Indian Banking Ecosystemfintechprofiles.com/FT01/Poneet/FT100-Poneet.pdf · Axis Bank ICICI Bank...

Private Banks : Segmentation & Products

Indian Banking Ecosystem

Indian Banking Scenario

!Categories Of Banks● Commercial Banks● Development Banks● Co-operative Banks / Societies

Prepared By: Poneet Gupta 2


!Types of Commercial Banks● Public Sector Banks

!Major shareholding by the Government of India

● Private Banks!Major shareholding by general public

● Foreign Banks!Incorporated outside India, operating globally.

● Rural Banks!Owned generally by, Centre, State and Sponsor Bank



Prepared By: Poneet Gupta

Public Sector26

16%

Private Sector21

13%

Foreign Banks36

22%

Rural Banks82

49%

TYPE & NUMBER OF COMMERCIAL BANKS

Public Sector Private Sector Foreign Banks Rural Banks

4


!Some Private Banks● Axis Bank● ICICI Bank● HDFC Bank● Kotak Mahindra Bank● Yes Bank ● IDFC Bank


Indian Banking Scenario! Typical Business Segmentation● Retail Banking

!CASA

!Loans to Individuals, small businesses

● Wholesale Banking!Medium & Large Corporates

!Project Finance, FCTL, Non-Funded Credit

● Treasury Operations! Investment in primary & secondary markets

! Securities & Commodities!Foreign Exchange Trading

● Advisory Services!Merchant Banking

!Syndication

!Hire Purchase, etc



!Typical Customer Segmentation● Based on Type of Business

!Personal

!Business

● Based on Size / Volume● Based on Demographics

!Rural

!Urban

● Based on Residency!Residents

!Non-Residents



!Segmentation● Personal Banking

!Savings Accounts

!For Rural / Urban Segments!Based on Wealth (Priority / Premier Banking)!Based on Residential Status (FCNR, NRE etc)!Based on demographic attributes like gender, age group,

employment etc.

!Current Accounts

!Based on size / volume!More specific segmentation is part of business banking




!Term Deposits

!Based on tenure!Based on volume!Based on frequency (Fixed / Recurring)!Based on demographics (Senior Citizen / Urban & Rural)

!Cards

!Type (Debit / Credit / Prepaid)! Issuer (Master / Visa / Rupay)




!Loans

!Type of Asset (Car, Home, etc)!Security (against FD, Listed Securities, Home, etc)!Demographics (Crop Loan for farmers)!Purpose (Wedding loans)

!Value Added Services

!Safe Deposit Lockers!Dmat Accounts!Trading Accounts (for Securities)! Insurance (Life & General)



!Segmentation● Business Banking

!Size of Customer

!Typically <5 Cr, 5 to 50-250 Cr, 250-5000 Cr, 5000Cr+

!Business Activity

!Traders, Manufacturers, Retailers.

!Industry Specific

!Trade Services

!BG, LC, Forex, Bill Collection,



!Operations of Banks


Bank

Accept Deposit

Maintain Margins with RBI

Lend Money

Borrow Money for leveraging

Provide Services

Debit / Credit / Prepaid Cards

Wealth Management

InsuranceCapital Market

Services

Primary Market

Secondary Market

Compliances

Maintain Margins

Capital Adequacy Ratio

Reporting

12


Interest Income

62.40%

Investment Income

21.56%

Services Income

6.52%

Treasury Income

1.81%

Miscellaeous Income

7.71%

Income Segmentation - 2017 Interest Income

Investment Income

Services Income

Treasury Income

Miscellaeous Income

Source: RBI


Private Banks

Comparative Study

Comparative Study

!Banks Considered & Reason● Axis Bank

!Erstwhile UTI Bank has a legacy of government control.

!Leading private sector bank.

!More focus on corporates

● HDFC Bank!Leading private sector bank

!Has a higher CASA business and high retail clientele.

● Kotak Mahindra Bank!Relatively young and aggressive bank.

!Believes in growth through acquisition.


