Banking on technology

A public sector bank's mobile ATM. - SHASHI ASHIWAL

Having woken up to the fact that offering services tailored to meet customers' specific needs can actually bring in more business, banks today sell financial products.

IN the age of consumerism, the customer is king. And guess who is latching on to this mantra of sales and marketing? The banking sector. Although the sector is part of the service industry, only recently have individual banks woken up to the fact that offering products and services tailored to meet the customers' specific needs can actually bring in more business.

Banks today do much more than lend and borrow money. They sell financial products; pay utility bills; file tax returns; and even get the PAN (Permanent Account Number issued by the Commissioner of Income Tax) card made for their customers.

The new-age private sector banks can be said to be the forerunners in offering such customer-oriented service. Concepts such as anywhere banking, 12-hour banking and transactions through ATMs (automatic teller machines), which were introduced by them, have revolutionised the banking practices in India. Today, many of the routine banking operations, such as cash transactions and checking the statement of account, can be done through ATMs. Telephone or Internet banking is also slowly catching on.

Although late to wake up to customer-centric operations, public sector banks are catching up with their private sector counterparts. Today, State Bank of India and its seven associates in various States, have 5,000-odd ATMs, constituting the largest cash-spewing network in the country. ICICI Bank has 2,025 ATMs, HDFC Bank 1,054 and UTI Bank 1,737.

The ATMs are themselves turning into quasi banks, as they offer value-added services in addition to plain vanilla cash withdrawal and deposit. Services such as mobile recharge facility, utility bill payments, insurance premium payments and payment of donations to temples are growing. Banking holidays are, therefore, no longer to be feared. The convenience of seven-days-a-week, 24-hours-a-day banking has attracted consumers, says Aspy Engineer, Vice-President, Retail Banking, UTI Bank.

A study by the National Council of Applied Economic Research for Visa International Asia Pacific, released earlier this year, says that the number of ATMs in the country has grown from 1,100 in 2000 to 14,000 in 2004. Industry experts estimate that there would be an additional 5,000-6,000 ATMs by the end of the year.

In fact, banks are taking transactions to the doorstep of the customers with mobile ATMs. During the recent monsoon havoc in Mumbai, ICICI Bank provided a mobile ATM van in suburban Kalyan.

Banks are even taking loans to the customers. Recently, Dena Bank adopted a novel way to canvass for its education loans called Dena Vidya Laxmi. A specially designed light commercial vehicle equipped with helpdesks and counsellors visited several colleges. Specialised counters were set up in colleges to enable students to avail themselves of loans.

Another new concept introduced by private sector banks is 12-hour banking. Some public sector banks - Dena Bank, Bank of Baroda and Andhra Bank - have recently begun 8 a.m.-to-8 p.m. banking.

Some of these private and public sectors banks even offer 24-hour banking at their branches located at strategic places like airports. Plastic money has changed the way people look at money. If credit and debit cards have made cash redundant, co-branded cards are changing the customers' spending patterns and lifestyle. The benefits from these cards range from earning frequent flyer miles and free talk time to waiver on fuel surcharge. ICICI Bank has gone a step further: it has localised the cards. For example, it offers Big Bazaar credit cards to customers staying in Parel, a locality in Mumbai, where the bazaar is located in Parel.

HSBC and Trent Limited, a Tata Group company, have launched Star India Bazaar credit card, India's first private label credit card. Holders of these cards will be eligible for exclusive Star India Bazaar discount programmes.

Puneet Chaddha, Senior Vice-President and Head, Cards and Retail Assets, HSBC Bank, says, "Consumers prefer credit cards based on the category in which they spend more. So frequent fliers prefer cards that give them benefits on air travel, car owners prefer credit cards with benefit of fuel purchase, women prefer credit cards offering benefits on supermarket purchases, and so on. Consumers have started holding different cards offering different benefits, so card preference is changing as per the benefits offered by a specific category."

The concept of such niche or co-branded cards are expected to grow, says Murali M. Natrajan, Head-Consumer, Banking, Standard Chartered Bank, India and Nepal. "No two customers are alike and each needs to be treated differently, in a customised manner. The credit card is the first step in the bank's efforts towards customisation."

Most credit cards also offer health and life insurance cover. Many banks have now waived the annual fee on credit cards. While their competitors may dismiss this as a marketing ploy and say it is one way to cover other hidden costs, customers do not stand to lose.

Credit cards can also be used to contribute money to a worthy cause. For this one needs a card that has a tie-up with a non-profit making non-governmental organisation.

State Bank of India has tied up with four such NGOs, the Cancer Patients Aid Association, the National Association for the Blind, SOS Children's Villages of India and the World-Wide Fund for Nature (WWF), India. The SBI Social Card allows cardholders to donate to such NGOs every time they use it. Similarly, Citibank has a tie-up with CRY and WWF.

Banks are on their way to becoming a one-stop shop for selling products such as mutual funds, insurance and RBI bonds and offer service such as payment of utility bills and equity trading. Citibank has a dedicated helpline that offers support services, including home maintenance, purchase of movie or train or air tickets.

Cross-selling also helps banks personalise products for their customers. For instance, banks give loans against insurance, or link deposit schemes to insurance, depending on customer needs, says Paul Ingty, Deputy General Manager, Head of Marketing and Cross Selling, State Bank of India.

Paresh Sukhtankar, Head-Credit and Market Risk, says "The more products we sell, the more we are strengthening our relationship with the customer."

Wealth management or private banking is another new concept which is becoming popular. It includes all financial services (banking, investment, tax management, legal solutions and transmission of wealth to the next generation), from `cradle to grave', according to Kausik Deva, Head of Marketing, private banking, BNP Paribas.

As part of wealth management, ABN Amro even offers advice about art as an investment, says Sutapa Banerjee, Senior Vice-President, Head-Private Banking.

As B. Madhivanan, Joint General Manager, ICICI Bank, says, "It is the age of commoditised business. Give the consumer a product and a reason to use it."