The ING Case Study Competition

ING VYSYA BANK

ING VYSYA BANK

Executive Summary

Digital modernization gives traditional banks a second chance. A smart, enterprise-wide approach positions them to deepen customer satisfaction and loyalty, driving long-term relationships and profitability.

Digital technology gives banks the opportunity to regain their relevance with customers, and the heart of that connection is data. Every consumer click, swipe, comment and search creates a unique virtual identity

The implication for banks is that as business models are transformed by the shift to digital channels, it opens up new opportunities for engaging and interacting with customers to build relationships and grow revenues.

Well appointed branches and slick websites will no longer be enough, as customers expect services on the move. Location-based offers, timely and relevant content, and interactive applications will form the basis of the mobile customer’s engagement with their banks.

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ING VYSYA BANK

Insights - Why do customers buy from where they buy?

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SWOT Analysis( Digital Vs Branch Banking)

ING VYSYA BANK

Strengths Weaknesses

Opportunities Threats

• Cost :- Cost per transaction is lower in digital banking as compared to branch banking.

• Time:- Time consumed in any transaction is significantly less in digital than other options.

• Convenient:- The ease of use is high in digital due to the availability of internet and mobility and increasing penetration.

• Availability:- Bank’s are working hard and have been successful in maintaining 24*7 uptime for the online systems as compared to the prescribed operating hours of branches.

• Infrastructure:- Although the scenario is changing at a rapid pace still considering Indian scenario, The banking system still lacks proper technology based infrastructure.

• Risk Measures:- Ineffective risk measures are a source of concern for digital banking owing to nascent stage.

• Access:- A vast population is still not tech savvy and issues of access control keeps on arising with digital marketing

• Products:- Still a wide of banking products are not available online while offline availability is efficient.

• Technology:- Advancement of technologies, strong asset base would help in bigger growth of online measures.

• Users:- Internet using customer base is likely to increase in future as compared to offline users.

• Trust :- A sophisticated security system is a must and has a lot of scope of improvement.

• Financial Inclusion:- With government focussed on financial inclusion model, A vast array of opportunities have opened up.

• Grievance:- Robust Grievance redressal system is opportunity for both the modes.

• Tech Savvy:- Solutions provided needs a basic understanding of technology be it mobile or computers which is not the case in branch banking owing to human touch

• Investment:- Huge investment in technology is required for setting up the infrastructure and thus additional capital requirements.

• Security:- Any digitized solution is always prone to security threats, the same is lesser in branch based approach

• Fatigue:- There is always possibility of technical failures which will affect the both.

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Digital Banking Roadmap

• Integrated infrastructure for seamless retrieval, storage and distribution of information and data.

• Digital banking requires regulations and policies for protection of value of data and information.

• Content management roadmap for digital banking includes storage, management, workflow, process, integration, reporting, information.

• Business strategy components include a service orientation, governance, technology adoption, process alignment, tuning and optimization.

• Analytics include multidimensional analysis based on geography, customer type, product, real time content analysis. It also includes tracking consumer behaviour and correlating it to revenue driven activities and nurture cross selling opportunities.

• Information must be accessible from anywhere and from any mobile form factor. Other key components include social media, the digital app store as a one-stop shop for mobile business applications, authentication and access security.

• A consistent user experience needs to be provided across all major interaction touch points. Other key factors include campaign management, branding, search engine optimization, user experience and session management.

Seven Strategic Areas to Consider

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ING VYSYA BANK

Digital Banking Model

VALUE PROPOSITIONS

•Convenience•Self-service•Trust• Liquidity

CHANNELS

•Branch•Web•ATM•KIOSK•IVR•Social Media

CUSTOMER

RELATIONSHIPS

•Customer lifetime value• Improve customer engagement•Loyalty•Repeat transactions

CUSTOMERSEGMENTS

•Convenience•Self-service•Trust•Liquidity

REVENUE

STREAMS

Annual Subscription, Free channel services,

Merchant funded offers.

COST

STRUCTURE

• Cost of compliance• Cost of capital (lower interest rates so

lower deposit volumes)

KEYPARTNERS

•Digital partners•Merchants•Payment networks •Telcos•Technology partners•Logistics partners

KEYRESOURCES

•Capital•Sales channels•Branches•Employees •Sales brokers (Lending)

KEY

ACTIVITIES

•Payments•Lending •Deposits

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ING VYSYA BANK

• Partnering micro, small and medium enterprises in their growth

• Specialized understanding of the market segment

• Long market experience enables strong growth with strong asset quality

Wealth management solutions to High Net worth individuals and entities, including individuals, families, small businesses and large corporations.

• Loan against property, Home loans,. Gold Loans, Personal loans, Commercial vehicle loans etc

• Enables significant cross selling opportunities to existing customers

Wealth management products and services, Insurance, bill payment solutions, Gold sales, Foreign Exchange services, forex cards, lockers, internet banking, phone banking etc

Multiple products across savings, current, fixed deposits accounts catering to multiple customer segments

Targeted products such as Kisan credit cards, produce loans, agriculture term loans etc.

