UNIVERSITY OF MUMBAI PROJECT ON INNOVATION IN BANKING SECTOR

BACHELOR OF COMMERCE (BANKING & INSURANCE) SEMESTER V (2012-2013)

SUBMITTED BY PAPPU JAISWAL ROLL NO. 18

PROJECT GUIDE Prof. LAKSHMI CHANDRASEKAR IYER

HINDI VIDYA PRACHAR SAMITIS RAMNIRANJAN JHUNJHUNWALA COLLEGE, GHATKOPAR (WEST), MUMBAI-400 086.

INNOVATION IN BANKING SECTOR

BACHELOR OF COMMERCE (BANKING & INSURANCE) SEMESTER V (2012-2013)

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF BACHELOR OF COMMERCE- BANKING & INSURANCE

BY PAPPU JAISWAL ROLL NO: 18

HINDI VIDYA PRACHAR SAMITIS RAMNIRANJAN JHUNJHUNWALA COLLEGE GHATKOPAR (W), MUMBAI-400086.

CERTIFICATE

THIS IS TO CERTIFY THAT Mr. PAPPU JAISWAL OF B.COM. BANKING & INSURANCE SEMESTER V (2012-13) HAS SUCCESSFULLY COMPLETED THE PROJECT ON INNOVATION IN BANKING SECTOR UNDER THE GUIDANCE OF Prof. LAKSHMI CHANDRASEKAR IYER.

PRINCIPAL. (DR. USHA MUKUNDAN)

PROJECT GUIDE/ INTERNAL EXAMINER (Prof. LAKSHMI CHANDRASEKAR IYER)

EXTERNAL EXAMINER

DECLARATION

I, Mr. PAPPU JAISWAL THE STUDENT OF B.COM. BANKING & INSURANCE SEMESTER V (2012-13) HEREBY DECLARES THAT I HAVE COMPLETED THE PROJECT ON INNOVATION IN BANKING SECTOR THE INFORMATION SUBMITTED IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

SIGNATURE OF STUDENT

NAME OF THE STUDENT PAPPU JAISWAL ROLLNO: 18

ACKNOWLEDGEMENT

I would like to express my sincere gratitude to The Almighty for having Showered His immense blessings on me and has enabled me to complete this research work.

I would also like to express my heartfelt gratitude to our principal Dr .USHA MUKUNDAN, who has given me opportunity to conduct this study.

My guide Mrs.LAKSHMI CHANDRASEKAR IYER also deserves sincere thanks that has given me her guidance throughout the project and made it a success.

My parents have been a backbone to me in completing this project and my friends who extended their constant support during my study also deserve heartfelt thanks.

INDEX SR.NO 1 2 3 4 5 6 7 8 9 PARTICULARS Executive Summary. Introduction. Objectives of the project. Innovations in Banking Products. Innovations in Banking Branches. NEFT & RTGS. Innovations in icici Bank. Conclusion. Bibliography. PAGE.NO 1 7-8 9-16 17-26 27-28 29-45 46-51 52-53

Executive Summary
Usually all persons want money for personal and commercial purposes. Banks are the oldest lending institutions in Indian scenario. They are providing all facilities to all citizens for their own purposes by their terms. To survive in this modern market every bank implements so many new innovative ideas, strategies, and advanced technologies. For that they give each and every minute detail about their institution and projects to Public. They are providing ample facilities to satisfy their customers i.e. Net Banking, Mobile Banking, Door to Door facility, Instant facility, Investment facility, Demat facility, Credit Card facility, Loans and Advances, Account facility etc. And such banks get success to create their own image in public and corporate world. This bank always accepts innovative notions in Indian banking scenario like Credit Cards, ATM machines, Risk Management etc. So, as a student business economics I take keen interest in Indian economy and for that banks are the main source of development. So this must be the first choice for me to select this topic. At this stage every person must know about new innovation, technology of procedure new schemes and new ventures.

Innovation in Banking Sector.

Chapter 1.
Introduction:
Usually all persons want money for personal and commercial purposes. Banks are the oldest lending institutions in Indian scenario. They are providing all facilities to all citizens for their own purposes by their terms. To survive in this modern market every bank implements so many new innovative ideas, strategies, and advanced technologies. For that they give each and every minute detail about their institution and projects to Public. They are providing ample facilities to satisfy their customers i.e. Net Banking, Mobile Banking, Door to Door facility, Instant facility, Investment facility, Demat facility, Credit Card facility, Loans and Advances, Account facility etc. And such banks get success to create their own image in public and corporate world. This bank always accepts innovative notions in Indian banking scenario like Credit Cards, ATM machines, Risk Management etc. At this stage every person must know about new innovation, technology of procedure new schemes and new ventures.

During the last 40 years, the banking industry has undergone a series of changes through financial reforms, advancement of communication and information technologies, globalization of financial services and economic development. Those changes should have had a considerable effect on efficiency, productivity change, market structure and performance in the banking industry. There is an established relationship between business strategy, innovation and organizational performance. Innovation which refers to the use of a new product, service or method in business practice immediately subsequent to its discovery, influences economic success and market share in increasingly competitive global markets. In response to new technology-driven global markets, companies have increased their use of advanced
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technologies as well as their innovation efforts. Innovation is associated with competitive advantage in both growing and mature markets. Innovation, unlike most other business practices can change the competitive balance in mature markets. The concept and practice of innovation became closely associated with economic gain and competitive advantage in the 1930s. The increasingly competitive environment in the financial services market has resulted in pressure to develop and utilize alternative delivery channels. The most recent delivery channel to be introduced is electronic or online banking. The term electronic banking is used to describe the provision of information or services by a bank to its customers, via a computer or television. In its simplest form, online banking can mean the provision of information about a bank and its products via a page on the World Wide Web (www). A more developed service is one that provides the customer with the opportunity to gain access to their accounts and execute transactions or buy products online. Commercial banks now are facing extreme challenges in the current competitive environment because the changes and new services became the base of marketing and in order to face those challenges commercial banks started to go towards marketing invocation and creativity which includes marketing invocation and creativity in creating new services, marketing invocation and creativity in delivering bank services to customers and marketing invocation and creativity in promoting those services and delivering those services to customers in the right time and place since time and speed became essential in the world of financial services and depends on innovation in this competition in order to deliver the best products and services in order to achieve competitive advantage and gain customer satisfaction and loyalty.