Private Banks

Business Segmentation

Leading Private Sector Bank

Axis Bank


Axis Bank

! Segmentation● Personal Banking

!Retail

!NRI

!Rural / Agriculture

!Priority

● Business!Business Account (various type of current accounts)

!Salary Accounts

!Corporate Finance

!Payment Solutions

!Customised Solutions


Axis Bank! Segmentation● Personal Banking

!Savings Account! With different features for different wealth segments, residential

status & rural/urban.! Special focus on certain groups like women, senior citizen, children,

services personnel! Depending on residential status (NRI – Residents)

!Current Accounts – has more products for business under personal banking than most.! For Individuals, Professionals and Micro & Small Enterprises! For specific entities like Societies, Trusts, NGO’s etc! For specific industries

!Term Deposits! Fixed Deposits / Recurring Deposits


Axis Bank


!Cards

!Debit Cards!Credit Cards!Prepaid Cards (Travel Cards / Gift Cards)

!Loans

!Home Loan!Vehicle Loan (Car / Bikes / Commercial Vehicle)!Personal Loan!Education Loan! Loan against assets (Fixed Deposit / Jewellery / Listed Security)


Axis Bank


!Other Value Added Services

!Share Trading / Dmat Accounts!Safe Deposit Locker!Safe Custody! Insurance!Mutual Funds!Wealth Management Advisory


Axis Bank


!Current Accounts!Based on size & volume of business!Based on Industry!Based on level of service required

!Treasury Services!Forex!Derivatives!Money market services

!Cards!Credit Cards!Prepaid Cards


Axis Bank


!Trade Services

!Bank Guarantee! Letters of Credit!Bill Collection!Forex & Hedging


!Custodial Services!Advisory Services!Trusteeship Services!Debt / Equity Solutions


Axis Bank


!Funding!Term Loans!Shipment Credit!Working Capital Finance!Structured Finance – for large customers

● Customer Segmentation!Startups

!Turnover < 10 Crores


!Turnover > 250 Crores


Axis Bank!Distribution & Service Channels● Assisted Banking

!Though a wide network of branches

!Relationship Managers for premium accounts.

!Service Managers at branches for specific needs.

● Self-Banking!Though a wide network of ATM’s

● Remote Banking!Internet Banking

! Has a very robust internet banking platform!Mobile Banking

! Basic functions for individual needs are available!Phone Banking

! A fairly mature phone banking


Leading Private Sector Bank

HDFC Bank


HDFC Bank


!Retail

!NRI

!Premier

● Business!SME

!Wholesale

!Agriculture


HDFC Bank! Segmentation● Personal Banking

!Savings Account! With different features for different wealth segments, residential

status & rural/urban.! Special focus on certain groups like women, senior citizen, children,

services personnel! Depending on residential status (NRI – Residents)

!Current Accounts! For Individuals, Professionals, Trader, Retailers! For specific entities like Societies, Trusts, NGO’s etc! For specific industries! Based on sizer of the entity

!Term Deposits! Fixed Deposits / Recurring Deposits


HDFC Bank


!Cards

!Debit Cards!Credit Cards!Prepaid Cards (Travel Cards / Gift Cards)

!Loans

!Home Loan!Vehicle Loan (Car / Bikes / Commercial Vehicle)!Personal Loan!Education Loan! Loan against assets (Fixed Deposit / Jewellery / Listed Security)


HDFC Bank



!Share Trading / Dmat Accounts!Safe Deposit Locker!Safe Custody! Insurance!Mutual Funds!Wealth Management Advisory


HDFC Bank


!Current Accounts!Based on size & volume of business!Based on Industry!Based on level of service required

!Treasury Services!Forex!Derivatives!Money market services

!Cards!Credit Cards!Prepaid Cards


HDFC Bank


!Trade Services

!Bank Guarantee! Letters of Credit!Bill Collection!Forex & Hedging


!Custodial Services!Advisory Services!Trusteeship Services!Debt / Equity Solutions


HDFC Bank


!Funding!Term Loans!Shipment Credit!Working Capital Finance!Structured Finance – for large customers

● Customer Segmentation!Start-ups



!Turnover > 250 Crores


HDFC Bank! Distribution & Service Chanels● Assisted Banking

!Though a wide network of branches

!Relationship Managers for premium accounts.