Tailored credit products for poultry, dairy, agriculture, cold storage and logistics businesses

Analysis of ING Products

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SCOPEThe main purpose of the research is to understand the customer’s insights, tendency of them to likely shift from the branch banking to digital model of banking and key areas to be focussed for the future.

DATA Gathering

• Primary SourceThe primary source for the data collection has been personal interviews, questionnaires in the form of Google forms which were got filled from the customers of ING as well as customers of other banks. The Primary

method of Data Collection would suit this type of Research Design.  • Secondary Source

Secondary source for the data collection has been websites for various banks including ING and Reserve bank of India

SURVEY MethodSample size considered was 100, The subjects were selected on the ease of availability. The data analysis techniques such as pie chart, histogram and bar diagrams are used.

ACCURACYIt is difficult to know if all the respondents gave accurate information; some respondents tend to give misleading information.

ING VYSYA BANK

Research Methodology

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Out of 100 respondents 78% of them were male and 22% were female

ING VYSYA BANK

Out of 100 respondents the segregation on basis of age is shown above

On the basis of educational qualification the sample size is represented in pie chart

DATA Analysis

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ING VYSYA BANK

Use of the Digital or Branch Solutions

Preferred channels for buying for different age groups

As Generation Y ‘grows up’ with digital, it will be more important for banks to match their digital expectations.

As online services get equipped with more and better functionality, it will transform the traditional interaction model with the consumer Willingness: Consumers will

pay more for good services, They suggested they would be willing to pay an optimal price for services

1:- Notification via twitter or Facebook2:- Spending Analysis3:- Third Party Offers4:- Willing to pay for new services

SurveyFindings

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ING VYSYA BANK

Banking Industry•Total assets increased more than five times to reach US$1.3 trillion• Total credits and deposits grew consistently at approximately 20% to reach US$0.8 trillion and US $1.1 trillion respectively.•Number of bank branches reached nearly 93,000.

Incremental branches in the past 9 years

Source:- RBI Statistical data 2012-2013

• The number of bank branches in urban and semi-urban areas has been growing at a fast pace. Fifty eight percent of ~25,000 branches opened in last five years were in urban and semi-urban regions.

• Indian banks have been increasingly growing their international presence in the recent past. In part to cater to the growing Indian diaspora in foreign countries (estimated at ~ 20 mn persons) and in part to meet the growing demands from cross border trade and economic activity.

Industry Reach

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ING VYSYA BANK

• Supply Chain Financing (SCF) is gaining traction in India, SCF is rapidly gaining attention in international markets and is growing at a pace of 30 – 40 percent at major international banks according to a research

Source:- India Commercial Banking Report

• There has been an intense debate on the appropriate model for FI. RBI has favored bank-led model instead of the technology-led model which has been successful in many other countries. The model allows the country to leverage existing branch base for a planned, structured and sustained FI process

• The Factoring bill essentially protects micro and small businesses from delayed payments for goods and services by larger entities. Traditional banks used to provide loans based on the borrower’s (i.e. the MSME player’s) ability to service the loan.

• Factoring will however evaluate the lending decision based on the ultimate debtor (i.e. the ultimate customer of the MSME). This will greatly improve the liquidity and working capital problems of MSME players

Source:- Factors Chain International

With favourable legislations, factoring is gradually taking off in India. The Indian market constitutes a mere one percent of the world’s factoring market

Industry Reach

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ING VYSYA BANK

Growth Prediction

• India's banking industry could become the fifth largest banking sector globally by 2020 and the third largest by 2025.

• These days, banks in India are turning their focus to servicing clients and improving their technology infrastructure.

• The popularity of internet and mobile banking is at an all-time high, with customer relationship management (CRM) and data warehousing anticipated to drive the next wave of banking technology in the country.

• Total lending and deposits increased at a compound annual growth rate (CAGR) of 22.8 per cent and 21.2 per cent, respectively, during FY 06–13 and are further poised for growth, backed by demand for housing and personal finance.

• With the help of the Financial Inclusion Plan (FY 10–13), the banking connectivity in India increased more than threefold to 211,234 villages in 2013 from 67,694, at the beginning of the plan period.

Source:- http://www.ibef.org/industry/banking-india.aspx

Source:- IBEF banking report

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Conclusion

• Banks face the dilemma of having to choose one of two available paths open to them: whether to stay with traditional banking models that have served banks well until now, or embrace change and serve the customer in a way that the customer wants.

• Acknowledge that the new digital feature set is changing the way consumers interact with their banks. Understanding the different needs of different customer groups is essential, as a one-size approach will prove insufficient to meet the range of needs of customers.

• Banking will necessarily become increasingly intertwined with customers’ digital lives. New business models and means of interaction will be required in order to be successful in this changing business context.

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ING VYSYA BANK

Reference

• http://www.rbi.org.in/home.aspx• http://www.ingvysyabank.com/• http://www.pwc.com/gx/en/banking-capital-markets/banking-2020/• http://www.accenture.com/in-en/industry/financial-services/banking/Pages/

index.aspx• http://www.cognizant.com/banking-financial-services• http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/

Documents/KPMG-CII-Indian-Banking.pdf• http://www.ibef.org/industry/banking-india.aspx• Internet banking acceptance model: Cross-market examination by Bander

Alsajjan and Charles Dennis

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