Chapter 2.
Objectives of the Project:
Because of the following reasons, I prefer this project work to get the knowledge of the banking system. Banking is an essential industry. It is where we often wind up when we are seeking a problem in financial crisis and money related query. Banking is one of the most regulated businesses in the world. Banks remain important source for career opportunities for people. It is vital system for developing economy for the nation. Banks can play a dynamic role in delivery and purchase of consumer durables. Banks always innovate new ideas. Bank is an example of creativity.

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Chapter 3.

Innovation in Banking Products

This chapter contains the different innovations in banking products such as E-Banking, Mobile Banking, Debit Cards, Credit Cards, ATM, etc.

E-Banking
Introduction:
With the trend of globalization all over the world, it is difficult for any nation whether big or small, developed, to remain isolated from what is happening around. The growth of e- commerce and Internet has transformed the world into the global village. Fast development in electronic technology has concerned the computers to take over the bank counters and to convert brick banking into electronic banking. Usage of technology by banks is due to challenge of competition, rising consumer expectations and shrinking margins of banks, which lead to reduction in cost, and enhancement of productivity, efficiency and customer convenience.

Meaning:
E-banking means, Application of electronic technology towards transfer of funds through an electronic terminal, computer or magnetic tape to conduct various transactions like cash receipts, payments, transfer of funds etc.

It is often known as banking on net. It does not involve any physical exchange of money, but its all done electronically, from one account to another, using the Internet. With the advent of e banking, customers are benefited by unlimited accessibility through the
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network of Automated Teller Machines, personal computers or even through mobile phones. Customer can perform various banking transactions such as balance enquires, bill payments, and transaction histories, transfer money between accounts, without having to step to office of the branch.

Features of E-banking:
Anywhere any time banking: Customers can avail banking facility while sitting at their home/office. Globalization of service: E-Banking has a special feature of globalizing banks services all over. Intense competition: E-Commerce is a product of handling intense competition among various banks. Cash less banking: E-Commerce also provides feature of cash less banking as cash is not require in raw form but electronic cash like debit or credit cards may serve the purpose. Promptness: Another feature of E-Commerce is provides promptness in services.

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Process of E-Banking/ procedure of E-Banking:

E-Banking process can be explained with the help of following diagram and explanation as under:

Diagram:

Log on to Website

Verification of Password

Final Approval

Credit Card Request

Processing of Information

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Explanation: To make the use of E-Banking user has to go to the World Wide Web and log on to the website. Next step follows verification of user ID and password by the website server. As soon as password is approved on the server, then processing of information will start on the web. In this step, credit card number will be demanded for online transaction. If all security measures are completed then the transaction is approved accordingly.

Advantages of E-Banking:
Importance of E-Banking can be explained from four aspects:

Advantages

Banks

Customer

Govt.

Merchant Trader

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I.

Benefits to banks:

Reduction in cost: E-Banking is helpful to banks by reducing the cost of various

transactions as compared to traditional cost by way of ATMS Telephone banking.

Global coverage: E-Banking provides global network coverage of banks services i.e.
through the concept of Anywhere Anytime Banking. Good customer relationship: E-Banking helps in attracting and retaining the customer by properly handling their grievances. Reduction in paper work: E-Banking helps in eliminating endless paper based bank statements, spreadsheets, bulky books of accounts, ledger including the use of calculator. Reduction in frauds and misappropriations: Through E-Banking frauds and misappropriations can be reduced as inter branch reconciliation is possible through internet.

II.

Benefits to Customers:

Anytime banking: E-banking provides 24 hours, 365 days services to customers. Anywhere banking: customers can avail any sort of banking services from anywhere around the globe from sitting at anyplace. Prompt services: Customer can avail the services of details regarding their accounts and transactional details instantly.

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 On line purchase: Customer can buy product of bank or invest in any scheme without actually insisting the bank branch but only through online. Saving in time: With the help of E-banking there is no need for bank customers to stand in queue for hours to complete financial transactions.

III.

Benefits to government:

Transparency in transactions: E-Banking provides transparency in transactions i.e. access to information is possible easily. Global market: With the help of E-Banking products of our country will get global market to be popularized properly. Risk of carrying cash: E-Banking provides the facility of cash less banking which helps in growth of economy.

IV.

Benefits to merchant traders:

Promotion of business: With the help of E-Banking business of merchants traders will be promoted because of increased purchasing power of credit holder. Immediate settlement: E-Banking helps settlement, and payment of cash is possible by the customer. Avoids risks: It helps merchants bankers also as there is no risk of handling cash.

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Limitations of E Banking:
Problems of security: Security and privacy aspects are major issue in case of EBanking transaction. Various sites are not properly locked at to ensure weather customers money is safe in cyber world or not. High cost: The infrastructural cost of providing E-Banking facility is very high. The banks not only have to automate front-end services but also back office services, which involve high cost. Lack of awareness: Another great hindrance is lack of awareness because effective and wide media efforts in publishing Internet banking need to be emphasized. Lack of computerization: Lack of computerization and low density of telephone lines is also a bottleneck for online banking. In India, out of 65000 bank branches, only 5000 branches are computerized. Wrong assumption by people: Many people are away from net banking on the assumption that it is more expensive than the traditional method of dealing with bank transactions. They still prefer going to bank to perform transactions.

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Types of E-Banking services: Diagram:

E-Banking Services

ATM EFT Credit Card ECheque Mobile Banking Telephone Banking

Explanation:
1. Automatic Teller Machine (ATM): ATM facility was started in early1990s by foreign banks like HSBC, City bank. ATM is made to work 24Hrs a day. For the purpose of withdrawing cash from ATM machine, plastic currency and debit cards are used.

2. Credit Cards: Credit card is another facility produced by E-Banking. Credit card is a product with the help of which a customer can avail various facilities or buy products/services without making immediate payment and that payment could be made at later stage of time.

3. Mobile Banking: Mobile banking provides customer to access their account on mobile phone screen. Routine banking transactions can be performed by just punching a few buttons on the mobile.

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4. Telephone Banking: Tele banking is another main service provide by e- banking Tele banking is a service where banks get various phone calls during their working hours. It helps the user to transact various transactions while remaining at home.

5. Electronic Fund Transfer (EFT): E-Banking has given a system of electronically transferring funds .i.e. EFT which involves transfer of funds from bank account of one customer to bank account of another customer electronically. This is done through electronic data interchange (EDI).