● Self-Banking!Though a wide network of ATM’s

● Remote Banking! Internet Banking

! Has a very robust internet banking platform!Mobile Banking

! Basic functions for individual needs are available!Phone Banking

! A fairly mature phone banking!Online Chat

! Using Facebook Messengers


Young and Aggressive Private Sector Bank

Kotak Mahindra Bank


Kotak Mahindra Bank


!Retail

!NRI

!Priority

● Business!Business Account (various type of current accounts)

!Working Capital Finance

!Term Loans

!Trade Services


Kotak Mahindra Bank

!Segmentation● Corporate

!Trade Finance

!Payment & Collection

!Escrow

!Forex

●Wealth!Investment Management

!Wealth Structuring

!Banking Solutions


Kotak Mahindra Bank


!Savings Account

!Based primarily on minimum balance !Features differ.!Special focus on certain groups like women, senior citizen, children

!Term Deposits

!Fixed Deposits !Recurring Deposits!Tax Saving Deposits!Senior Citizen Deposits


Kotak Mahindra Bank


!Cards

!Debit Cards!Credit Cards!Prepaid Cards (Travel Cards / Gift Cards / Online Use)

!Loans

!Home Loan!Vehicle Loan (Car)!Personal Loan!Education Loan! Loan against assets (Fixed Deposit / Listed Security)


Kotak Mahindra Bank



!Dmat Accounts! Insurance (Life / Health / Motor)!Mutual Funds!Wealth Management Advisory


Kotak Mahindra Bank


!Current Accounts

!Based on size & maturity of business!Based on level of service required

!Term Loans

!Agriculture Sector!Property!Construction & Infrastucture!Vehicles


Kotak Mahindra Bank


!Working Capital

! Industry wise segregation

!Trade Services

!Transaction Finance» Bill Discounting / Order Finance

!Non Funded Credit!Export Business! Import Business! International Trade


Kotak Mahindra Bank

!Segmentation● Corporate Banking

!Customised Solutions

! Long Term Finance!Working Capital Finance!Structured Finance

●Wealth Management!Investment Management

!Wealth Structuring

!Banking Solutions

!Personal & Business



Project – FinTech – FT001 – December 2017S. P. Jain

Comparison of Private Sector Banks

44

Poneet Gupta | Financial Technologies @ S P Jain School of Global Management | December 2017

Indian Banking Scenario PRIVATE BANKS : SEGMENTATION & PRODUCTS

Indian Banking Ecosystem Comparison of Private Banks

Customer Segmentation Personal Banking

46

Product Types Axis Bank HDFC Bank Kotak Bank Segment Name Retail Retail Retail

Savings Accounts Saving Account Basic Savings Bank 811 Savings ASAP Instant - 811 Edge EasyAccess Regular Edge Prime Plus - Ace Prime Saving Max Platina Women’s Women's Silk Women’s Senior Privilege Senior Citizens Sanman Future Stars Kids Advantage Junior Pension - - Trust/NGO Institutional - Insurance Agent - - YOUth - - Basic - Classic Small Basic BSBDA Small - Inaam Personal - - PM Jan-Dhan Yojana Farmers Savings - Pension Account Pension Account - - Family Savings Group My Family - - Grand - - Pro - - Nova - - Alpha - Government - Salary Accounts Easy Access Regular Edge Prime Classic Neo Priority Premium Ace Defense Defense Platina Reimbursement - - - Family Salary - Deposits Fixed Deposit Regular Fixed Fixed Deposit Recurring Deposit Recurring Deposit Recurring Deposit Tax Saver 5 Year Tax Saving Tax Saving Deposit Encash 24 Dream Deposit - Fixed Deposit Plus Sweep-in Sweep-in - - Ace Fixed Deposit - - Senior Citizen FD



