Karthick RajaIIM Tirchy

Executive Summary

• Digital Banking is the future of Banking. Survey results indicate that 18-35 Age groups are more likely to switch to a better bank with respect to digital services.

• The demographics of the Indian populace point to a younger population with 65% below the age of 35.

• ING Direct’s simple approach to banking in Australia is paying rich dividends and it shows through winning awards for the third consecutive year.

• A Ernest & Young Global Survey points out that simplicity is the major factor among respondents to creating new customers as well as increasing customer retention.

• Hence the best strategy for ING Vysya bank would be to focus on customer retention through adoption of the best practices at ING Direct in the short term, while increasing customer base through innovative schemes in Online Banking by providing more E-commerce facilities and targeting the age group of 13-35 through an effective marketing campaign in the long run.

• Unique approaches: Penetrating rural markets, RuPay network, e-commerce tie-ups

Digital Banking vs Branch Banking• Why do customers buy from where they buy?

Digital Banking

24x7 Availability

Online Shopping

Mobile Bill Payment

Instant Fund Transfer

Online Account Management

• Weaknesses - security concerns, site disruption due to technical glitches, site navigation issues & accessibility issues for people from remote areas

Digital Banking vs Branch Banking• Why do customers buy from where they buy?

Branch Banking

ATMs Security Customer Service

Cash Deposits

• Weaknesses - More costlier to carry out transactions when compared to Online banking, Delay in decision making because of limited powers of branches & inconvenience to the customers in terms of travel and costs

Why Digital Banking is the way forward!

of the total people who were surveyed were likely to change their bank, if they found an alternative with better Digital Banking services.

52%

Survey Result: How likely are you to shift to a Bank that offers better Digital Banking Services than your current one ?

of the population is less than 35 years of age in India. If we consider their preferences alone, then65%

62% of those surveyed in the age group of Less than 35 years said they were likely to change their bank if they found one offering better digital services

Road Map to Digital Banking• From the survey it can be understood that

younger people prefer Digital Banking to Branch Banking and vice versa for older people. • The future lies in Digital Banking as the

predicted age for the average Indian in 2020 is 29 years and with 65% of the population lesser than 35 years.• Currently digital banking is an extension to

branch banking. It is set to reverse in the coming years as more people use mobile banking which is the easiest medium of access to digital banking for the rural populace.

Tapping the market

• ING Vysya has a robust and uncluttered web presence (ingvysyabank.com). • The ING Vysya App developed in partnership with Mindtree, has been

downloaded 50,000 times in 2 months. 1

• ING Direct has been voted Australia’s best non-major bank for the third consecutive year. 2

• To effectively leveraging these assets, ING Vysya Bank must grow the numbers in an aggressive campaign by targeting new customers in the age group of 13-35 years.

Savings Account

• To increase enrolment in savings account, The Zing savings account with a personalized debit card offering can be introduced in schools to teenage students. • It can be rolled in 2 phases: Phase-I targeting Metros and Phase-II

targeting Tier 2 cities.• Tie-ups with mobile e-recharge solutions such as Paytm, Freecharge

etc. to provide mobile recharge facility through SMS will increase the rate of enrolment. • The ability to personalize the debit cards will be more valued by

students than other age groups and should be emphasized

Education Loans & Financial Inclusion

• Most banks target students applying for higher educations by directly contacting them on campus with Education loans. • ING Vysya Bank while providing educational loans, can try to bundle

it with a debit card & online banking a/c facility. In the eyes of the customer, it will be perceived as a bonus benefit and not as an expense.• With major competitors such as ICICI & HDFC becoming part of the

RuPay network, ING Vysya should not overlook it. • By joining Jan Dhan Yojana scheme, ING Vysya can increase its rural

penetration.

RuPay NetworkRuPay card is an alternative to Visa & MasterCard developed by National Payments corporation of India

Lesser Processing

Fee

Faster Transactions

No Quarterly Fees

• RuPay doesn’t have international acceptance, but NPCI is working hard to rectify this by partnering with Discover Financial Services and Japan Credit Bureau.

• RuPay doesn’t offer credit card but it is expected to do so by March 2015

Advantages Disadvantages

• ING Vysya can offer RuPay cards in rural areas where international transactions. It can start offering it in the urban market once it’s disadvantages are sorted out

Retaining Customers and Increasing Referrals

• A Global Survey by E&Y (Includes India) found that the most common reason for customers to open/close accounts in the past year was their experience with Banks rather than rates/fees and convenience and accessibility. Simplicity of the interactions increased consumer trust in the bank and increased trust leads to loyalty in customers, bringing in referrals.

• In fact 41% of the people were willing to pay more for simpler experience and interactions.

• Improving customer experience is crucial to increasing current a/c & credit card numbers.

Reasons that customers opened or closed accounts in the past 12 months

Term Deposits7 days to 15 days 4.00% 3.50%

16 days to 30 days 5.00% 5.00%

31 days to 60 days 5.50% 6.00%

61 days to 91 days 8.80% 8.25%

92 days to 181 days 8.90% 8.25%

182 days to 364 days

9.00% 8.75%

365 days 9.00 % 8.75%

366 days to 730 days

9.25% 8.75%

731 days to 999 days

9.00 % 8.75%

1000 days 9.25% 8.75%

1001 days to 1096

days9.00% 8.75%

1097 days to < 5 years

9.00% 8.75%

5 years to 10 years 9.00% 8.25%

ING HDFC ING HDFC

Comparison between ING Vysya & HDFC interest rates:

As can be seen, ING Vysya offers superior interest rates when compared to its competitor HDFC.

However to increase numbers, advocacy is needed. Advocacy can only be achieved through trust which increases with simplicity of customer interactions.

Online Partnerships

• The Bank completed a partnership with Indian Railway Catering and Tourism Corporation (IRCTC) for online booking of railway tickets. Such initiatives have enabled the Bank to witness strong growth in online payment transactions.

• In continuation with such initiatives, ING Vysya can partner with E-commerce sites such as Flipkart, Amazon, Snapdeal in product launches. For example ING Vysya can offer a “X”% cashback on the launch of Xiaomi Mi 3.

• In addition to Text Recharge services, ING Vysya can increase its customer base by bringing in Online recharge of DTH, Electricity bills,etc.

• Partnership with travel sites such as RedBus and GoIbibo in terms of cashback offers such that it can be redeemed only if they use the same card in the same website can increase customer retention as well as customer base.

References

• References is included in the notes for each slide.• Survey Report can be accessed at

https://huntforlions.typeform.com/report/gSzY6K/oKde• Raw Survey data is attached to the email. • (Karthick Raja_First Year_IIMTrichy.xlsx)