6. Electronic Cheques: E-cheque is a system, which provides more security and reduction in overall cost. E-cheque facilitates on line payment. It needs no clearance charges. Issue of E-cheque is more familiar in various advanced countries.

Mobile Banking
Introduction:
There are rapid changes in the financial services environment, which has led to increased competition by few players and product innovations. Recent innovations in telecommunications have opened up an additional channel for electronic banking.

Meaning:
Banks have noticed and availed the opportunity that exists between banking and mobile telephony. SMS (short messaging services) and GSM (global system mobile) of mobile can be used for banking transactions. The mobile banking enables the customers to bank anywhere and at any time.

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These wireless devices may give services as hand held PCs. Mobile devices are enabled now days to perform many activities which earlier have been available only as internet services.

Issues relating to Mobile Banking:

Cost saving: SMS offers revenue opportunities for operators by changing SMS into higher value added applications. The service offerings in SMS banking are numerous and highly cost saving. Simple to operate: The success of M- Banking is due to its user-friendly interface and range of services it offers. Market research: Proper understanding of specific market is key in the success of mobile banking. Research on available payment methods, user habits and key players is required to be done. Players will have to be creative to make users perceive it as beneficial.

Services relating to Mobile Banking:

Global system mobile (GSM) is not just about voice communications but also supports wireless personal digital assistant and other devices, just as it supports telephony. SMS tariffs should be lowered in order to capture the markets and to exploits the potential customer for commercial transactions over mobile device. Many services and schemes are being piloted and some are already available.
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Few are mentioned here under: Balance enquiry can be made. Requesting for providing bank statement. Requesting countermanding cheque payments (stop cheque). Cheque book request can be made. Cheque clearance alerts are given to customers. Sending account balances every time one makes a withdrawal, which helps in finding out if someone else, is using your ATM card.

Limitations /problems in M-Banking:

Possibility of error is higher than in internet banking. The data transmission is very slow. M-banking services are risky and not secure trials and pilots are still on World Wide Web to developed enhanced security. M-banking services are not enough versatile. The information knowledge available related to M-Banking is not sufficient. Some nonusers of mobile banking perceive it to be complicated due to lack of guidance available.

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M- Banking is not just a service reserved for international banks but for any financial institution wishing to take it. There is a great opportunity to exploit the combination of fast growing consumer device the mobile phone with the richness of internet protocols that will surpass a similar revolution imitated by pc related banking MBanking has a lot to offer banks and to its customers, but its success depend upon of variety of services, security and user friendly interface its make it easy, cheaper it simple to use.

ATM (Automated Teller Machine)

Introduction:
ATM facility was started in early 1990s by foreign banks like HSBC, city bank. ATM is made to work 24 Hrs a day. For the purpose of withdrawing cash from ATM machine, plastic currency and debit cards are used. The account number and credit limit of customers are magnetically embedded on a strip of the tape on the back of a card. ATM enables user to perform banking transactions by actually interacting with the human teller. This is one of the unattended or unmanned devices usually located on or off the banks premises. Its function is to receive and dispense cash and to handle routine financial transactions. The operation mechanism is that card which is inserted in to the ATM; the terminal reads the tape data to processes, which activates the accounts. According to the instructions, the details are displayed on the screen and by checking a few keys of the keyboard the user can direct the computer to carry out the financial transactions. An Automated Teller Machine (ATM) is a computerized telecommunications device that provides the customers of a financial institution with access to financial
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transactions in a public space without the need for a human clerk or a bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip, that contains a unique card number and some security information, such as an expiration date or CVC. Security is customer is provided by the customer entering a Personal Identification Number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash withdrawals, check their account balances, as well as purchasing mobile cell phone prepaid credit. ATMs are known by various other names including automated banking machine, money machine, bank machine, cash machine, hole-in-the-wall, cash point, etc.

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Working of ATM:
Insertion of Card in to ATM Transmission of Tape data to Processor Activation of Account

Actual Transaction Operation by user

Clicking of Keys of Keyboard

Display of data on screen

ATM will give various options on the screen like: Balance enquiry Mini statement Deposits Cash withdrawals, etc.

Banks have launched the operation of accepting payments for utility services like electricity and telephone bills etc. Banking on the net is only an extension of the ATM and tele banking services.

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Various facilities produced by ATMs: Cash withdrawals Personal identification number (PIN) change On line balance enquiry Transfer of funds between accounts linked to ones card Request for cheque book Request for account statement

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Debit Card
Introduction:
Debit cards combine the functions of ATM cards and checks. When you pay with a debit card, the money is automatically deducted from your checking account. Many banks issue a combined ATM/debit card that looks just like a credit card and can be used in places where credit cards are accepted. But don't be mistaken -- they are not credit cards. The money you spend comes out of your checking account immediately. Debit and check cards, as they have become widespread, have revealed numerous advantages and disadvantages to the consumer and retailer alike.

Advantages are as follows:

A consumer who is not credit worthy and may find it difficult or impossible to obtain a credit card can more easily obtain a debit card, allowing him/her to make plastic transactions. Use of a debit card is limited to the existing funds in the account to which it is linked, thereby preventing the consumer from racking up debt as a result of its use, or being charged interest, late fees, or fees exclusive to credit cards. For most transactions, a check card can be used to avoid check writing altogether. Check cards debit funds from the user's account on the spot, thereby finalizing the transaction at
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the time of purchase, and by passing the requirement to pay a credit card bill at a later date, or to write an insecure check containing the account holder's personal information. Like credit cards, debit cards are accepted by merchants with less identification and scrutiny than personal checks, thereby making transactions quicker and less intrusive. Unlike personal checks, merchants generally do not believe that a payment via a debit card may be later dishonored. Unlike a credit card, which charges higher fees and interest rates when a cash advance is obtained, a debit card may be used to obtain cash from an ATM or a PIN-based transaction at no extra charge, other than a foreign ATM fee.

