. Date required for the study has been collected from secondary source like RBI reports, publications and other national and international sources. The study started from gave introduction to industry then to trends later on its role in economic development. Challenges like customers retention, money laundering, ineptness, network management issues and few more have taken part in the study. The study had concluded by giving prime importance to improve retain banking sector in order to make its further more contribution to country’s development. C. Padmavathi, M.S. Balaji, V.J. Sivakumar (2002) , authors have designed the study to evaluate effectiveness of customer relationship management (CRM) in Indian retail banking and to examine its relationship with key customer response variable. Date has been collected from primary sources and statistical methods such as Kaiser –meyer- olkin measure (KMO), Bartlett test of sphericity and exploratory factor analysis have adopted. Since study have conducted on the five basic parameters, authors have expressed their findings with the hope that banks would do better by concentrating on these dimension to improve the customer satisfaction and there by managers can retain their customers. Lianxi Zhou (2004) , author has studied customer satisfaction in chines retail banking sector with help of specifies performance dimension - quality of service. 373 customers have met for collect data regard service quality of the industry and results have been measured and expressed its implication in international setting. Statistical tools percentage calculation and T-test have done to know significant values. As per the study, specific quality dimension to know customers to satisfy was insufficient since they looking for assurance and reliability from local banks and study has suggested managers there to focuses on assurance and reliability in formulation of strategies to satisfy and retain their customers. R.F Balachandra, TSB Bank plc and RL Galloway (1994) , It was the period where the concept of ‘quality in banking services’ getting definition all over the world, authors have studied customers and bank staff (TSb bank plc) requirements of quality services in banking. This was carries out during 1991-1992 on one of the largest bank in UK – TSB Bank plc. The data was collected from large number of customers across the 71 branches by personal interview at their home by wide range of questionnaire. Date was analysed with the help of SERVQUAL classification and Gap model too used to link data with staff perception. As per the study customer were seeking for responsive services with assurance, competence and credibility. And staffs have expressed various reasons for failure of quality in services and the study has discussed wide range of issues to overcome the same issues. Terrence Levesque and Gordon H.G Mc Dougall (1996) , deregulation of banking sector was create a issue of maintain loyal customers in Canada during the study, authors have studied the determinants of customer satisfaction in retail banking in Canada. Data required for the study was collected from church members and university member where they collected data directly from customer with designed questionnaire. Their study found the core and relative performance both would helps to retain loyal customer where these performance helps to satisfy customers need. Volume 11, Issue 6, 2020 Page No: 104 Compliance Engineering Journal ISSN NO: 0898-3577 FEATURES OF RETAIL BANKING Retail banks are dealing to commercial banks with individual consumers, both the liabilities and the asset side of the balance sheet. The important products offered by banks in retail banking are fixed, current/ savings account on liabilities side and personal loans, house loans, auto loans and educational loans on the asset side. Retail banking sector is characterized by doing banking business in large volume of transactions involving low value, the retail banking portfolio includes deposits and assets linked products as well as other financial services provided to individuals for personal consumption and it provides an opportunity to banks to diversify their asset portfolio. Since loans are given to a large number of consumers and transactions have very low value, the risk of NPA is reduced because all the consumers do not make default in making loan repayment at a time. Retail banking adopting the strategy of the maxim do not keep all the eggs in one basket and this industry is diverse and competitive. There is a large number of retail banking products that are extremely customer-friendly and are offered by many banks. Banks adopt multiple channels of distribution of retail banking products and services. ADVANTAGES OF RETAIL BANKING Retail banking is mass market banking, where individual consumer’s diverse are fulfilled at the local level offering multiple products with growth of banking technology and automation of banking process. Retail deposits are stable and constitute core deposits, interest insensitive and less bargaining for additional interest, effective customer relationship management with retail customers builds strong customer base, and retail banking increases the subsidiary business of banks. Retail banking results in better yield and improved bottom line for banks and retail segment is a good avenue for funds deployment, consumer loans are presumed to be of lower risk and NPA perception. It improves lifestyle and fulfils aspirations of people through affordable credit and an opportunity for banks to innovate banking products as per the expectations of various classes of customers and it involves minimum marketing efforts in a demand-driven economy. RETAIL BUSINESS STRATEGIES Retail banks changing continuously as a future-ready organization and has consistently evolved its capabilities to ensure agility and value creation in its businesses. This focus is integral to the bank’s strategy and bank continued to make progress on its strategic objectives even as the year saw significant challenges. The Bank’s businesses focused on growing the core operating profits in a risk calibrated and forceful manner. The Bank implemented a number of initiatives to expand its customer base and deepen the penetration of products and services, thus further strengthening the franchise. The digital strategy was key driver of the bank’s reach and unlocking
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