47


Current Account Prime Regular Neo Normal EZEE Ace Local Max Astra 05 Business Advantage Apex Astra 15 Business Select Supreme Elite Business Classic - Pro Sweeps - Edge Priority Premium - Business Privilege Ultima - Channel One Premium - Club 50 - - Industry Specific Industry Specific Industry Specific Banks Hospitals - Brokers Institutional - Exporters / Importers - Global Trade Large Retailers Trade - Distributors Professional - Societies Merchant Advantage - - Agriculture - - Ecommerce - - Start Ups Startup Cashless Payment Cards Debit Cards Debit Cards Debit Cards Credit Cards Credit Cards Credit Cards Prepaid Cards Prepaid Cards Prepaid Cards Transit Cards - - Forex Card d - - Commercial Cards - - Digital Payments - - Forex Travel Cards d Travel Cards - Single Currency Card Single Currency Card - Multi-currency Card Multi-currency Card - India Travel Card - - Diners Card - - Contactless Card ForexPlus Chip Card - Image Card - - Remittances Remittances - Travelers’ Cheque - - Currency - - Drafts Drafts - - Cheque Collection - - Cash to Master -



48


Loans Home Loan Home Loan Home Loan Personal Loan Personal Loan Personal Loan Vehicle Loans Vehicle Loans Vehicle Loans Security Loans Security Loans Stock Ace Education Loan Education Loans Education Loans Asset Loans Asset Loans Gold Loan - Rural Loans - Investments Mutual Funds Mutual Funds Mutual Funds Dmat Accountc Dmat Accounts Dmat Accounts PPFc PPF - KVP - - 8% Savings Bond 8% Savings Bond - Gold/Silver Coins - Sovereign Gold Bond Share Trading c - 3 in 1 Online Trading Atal Pension Yojna Atal Pension Yojna - IPOSmart IPO Thru ASBA Kotak ASBA NPS NPS NPS - 54EC Bonds - - IINSS - - Sukanya Samriddhi - - - PMS - - QFI Insurance Life Insurance Life Insurance Life Insurance General Insurance General Insurance General Insurance Health Insurance Health Insurance Health Insurance PM Suraksha Bima - PM Suraksha Bima PM Jivan Jyoti Bima - PM Jivan Jyoti Bima Bima Uphar - - Value Added Services Safe Locker - Safe Lockers Safe Custody - -

Segment Name Retail Retail Wealth Private Banking - Direct Equity Investment Mgmt (Wealth Management) - Mutual Funds Wealth Structuring - FIP’s Banking Solutions - Insurance - - Alternate Funds - - Structured Products - - Estate Planning -



49

Product Types Axis Bank HDFC Bank Kotak Bank Segment Name NRI NRI

Accounts NRE Savings Savings - NRI Savings - - NRO Savings - - RFC Savings Returning NRI - NRE Salary Salary - NRI Current Current - - Offshore Accounts - Deposits RFC Term Deposit - - FCNR Deposit Deposits - NRI Term Deposit Fixed Deposit - NRO Rupee - - NRE Rupee - - NRE Recurring - - NRO Recurring - - Loans Home Loan Home Loan - Top-up Loan - - - Securities Loan - Investments Mutual Fund Mutual Fund - Portfolio Investment Portfolio Investment - Gold Coins - - 4 in 1 Investment - - - Offshore Investments - - Equities / Derivatives - Insurance General Insurance Life Insurance - Value Added Services Remittances - - Wire Transfer - - Exchange House - - Tie-ups - - - Payment Services - - Research Reports -



50

Product Types Axis Bank HDFC Bank Kotak Bank Segment Name Rural / Agri Retail Business

Accounts Krishi Savings Kisan Club - Krishi Current Farmers Account - Loans Gold - Crop Loan Contract Farming - Agri Project Warehouse Receipt - - Microfinance - - Asset Finance - Farm Equipment Kisan Credit Card - -

Segment Name Premium Premium - Priority RI SB Account Classic - NRI SB Account Preferred - Imperia - Burgundy RI SB Account - - NRI SB Account - -

c Type of Account considered as Investment product. d Prepaid Cards considered as Forex Offering