The Debit card has many disadvantages as opposed to cash or credit:

Some banks are now charging over-limit fees or non-sufficient funds fees based upon preauthorizations, and even attempted but refused transactions by the merchant (some of which may not even be known by the client). Many merchants mistakenly believe that amounts owed can be "taken" from a customer's account after a debit card (or number) has been presented, without agreement as to date, payee name, amount and currency, thus causing penalty fees for overdrafts, over-thelimit, amounts not available causing further rejections or overdrafts, and rejected transactions by some banks. In some unspecified countries, debit cards offer lower levels of security protection than credit cards. Theft of the users PIN using skimming devices can be accomplished much easier with a PIN input than with a signature-based credit transaction. However, theft of users' PIN codes using skimming devices van be equally easily accomplished with a debit transaction PIN input, as with a credit transaction PIN input, and theft using a signaturebased credit transaction is equally easy as theft using a signature-based debit transaction.
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 In many places, laws protect the consumer from fraud a lot less than with a credit card. While the holder of a credit card is legally responsible for only a minimal amount of a fraudulent transaction made with a credit card, which is often waived by the bank, the consumer may be held liable for hundreds of dollars in fraudulent debit transactions. The consumer also has a much shorter time (usually just two days) to report such fraud to the bank in order to be eligible for such a waiver with a debit card, whereas with a credit card, this time may be up to 60 days. A thief who obtains or clones a debit card along with its PIN may be able to clean out the consumer's bank account, and the consumer will have no recourse. When a transaction is made using a credit card, the bank's money is being spent, and therefore, the bank has a vested interest in claiming its money where there is fraud or a dispute. The bank may fight to void the charges of a consumer who is dissatisfied with a purchase, or who has otherwise been treated unfairly by the merchant. But when a debit purchase is made, the consumer spent his/her own money, and the bank has little if any motivation to collect the funds.

Some cards are blocked from making either online or offline transactions, while other cards are enabled for both kinds of transactions.

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Credit Card
Introduction:
A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user). It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810standard.

The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user. A credit card is different from a charge card, where a charge card requires the balance to be paid in full each month. In contrast, credit cards allow the consumers to 'revolve' their balance, at the cost of having interest charged. Most credit cards are issued by local banks or credit unions. Credit cards are issued after an account has been approved by the credit provider, after which cardholders can use it to make purchases at merchants accepting that card. When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates his/her consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a Personal identification number (PIN). Also, many merchants now accept verbal authorizations via telephone and

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electronic authorization using the Internet, known as a 'Card/Cardholder Not Present' (CNP) transaction.

Electronic Verification System

Electronic Verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank .Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom and Ireland commonly known as Chip and PIN, but is more technically an EMV card. Other variations of verification systems are used by e Commerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the card holder. Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any
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charges that he or she thinks are incorrect. Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed if the balance is not paid in full (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts, thus avoiding late payment altogether as long as the cardholder has sufficient funds.

Interest charges
Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid. For example, if a user had a $1,000 transaction and repaid it in full within this grace period, there would be no interest charged. If, however, even $1.00 of the total amount remained unpaid, interest would be charged on the $1,000 from the date of purchase until the payment is received. The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, to encourage balance transfers from cards of other issuers. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue.
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Advantages
Advantages

Customers

Grace Period

Merchants

Benefits to customers:
Because of intense competition in the credit card industry, credit card providers often offer incentives such as frequent flyer points, gift certificates, or cash back (typically up to 1 percent based on total purchases) to try to attract customers to their programs. Low interest credit cards or even 0% interest credit cards are available. The only downside to consumers is that the period of low interest credit cards is limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee.

Grace period:
A credit card's grace period is the time the customer has to pay the balance before interest is charged to the balance. Grace periods vary, but usually range from 20 to 40 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met.
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Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charges incurred depend on the grace period and balance; with most credit cards there is no grace period if there is any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

Benefits to merchants:
For merchants, a credit card transaction is often more secure than other forms of payment, such as checks, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on the credit card payment (except for legitimate disputes, which are discussed below, and can result in charges back to the merchant). In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees and reduce the amount of cash on the premises. Prior to credit cards, each merchant had to evaluate each customer's credit history before extending credit. That task is now performed by the banks which assume the credit risk. For each purchase, the bank charges the merchant a commission (discount fee)for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee.

Parties involved:
Cardholder: The holder of the card used to make a purchase; the consumer. Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case.

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 Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder. Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant. Independent sales organization: Resellers (to merchants) of the services of the acquiring bank. Merchant account: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with. Credit Card association: An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks. Affinity partner: Some institutions lend their names to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams ,universities, charities, professional organizations, and major retailers.

Features:
As well as convenient, accessible credit, credit cards offer consumers an easy way to track expenses, which is necessary for both monitoring personal expenditures and the tracking of work-related expenses for taxation and reimbursement purposes. Credit cards are accepted worldwide, and are available with a large variety of credit limits, repayment arrangement, and other perks (such as rewards schemes in which points earned by purchasing goods with the card can be redeemed for further goods and services or credit card cash back ).
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Some countries, such as the United States, the United Kingdom, and France, limit the amount for which a consumer can be held liable due to fraudulent transactions as a result of a consumer's credit card being lost or stolen.

Problems:
A smart card, combining credit card and debit card properties. The 3 by 5 mm security chip embedded in the card is shown enlarged in the inset. The contact pads on the card enable electronic access to the chip. The low security of the credit card system presents countless opportunities for fraud. This opportunity has created a huge black market in stolen credit card numbers, which are generally used quickly before the cards are reported stolen. The goal of the credit card companies is not to eliminate fraud, but to "reduce it to manageable levels". This implies that high-cost low-return fraud prevention measures will not be used if their cost exceeds the potential gains from fraud reduction. Most internet fraud is done through the use of stolen credit card information which is obtained in many ways, the simplest being copying information from retailers, either online or offline. Despite efforts to improve security for remote purchases using credit cards, systems with security holes are usually the result of poor implementations of card acquisition by merchants. For example, a website that uses SSL to encrypt card numbers from a client may simply email the number from the web server to someone who manually processes the card details at a card terminal. Naturally, anywhere card details become human-readable before being processed at the acquiring bank, a security risk is created.

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Chapter 4:

Innovations in Banking Branches

This chapter includes innovations in banking branches such as Universal banking, offshore banking, retail banking, and wholesale banking.

Universal Banking
Introduction:
Universal banking is bank engaged in diverse kind of banking activities. Under the universal banking system the banks do broad based and comprehensive activities. R.H.Khan committee had recommended the concept of universal banking. As per universal banking financial institutions and banks are allowed to undertake all kinds of activities of banking, development financing and related activities subject to compliance of statutory and other requirements prescribed by RBI, Govt. and related legal acts.

