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Banking

Industry Summary

  • The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks in addition to cooperative credit institutions.
  • Govt to set up Asset Restructuring and Management Companies to take over stressed assets of banks, thereby facilitating operational ease
  • Increased emphasis on digital payments and UPI, and initiatives like the PM Jan Dhan Yojana has increased the reach of banking sector
  • The creation of new banking entities like 'Payment Banks' and 'Small Business Banks' made banking infrastructure more robust.

Value Chain

Step 1

Marketing

Advertising, Branding, Sales Support

Step 2

Sales Multichannel

Management, Acquisition, Offering, Market Expansion

Step 3

Customer & Stakeholder Relationship Management

Focus on specific groups (NRIs, HNIs), Regulatory Compliance

Step 4

Product

Product Offering, Product Expansion

Step 5

Transaction

Payments, Clearings & Settlement, Trading

Cost Drivers

  • Service costs such as transaction services, ATM services
  • Employee Benefits
  • Cost of funds/resourced borrowed
  • Operational efficiency of branches
  • Non-performing assets
  • Asset Liability Mismatch
  • All write-offs and provisions
  • Infrastructure Costs (physical & Tech)

Revenue Drivers

  • Loan Outstanding (Lending)
  • Investment Yield
  • Ancillary Services (Guarantees, Letter of Credit etc.)
  • Foreign Exchange Business
  • Asset Turnover
  • Customer mix
  • Branch Network
  • Product Mix & Differentiation

Growth Drivers

  • Economic growth of country
  • Government/RBI Regulations
  • Geographical expansion of banking
  • Technological Innovations (Digitization)
  • Infrastructure growth
  • Big projects approvals, Financial Literacy

Key Customers

  • Individuals
  • HNI Consumers
  • Micro, Small & Medium Businesses
  • Large Businesses
  • Govt and govt agencies

Key Players

  • SBI
  • HDFC
  • ICICI
  • PNB

Channels

  • Largely face to face interactions (branches etc.)
  • Online banking, ATM services growing
  • Mobile Banking growing rapidly
  • Business Correspondents (3rd parties engaged where branches are not available)