Assignment For CDE

I.
C hann els :
Banking channels refer to the means by which customers access a bank’s products and
services. While it is tempting for a bank to offer many channels, it is a big challenge to
manage all of them due to cost and the fact that a unified view of client interactions
becomes difficult.
Typical channels offered by banks include:
i. Branch Banking
ii. ATMs
iii. Net Banking
iv. Phone Banking
v. Mobile Banking
(i) Branch Banking: This is still the most popular channel. (Note: include this as a
pop-up: the total number of Scheduled Commercial Bank branches in India was
76,518 at end- June 2008 a growth of 5.2 per cent during the year. These
comprised 31,127 rural branches, 17,858 semi-urban branches and 27,533 urban
and metropolitan branches.The geographic distribution of branches, interestingly,
is concentrated in Southern and Eastern India!
Source: RBI report REPORT ON TREND AND PROGRESS OF BANKING IN INDIA 2007-08
However, note that it is also the mo st expen siv e channel for a bank. It involves
large investment in infrastructure and employees. In fact, banks like Citibank in India
charge customers if they use branch banking! It is trying to move customers to more
cost-effective channels for standard transactions which don’t need a face-face
interaction.
Funct ions of a br anc h
The functions of a branch are illustrated below. They can be divided into back-office or
operations, and the front-office or customer interfacing functions. Most large banks
today centralize operations. For example, if you walk into ICICI Bank to open your
account, the branch will just accept the documents and verify them. The actual opening
of the account on the system, generation of debit card, cheque book, etc. all happens in
one centralized processing center. Hence for large banks, operations within each branch
are minimal.
The front office or customer facing functions are those of the Teller, Customer Service
and Sales. Often, as shown, one person can have dual responsibilities: a Teller can also
answer customer queries. A customer service staff can use his interaction time to sell a
bank product.
(Note: What do we mean by a ‘product’ and a ‘service’ in the world of banking? A

standardized set of services with standard fees/rates attached would be called a
product. For example, a savings account is a standard set of services and would be
called a product. A foreign currency transaction or a demand draft for a customer on the
other hand, would be called a service.)
(i i) ATMs
ATMs can be just cash dispensers or evolved facilities offering facilities such as:
• Balance Enquiry
• Statement of Accounts
• Cash Withdrawal
• Cash deposit
• Check deposit
• Check cashing
• Funds transfer
• Bill Payment
• Currency Exchange
• Loan Application
• Investment Advice
• MF, Insurance sales
• Electronic Purse loading
• Ticketing
ATMs communicate with each other through a network. In India today we have a
national-level ATM switch, which inter-connects nearly 35,000 ATMs of banks, across the
country.
© Catalyst Consulting 2009 Page 2

That’s the reason why, even though you may be an Axis Bank employee, you can
withdraw funds from an ATM managed by, say, HSBC. Earlier, such ‘third-party’ ATM
transactions would result in a fee income to the third-party bank (in the example above,
HSBC), charged from the customer. W.e.f 1st April 2009, RBI has made third-party ATM
usage free to the customer.
Here’s a look at the large ATM players:
THE BIG BOYS CLUB
Banks with maximum number of ATMs
Ban k ATM s
State Bank Group 11250
ICICI Bank 4600
Axis Bank 3570
HDFC Bank 3,177*
Canara Bank 2007
*As on December 31, 2008
Source: http://www.business-standard.com/india/storypage.php?autono=353044
(i ii) Internet Banki ng

Internet Banking refers to the ability to access banking services/products via the
internet. It is one of the cheapest channels for a bank
Typical Internet Banking offerings include:
• Static information about the bank’s offerings, application forms
• Specific account information: Statements, Alerts,
• Ability to change/edit account information
• Stop payments, cheque book requests/other instructions
• Payment transactions to other accounts within and external to the bank
• Bill Payments

(iv ) Mobile Banki ng
Banking using a mobile phone network can use either SMS or WAP technology.
Interactions can be classified as either transactions or enquiries; as also if they are bank
initiated (‘Push’) or Customer initiated (‘Pull’), as shown in the table below.

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I.

Funct ions of a br anc h

(Note: What do we mean by a ‘product’ and a ‘service’ in the world of banking? A

© Catalyst Consulting 2009 Page 2

(i ii) Internet Banki ng

© Catalyst Consulting 2009 Page 3

© Catalyst Consulting 2009 Page 4

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