Meaning:
Universal banking is a multipurpose and multi functional financial superstore providing both banking and financial services. A universal bank may undertake multifarious services under one roof, which includes:

a) Receiving money on current or deposit accounts and lending of money for trade, industries, exports, agriculture etc.

b) Mortgage financing; project financing infrastructure lending, asset securitization, leasing, factory etc.

c) Remittance of funds, custodial services, credit/debit cards, collection of cheque/bills etc.

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d) Corporate advisory services, insurance depository service, merchant banking (brokerage, underwriting new debt and equity shares) foreign exchange operations.

Therefore in universal banking under one roof, corporate can get loans and avail, other financial services, while individuals can bank and borrow.

The few objectives of universal banking are as follows: To help in bringing harmony in the role of financial institutions and banks. To offer world-class financial services to the clients by using information technology and cross selling. To reduce per customer cost. To increase per customer revenue. To take benefit of economies of scale. To compete with international banks by expanding business beyond the national boundaries.

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RBI Guidelines:
According to RBI guidelines of April 2001, financial institutions have an option to convert into a bank provided they ensure compliance with following provisions.

Reserve provisions (CRR/SLR): A financial institution will have to comply with CRR and SLR provisions after its conversion into a universal banking.

Permissible activities: In case an activity, which is not permissible for a bank under section 6(1) of B.R.Act 1949, is presently undertaken by financial institution, such activity will have to be stopped after its conversion into a universal banking.

Composition of board: The section 10(A) of B.R. Act 1949 requires that at least 51% of that total number of directors should have special knowledge and experience. This provision has to be complied with constituting the board after transformation from financial institution to a bank.

Benefits of universal banking:

The benefits of universal banking are as follows: Benefits

To Organization s

To Customers

To Shareholders

1. To the organization: When a bank diversifies its activities as a universal bank it can use its existing expertise in one type of financial service in providing the other types. So, it
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entails less cost in performing all the functions by one entity instead of separate specialized bodies. A bank possesses information on the risk characteristics of its clients, which it can use to pursue other activities with the same clients. A bank has an existing network of branches, which can acts as shops for selling products like insurance. This way a big bank can reach the remotest client without having to recourse to an agent. Many financial services are interlinked activities, e.g. insurance and lending. A bank can use its instruments in one activity to exploit the other, e.g. in case of project lending to the same firm which has purchased insurance from the bank. 2. To the customers: Universal banking being a one-stop shops for all varied services, some a lot of transaction costs and increases the speed of economic activity. The wide range of financial products and services offered by universal banks are preferred by the customers than the specialized banks due to comprehensive service provided by these banks.

3. To the shareholders: One manifestation of universal banking is a bank holding stakes in a firm. When a lender has a stake in the firm he is in a better position to monitor the firm to safeguard his interest, which sends a good signal about the financial health the firm to the investors. This situation is beneficial from investors point of view. All these benefits have to be weighed out against the problems.

The main drawbacks are that:

a) Universal banking leads to a loss in economies of specialization.

b) Problem of the bank indulging in too many risky activities. To account for this, appropriate regulation can be devised, which will ultimately benefit all the participants in the market, including the banks themselves.

In spite of these problems, there is a lot of interest expressed by banks and financial institutions in universal banking. In India, too a lot of opportunities are there to be
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exploited. Banks mainly the financial institutions are aware of it, and most of the groups have plans to diversify in big way. Even though there might not be profits forthcoming in the short run due to the switching costs incurred in moving to a new business.

Offshore Banking
Introduction:
Offshore banking refers to the banking business related to borrowing and lending funds abroad and meeting the special needs of international investors. An offshore bank is a bank located outside the resident country of the depositor. These banks are not subject to domestic monetary and fiscal regulations. Moreover offshore banks are also exempted from the regulations, which govern the branches of foreign banks. Rather they are situated in a low tax jurisdiction that provides financial and legal advantages. These advantages may include strong privacy, low or no taxation protection against local political or financial instability.

Services/functions.
The important functions or financial services, which offshore banking units can provide, are: Deposit taking Project financing Syndication of loans Issuing short-term instruments like negotiable certificates to deposits. Carry merchant banking activities in foreign currency denominated bonds.
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 Electronic funds transfer Foreign exchange Letter of credit and trade finance Investment management and investment custody Trustee services Corporate administration

Although every bank does not provide each service. Banks try to polarize between retail services (which are low cost) and private banking (which tries to bring personalized suite of services to the client).

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Benefits/advantages:
The main advantages of offshore banking are:

Advantages

Economic and Political Stability

Tax Benefits

Payment of Higher Interest Rates

Special Banking Services

Development of Remote Areas

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 Economic and political stability: Offshore banking provides economically politically stable jurisdictions especially for those resident in areas where there is a risk of political turmoil, and who fear their assets may be seized or disappear. Although, developed economies with regulated banking system offer same advantages in terms of stability. Payment of higher interest rates: Some of these banks which function at a lower cost base provide higher interest rates than the legal rates prevailing in their home countries due to lack of government intervention and lower overheads. Tax benefits: Generally the interest paid by offshore banks is without tax deduction. This acts as a benefit for individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed. Special banking services: Certain offshore banks offer special banking services not offered elsewhere such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities. Development of remote areas: offshore banking helps even geographically remote nations to generate investment and create growth in their economies.

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Disadvantages:
There are some limitations of offshore banking are as follows:

Disadvantages

Involved in Crime

Encourages Tax Evasion

Difficult Physical Access

Financial Disturbance

Involved in crime: Off shore banking has been found associated with the underground economy and organized crime through money lending. After September 11, 2001 these banks have been accused of helping various organized crime gangs, terrorist groups. Encourages tax evasion: Offshore banks encourage tax evasion by giving people seeking tax evasion an attractive place to deposit their hidden income. Difficult physical access: As offshore banks are often remotely situated therefore the physical access is difficult. Access to information can be difficult, however in a global telecommunication networks this does not seen to be a big problem as information can be set up on line, by phone or by mail. Developing countries may face financial disturbance: sometimes developing countries may face problem due to speed at which money can be transferred in and out of their economy. This hot money coming from offshore accounts can be definitely increase problems of financial and economic disturbance in developing countries.
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Retail Banking
Introduction:
The coming up of middle class with substantial purchasing power in India during the last decade has given rise to its desire to spend according to the changing life style. This has offered the Indian banking system, a ready market, for mobilization and development of their funds. Given the rising purchasing power of this class, there is huge untapped potential for business.