Customer Segmentation Business Banking

51

Product Types Axis Bank HDFC Bank Kotak Bank Segment Name Retail SME Business

Current Account Prime [Same as in Retail] [Same as in Retail] Wealth Priority RFC Industry Specific c Tailor Made Salary Accounts Loans [No separate General Segment] Working Capital - Commercial Strategic Business Term Term Business Business Against Assets Property Loan Industry Specific Professional - Commercial Vehicle Commercial Vehicle Healthcare - Contractors - Transporters Transport / Logistics Construction - Dealer Dealer Rural - - Channel Finance - Credit Card Receivable Payment Services [Provided but not Smarthub - Documented] CMS - PayZapp - RTGS - ENet - ECS - Doorstep Banking - Tax Payments - Cashless Payment Cards Business Prepaid - - Business Debit - - - Business Credit -



52


Capital Market Services Axis Infra Index - - Debt Solutions - - Equity Solutions - - MnA’s - - Private Equity - - Advisory Services - - Trusteeship Services - - Depository Services - - E-Depository Services - - Capital Market Funds - - Custodial Services - - E-Broking - - Trade & Forex Imports Import Services Bill Collection Import Collection Direct Import Bills Direct Payment Advance for Import Import Advances Buyer's Credit Buyer's Credit Supplier Credit - Exports Export Services Bill Collection Bill Collection Pre-Shipment Credit Export Advances Post-Shipment Credit - Documentary Credit LC Advising Letter of Credit LC Confirmation - - Bank Guarantee Remittances Inward Inward Outward Outward Online - Hedging Services Forward Contracts Forward Contracts Spot Contracts - Others Domestic Trade Bullion - Trade Advisory - TFConnect - - Residents ODI - FDI - ECB



53


Treasury Services Forex - - Derivatives - - Bullion - - FxConnect - - Money Market - - SGL Facilities - - Retailing of GSec - - Interest Rates - -

Segment Name - Wholesale Corporate Funded Services Working Capital Working Capital Short Term - Bill Discounting - Structured Finance Structured Finance Export Credit - Term Lending Long Term Finance Non Funded Services Letter of Credit - Bank Guarantee - Document Collection - Value Added Services Syndication Services - Forex Desk - RTGS - Money Market Desk - Cash Management Collection & Payments Derivatives Desk - Channel Financing - Employees Trusts - Salary Accounts - Cash Surplus - Reimbursement - Tax Collection - Bankers to Issue - VAT Payment - - Forex Management - Transaction Mgmt - Finance My Business - Finance My Trade - Debt Capital Market - Acquisition Finance



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Internet Banking Supply Chain Mgmt - Payment Gateway - Corporate Banking - Bank’s Bank Tax Payment - Cheques At Par - Cheque Collection - Funds Transfer - Trade Finance - Clearing sub-member - CTS sub-member - ATM sub-member - RTGS sub-member - NEFT sub-member - Aadhar sub-member - Financial Institutions Indialink - Cash Management - Cash Surplus - Tax Payment - Bankers to Issue - Forex Desk - Money Market Desk - Derivative Desk - Custodial Services - Correspondent Bank - Mutual Funds Collection Service - Payment Service - Fund Transfer - Money Market Desk - Debt Capital Market - Employee Trusts - Cash Surplus - Tax Payment - Banker to Issue - Investment Banking Structured Finance - Project Finance - Debt Capital - Finance Advisory -



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Stock Brokers Fund Based - Security Loan - Structured Product - Non Fund Based - Bank Guarantee - Transaction Based - Settlement Activity - Payment Gateway - Supply Chain Mgmt - Cash Management - FNet - Others - Salary Account - DP Account - Custodial Service - Insurance Collection Service - Forex Desk - Money Market Desk - Derivative Desk - Employee Trusts - Custodial Service - Disbursement Service - Trusts SGL Maintenance - RBI Auctions - Government Tax Collection - e-Ticketing - Letter of Credit - Franking - Pension - Fee Collection - Donation Collection -

c See Current Accounts in Personal Segment.

Project – FinTech – FT001 – December 2017

!Comparison of Three Private Sector Banks● Focus on Customer Segmentation● Focus on Project Offering

! Information Sources●www.axisbank.com●www.hdfcbank.com●www.kotak.com●www.rbi.org.in●www.moneyworks4me.com


Indian Banking Ecosystemfintechprofiles.com/FT01/Poneet/FT100-Poneet.pdf · Axis Bank ICICI Bank...

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