Meaning:
Retail banking is activity devised in past few years and now used extensively. It represents any banking, which is not wholesale based. It includes any business that is conducted through branch network, which is mainly focused towards personal sector. It encompasses all institutions that provide a related range of banking servicesmoney deposit, credit services and some form of financial advice.

Retail banking today is characterized by three areas: Multiple products (deposits, credit cards, insurance, investment) Multiple channels of distribution (call center, branch internet) Multiple customer groups (consumer, small business)

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Need for retail banking:

Economic prosperity and the consequent increase in the purchasing power of consumer. Technological factors also added to the requirement convenience of using credit cards, internet and phone banking anywhere and anytime banking has also flood customers into banking. Decline in interest rates have also contributed to increase retail banking. With the large corporate borrowers having diversified the sources to fund their financial requirements, frequent reduction in cash reserve ratio resulting in pumping in of liquidity, declining bank rate leading to decline in spreads un-attractive yields on government securities etc. have all forced banks to be in search of alternative opportunity to deploy their funds.

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Wholesale Banking
Wholesale banking is the provision of services by banks to the like of large corporate clients, mid-sized companies, real estate developers and investors, international trade finance businesses, institutional customers (such as pension funds and government entities/agencies), and services offered to other banks or other financial institutions. In essence, wholesale banking services usually involve high value transactions.

Wholesale banking contrasts with retail banking, which is the provision of banking services to individuals. (Wholesale finance means financial services, which are conducted between financial services companies and institutions such as banks, insurers, fund managers, and stockbrokers.) Modern wholesale banks are engaged in: finance wholesaling, underwriting, market making, consultancy, mergers and acquisitions, fund management.

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Chapter 5.

NEFT & RTGS

Besides all of the above innovation in banks there are two major innovations such as:
1) RTGS (Real Time Gross Settlement) 2) NEFT (National Electronic Fund Transfer)

What is NEFT and RTGS Difference between NEFT and RTGS online funds transfer?
NEFT and RTGS are the two convenient modes of money transfer between banks in India. RTGS refers to for Real Time Gross Settlement, it is a unique and and on gross basis. NEFT is the abbreviation for National Electronic Funds Transfer which is an online system for transferring funds between financial institutions. This system was introduced in 2005 and is highly improved version of EFT (Electronic Funds Transfer) which was confined to a select centre. The fundamental difference between RTGS and NEFT which can be clearly educed from the above definitions is that RTGS is based on gross settlement and NEFT is a netsettlement process. popular fund

transfer mechanism which enables the transfer of money between two banks on a real time

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 RTGS is the swiftest money transfer system through the banking channel as it is done in real time (push transfer), while NEFT being net based is comparatively slower than RTGS. In RTGS payment transaction will not involve any waiting period which is the true meaning of real time settlement. Under normal circumstances the transactions are settled as soon as they are processed by remitting bank. The transaction is settled on oneone basis without clustering any other transaction making it a Gross settlement. The transaction is considered irrevocable as the money transfer occurs in RBI records. NEFT functions on a deferred net settlement (DNS) basis where transactions are completed in batches at specific times. These settlements takes place at a particular point of time and all transactions are held up till that time. Another significant factor that differentiates RTGS and NEFT is fixing a floor limit. RTGS is an exclusive message based transfer mechanism for an amount over Rs 2 lakhs i.e. the minimum amount to be remitted through RTGS is Rs.2 lakhs. There is no upper ceiling for RTGS transactions. Contrary to that, NEFT is used mainly to transfer funds below Rs 2 lakhs, and this system is most commonly used for smaller value transactions involving smaller sum of money i.e. from an amount as minute as one rupee. However, there is no maximum limit for transfers through NEFT. In RTGS the beneficiary bank credits the beneficiarys account in a span of two hours post the receipt of funds transfer message. RTGS transactions are processed throughout the working hours of the system. Marking its difference yet again NEFT is done on net basis where the bank clubs transactions together and only the net amount is transferred. This settlement usually takes place 7 times a day on weekdays and 3 times on Saturdays. NEFT takes place within the same day if it is within the cut-off time and the next working day if it is beyond the prescribed cut-off time.

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 Majority of the commercial banks have employed RTGS and it is available in over 30472 numbers of branches while the count of banks which have purchased the software required to facilitate NEFT based transaction are over 89 and NEFT facility is available at approximately 32407 branches of banks in India. These branches may be available in remote corner of country also. Hence, RTGS and NEFT though distinct in their functionality and process, are unique and similar in their ultimate service which is now rendering plethora of advantages making the easiest service available in service sector industry across globe.

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Chapter 6.

Innovations in icici bank

Overview:
ICICI Bank (formerly Industrial Credit and Investment Corporation of India). ICICI Limited was established in 1955 by the World Bank, the Government of India and the Indian Industry, for the promotion of industrial development in India by giving project and corporate finance to the industries in India .ICICI Bank has grown from a development bank to a financial conglomerate and has become one of the largest public financial institutions in India. ICICI Bank has financed all the major sectors of the economy, covering 6,848 companies and 16,851 projects. As of March 31, 2000, ICICI had disbursed a total of Rs.1,13,070 crores, since inception.

ICICI Bank Fact Files:

Total assets: Rs.146, 214 crore (December 31, 2004) Network: 530 branches ATMs: Over 1,880 Abroad Subsidiaries: United Kingdom and Canada Abroad branches: Singapore and Bahrain Representative offices: United States, China, United Arab Emirates, and Bangladesh and South Africa

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Introduction:
ICICI Bank (Industrial Credit and Investment Corporation of India) is India's largest private sector bank in market capitalization and second largest overall in terms of assets. Bank has total assets of about USD 100 billion and network of over 1,491 branches, 22 regional offices and 49 regional processing centers, about4, 485 ATMs, and 24million customers. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank has got its equity shares listed on the stock exchanges at Kolkata and Vadodara, Mumbai and the National Stock Exchange of India Limited, and its ADRs on the New York Stock Exchange (NYSE). The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank now has wholly owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK , offshore banking units in Bahrain and, an advisory branch in Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular. ICICI reported a 1.15% rise in net profit to Rs. 1,014.21 crore on a 1.29% increase in total income to Rs. 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The bank's current and savings account (CASA) ratio increased to 30% in 2008 from 25% in 2007.

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BUSINESS OBJECTIVES:

Vision:
To be the leading provider of financial services in India and a major global bank.

Mission:
We will leverage our people, technology, speed and financial capital to be the banker of first choice for our customers by delivering high quality, world-class service. Expand the frontiers of our business globally. Play a proactive role in the full realization of Indias potential. Maintain a healthy financial profile and diversify our earnings across businesses and geographies. Maintain high standards of governance and ethics. Contribute positively to the various countries and markets in which we operate. Create value for our stakeholders.

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Product and Services:

Service and banking of ICICI bank categorized in to personal banking, business banking and NRI banking services.

Personal banking- Deposit in form of saving, recurring, term deposit, senior citizen deposit and children depository account are there for individual customer can also avail of their housing, automobile, farm equipment, business or personal loan scheme. Personal client can also invest in mutual funds and participate in stock trading through ICICI bank. Business banking Business banking services of ICICI Bank are exhaustive. Project financing, deal assessment, and land evaluation are investment banking services offered to corporate clients. Global trade and cash management transaction services facilitate remittances and receipts across important cities. Capital market and custodial services enable business houses to participate in equity trading and transfer across major stock markets of world.

Customer:
ICICI bank targets all segment of customer with various types of products and services. Customers are beneficiary from both sides monetary as well as non monetary. The bank targets to add nearly 50,00,00 customers under the new scheme in the next one year and Plans to offer auto loans through the new online channel in the future. ICICI bank Endeavours to safeguard and ensure the security of the information provided by the customer. ICICI bank uses 128-bit encryption, for the transmission of the information, which is currently the permitted level of encryption in India. When the information provided by the customers is not transmitted through this encryption, the customers system will display an appropriate message ensuring the best level of secrecy for the customer's information.
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The customer would be required to cooperate with ICICI bank in order to ensure the securityof the information, and it is recommended that the customers necessarily choose their passwords carefully such that no unauthorized access is made by a third party. To make the password complex and difficult for others to guess, the customers should use combination of alphabets, numbers and special characters (like! @, #, $ etc.). The customers should undertake not to disclose their password to anyone or keep any written or other record of the password such that a third party could access it. ICICI bank undertakes not to disclose the information provided by the customers to any Person, unless such action is necessary to: Conform to legal requirements or comply with legal process; Protect and defend ICICI bank's or its affiliates rights, interests or property; Enforce the terms and conditions of the products or services; or Act to protect the interests of ICICI bank, its affiliates, or its members, constituents or of other persons.

The main competitor of ICICI bank is S.B.I because this bank is totally taken by government after this bank HDFC bank is the main competitor of ICICI bank.

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Retail Segment of ICICI Lombard General Insurance:

ICICI Lombard's Retail Segment consists of personal insurance products - Health, Home, Motor and Travel insurances.

Health Insurance:
ICICI Lombard is known to be a pioneer in introducing innovative concepts in the Indian health Insurance sector. Be it the floater concept, the critical illness cover or the tax gain policy, all these were first introduced by ICICI Lombard. It was also one of the first general insurance companies in India to have a robust online system in place for buying and renewing policies. The various plans offered by ICICI Lombard include Family- where one policy covers the entire family, Health- where they cover OPD and dental expenses, also help save maximum tax under section 80D and Critical Illness plan - a special policy covering a list of critical illnesses. They also have a basic Personal Accident Plan which covers against accidents. ICICI Lombard health plans also provide coverage against terrorism.

Home Insurance:
Home Insurance is actually one of the most neglected areas in the general insurance category. Simply, because people in general, especially in India, do not give much importance to it. However, in the recent years, due to the increase in awareness, and the great extent of damage caused to property due to natural calamities and terrorism, it has been gaining importance. The Home Insurance Policy offered by ICICI Lombard covers both the structure and the contents of the house. You can opt for either of the covers or both. Unlike other policies, italso covers damage due to terrorist activities, loss of cash, public liability, temporary resettlement and others.

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Motor Insurance:
As Motor Insurance is mandatory in India and is governed by the Motor Tariff Act, the policies offered by various companies are more or less the same. There is not much room for innovation in this category. ICICI Lombard too offers Car InsuranceandTwo Wheeler Insurance. They are known to offer one of the best rates in the market. As the entire buying process is online and is instant, without any submission of documents or other formalities, people generally opt it for convenience.

Travel Insurance:
Travel insurance is one of the most prominent sectors of general insurance, especially overseas travel insurance and student medical insurance. ICICI Lombard offers various options in both the categories. The Overseas Travel Plans and Student Medical Plans offered cover medical and nonmedical expenses, including compensation for flights hijacked and pre existingdiseases in case of emergency. They charge on a per day basis if the travel is more than 7days. ICICI Lombard has tied up with United Health Group to facilitate access to all its clients

NRI Services:
ICICI Lombard has developed insurance policies for Non-resident Indians that can be bought, renewed and tracked online. Parents' Health Insurance covers hospitalization and medical expenses incurred by parents of the policyholder in India. For parents' travelling outside India, ICICI Lombard offers a Parents' Overseas Travel Insurance policy. An NRI can insure his children/ dependents travelling abroad to study, under the Student Medical Insurance plan. Likewise, the Home Insurance and Car Insurance schemes enable an NRI to secure his assets in India.

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Channels:
Channel is the term used for the various approaches a company uses to tap its customers. ICICI Lombard uses a multi channel approach to ensure the sales, service and other allied activities are carried out in the most effective manner.

Retail:
The Retail channel consists of sales executives, sales officers, brokers and agents. They are the one who are in direct contact with the customers and bring the innovative insurance solutions to their doorsteps.

Online:
ICICI Lombard has developed a web-based system to meet all the pre and post-policy transaction. One can get quotes, buy, renew and track their policies online through the website [www.icicilombard.com]. With the do-it-yourself architecture, the online channel is fast, convenient, and easy to understand and operate.

ICICI SECURITIES Indias Leading Investment Bank:

ICICI Securities Limited is Indias leading full service investment bank with a Dominant position in all segments of its operations - Corporate Finance, Fixed Income and Equities. It is a subsidiary of ICICI Bank, the largest private sector bank in India and operates out of Mumbai with offices in New Delhi, Chennai, Kolkata, New York, London and Singapore. Under the able leadership of Mr. S. Mukherji, Managing Director and CEO, ICICI Securities continues to grow as reflected in its performance over the past couple of years. The Corporate Finance team has consistently been among the top players in M&As and fund raising from domestic and international capital markets. The Equities team is a major Indian brokerage house and its research covers over 90% of Sensex market capitalization. The bond research of the Fixed Income team is a benchmark for the industry. The eminent position of ICICI Securities is reflected in the number of awards that our teams
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in the Fixed Income, M&A and Equity Capital Markets win. Our Fixed Income team for the last two years (CY04 and CY05) has been adjudged as the Best Bond House in India by both Asia money and Finance Asia. The Equities team was adjudged as the Best Indian Brokerage House-2003 by Asia money. The Corporate Finance team tops the M&A/Capital markets league tables regularly. Our wholly owned subsidiary, ICICI Brokerage Services Limited (IBSL), buys and sells equities for our institutional clients. ICICI Securities has a U.S. subsidiary, ICICI Securities Inc., which is a member of the National Association of

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CRM IN BANKING: A CASE STUDY OF ICICI BANK:

Globally, regulation and technological improvements are responsible for the vast majority of innovations in banking over the past quarter century. The introduction of personal computers and the proliferation of ATMs in the 1970s captured the bank managements attention. The regulatory changes in the 1980sfuelled much of the industrys growth, which was followed by downsizing as bankers focused on creating a market presence which resulted in significant merger activity. Recent technological improvements are at the root of the bankers focus as well as a target for their significant investment today. In fact, according to recent projections, bankers and their financial service company brethren will spend almost $ 7 billion this year on CRM and increase that by 14 per cent each year for the next several years.

Why CRM? The Changing Environment?

The environment within which financial institutions operate has changed in recent years. It is now one of: Increased competition Growing product commoditization, and Diminishing margins

Banking customers have also changed in recent years. Customers today are more knowledgeable, sophisticated and assertive than ever before. They demand higher levels of customer service, are less loyal, and more inclined to switch to a competitor. Modern customers thus necessitate flexibility in hours of operation, greater convenience, customization, transparency, accessibility and control.
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This has led to a shift in business focus from transactional to relationship marketing.

What are the CRM Strategies in icici bank?

Customers are the lifeblood of the business and the way in which a bank can protect and increase its customer base and ultimately its profitability is to build strong customer relationships through the delivery of superior quality service and to meet customer needs better than the competitors. The CRM approach focuses on maximizing value for the customer and the bank. Research has shown that the key drivers of customer loyalty are: Positive staff attitude Honesty, integrity and reliability Proactive advice and deliver of promise Consistent delivery of superior quality service Simplicity and ease of doing business Good after-sales service A fair effective complaints resolution policy.

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The use of CRM in banking has been essentially done for the following purposes:
Targeting customers It is necessary for banks to identify potential customers for approaching them with suitable offers. The transactional data that is generated through customer interactions and also by taking into account the profile of the customer (such as the lifecycle stage, economic background, family commitments, etc.) needs to be collated into one database to facilitate its proper analysis. For example, a customer interacts with the banks for savings accounts, credit cards, home loans, car loans, demat accounts, etc. the data generated through all these services needs to be integrated to enable effective targeting. After the integration is done, a profitability analysis of the customer needs to be undertaken to acquire an understanding of the profit-worthiness of the customer before targeting him with new offers.

Sales reference material A consolidated information database on all products, pricing, competitor information, sales presentations, proposal templates and marketing collateral should be accessible to all the people concerned. These prove to be very helpful in Sales Force Automation (SFA) wherein the salesperson gets instantaneous access to all relevant material as and when it is required (especially when he/she is in a meeting with a client.)

Consistent interface with customers The communication to customers from various departments like sales, finance, customer support, etc. should be consistent and not contradictory. Therefore, all departments should be privy to a unified view of the customer to enable a consistent approach. Removal of inconsistencies is necessary to ensure that customers are not harassed and frustrated owing to poor internal co-ordination. This is bound to enhance customer satisfaction. The contact centers used to interface with customers should ensure consistency in customer interaction,

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irrespective of the medium used for the interaction such as telephone, Internet, e-mail, fax, etc.

Discuss the benefits of the initiatives taken by ICICI Bank to promote CRM?
Customers usage pattern ICICIs CRM data warehouse integrates data from multiple sources and enables users to find out about the customers various transactions pertaining to savings accounts, credit cards, fixed deposits, etc. The warehouse also gives indications regarding the customers channel usage.

New product development Analysis at ICICI guides product development and marketing campaigns through behavior Explorer, whereby customer profiling can be undertaken by using ad hoc queries. The products thus created take into account the customers needs and desires, enabling the bank to satisfy customers through better personalization and customization of services. Central data management The initial implementation of CRM allowed ICICI to analyze its customer database, which includes information from eight separate operations systems including retail banking, bonds, fixed deposits, retail consumer loans, credit cards, custodial services, online share trading and ATM.

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What are the Mobile Banking Benefits in CRM?

Mobile banking enables the customer to avail of many facilities by just sending an SMS. These facilities, which are currently offered free of cost, are as follows: Locating ATM Locating branch Locating drop box Alert facilities like salary credit, account debit/credit, cheque bounce, etc., and Queries on banking, cards and demat account

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Conclusion
How close are we to the vision of a sound and well-functioning banking system that I outlined. It is fair to say that despite a turbulent year and many challenges, we have made some progress towards this goal. Various innovations of the bank provide benefits to the various business and Industries in many different ways. The innovations of bank are of two types: innovations in products & innovations in branches. Innovations in products includes, E-banking, ATM, debit cards, credit cards & mobile banking whereas innovations in branches includes, universal banking, offshore banking, retail banking, wholesale banking. There is greater awareness now of the need to prepare the banking system for the technical and capital requirements of the emerging prudential regime and a greater focus on core strengths and niche strategies. We have also made some progress in assessing our financial system against international best practices and in benchmarking the future directions of progress. We should strive to move towards realizing our vision of an efficient and sound banking system of international standards with redoubled vigor. Our greatest asset in this endeavor is the fund of technical and scientific human capital formation available in the country. The themes which are being covered in this Conference under structural, operational and governance issues should help in defining the road map for the future.

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Bibliography
www.wikipedia.com www.google.com www.lycos.com www.central bank of india.com www.icicibank.com www.banknetindia.com/banking/boverview.htm Banking Law and Practice by Sharma publications. Banking theory and practices by kalyani publishers. Principles of banking by AIBA (All India banking associations) Money, banking, international trade and public finance by d.m.mithani

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