Retail Banking Processes(2)

8/3/2019 Retail Banking Processes(2)

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Temasek Polytechnic School of Informatics & IT

Retail BankingTopic 3: Products & Services


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Learning Objectives

Explain the different categories of retail services,the key processes and systems used by banks tosupport retail banking;

Describe the services provided by banks toconsumers;

Identify the actors for the retail bankingservices;

Describe the processes and systems involved indeposit taking, cheque services and lending;


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Retail Banking

Retail Banking is also known as Personal Banking

Consumer Banking

Relates to financial services provided to individualconsumers and is usually small scale in nature anddriven by the mass market

To provide low-cost banking services in line withcustomers' needs by

offering standardized products and

simplifying sales processes


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Main objective of Retail Banking

4 basic roles of a retail bank:

A method of exchange

A means of preserving and accumulating

wealth A way to increase purchasing power

Assurance of security and safety


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Deposit services include

Savings account Current account

Time deposit account

Banks accepts different types ofdeposits

Coins and notes deposits

Cheque deposits

Electronic fund transfers


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Savings Account provides

safety of savings

easy availability of funds when needed

interest which is expected to cover the value

loss due to inflation


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Current Account

is used forpayments

usually offers low orzero interest rate

Current Account is also known as Chequeing account (British)

Checking account (American)


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Time Deposit Account

is a Savings account that exists for a specified period oftime

It involves depositing funds

for a set period of time usually at a pre-determined rate of interest

The main consideration of the depositor is

the fixed and assured interest rate

Time Deposit Account is also known as

Fixed Deposit Account


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Features /

Charges

Lock-In

period

Fall Below

Fee

Monthly

service

charge

ATM Cheque

Book

Interest Internet /

Phone

Banking

Savings

Account

CurrentAccount

Time

Deposit

Deposit Services In a nutshell


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Payment services

Automated Teller Machines

Cheque writing

Electronic Fund Transfer


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Automated Teller Machines

allows consumers can get cash, perform fund transfers, make billpayments

are less expensive than human tellers

are available 24 hours a day

ATMs allows consumers to perform many other services besides

payment services. These include

Check account balances

Perform cash deposit

Perform cheque deposit


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Cheque Writing

A cheque is a negotiable instrument instructing a financialinstitution to

pay a specific amount of a specific currency

from a specific account held in the makers namewith that institution

Cheque clearing:

1. Next working day if deposited before cut-off time

2. 2 working days if deposited after cut-off time

3. 5-day clearing week

Cheque (British)

Check (American)


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Cheque Writing

Q. When will be a cheque be cleared?

a. Deposited on Tue before 3 pm:

b. Deposited on Thurs after 3 pm:

c. Deposited on Friday after 3 pm:
http://images.google.com.sg/imgres?imgurl=http://www.cheshirehome.org.sg/images/questionmark.jpg&imgrefurl=http://www.cheshirehome.org.sg/&h=66&w=95&sz=4&hl=en&start=58&um=1&usg=__PCVMcY86OvPyPIC47SGnEkkCKZk=&tbnid=XbsmrQbzPgBC5M:&tbnh=56&tbnw=80&prev=/images%3Fq%3Dquestion%2Bmark%26start%3D40%26ndsp%3D20%26um%3D1%26hl%3Den%26cr%3DcountrySG%26sa%3DN


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Cheque Processing

4.Singapore Automated Clearing House

(SACH)

SGD / USD Cheque Clearing System

determines net settlement amount for each bankinitiates fund transfer between banks

sends cheque image and information to PayingBank

1. Payer

2. Payee

3. Presenting Bank

a. credit payees a/c (on hold)

b. capture cheque image andinformation & send to SACH

5. Paying Bank

a. Debit Payersaccount

6. Release hold
http://www.ocbc.com/http://www.dbs.com.sg/http://images.google.com.sg/imgres?imgurl=http://www.bethediff.org/images/Cheque.jpg&imgrefurl=http://www.bethediff.org/movie_harrypotter.html&h=1074&w=2069&sz=259&hl=en&start=4&um=1&usg=__vxBcJlafIjWr_AnNDHwLnNVvDb0=&tbnid=N3RWyjgyfWkl5M:&tbnh=78&tbnw=150&prev=/images%3Fq%3Dcheque%26um%3D1%26hl%3Denhttp://images.google.com.sg/imgres?imgurl=http://www.campusmap.ualberta.ca/img_feature/tory.jpg&imgrefurl=http://www.campusmap.ualberta.ca/index.cfm%3Fcampus%3D1%26sector%3D2%26feature%3D20&h=312&w=300&sz=41&hl=en&start=3&um=1&usg=__-aAWlBivwYb6FWpHnDMCGB3A6tc=&tbnid=tjBted0Fkp2V0M:&tbnh=117&tbnw=113&prev=/images%3Fq%3Dbuilding%26um%3D1%26hl%3Denhttp://images.google.com.sg/imgres?imgurl=http://www.freewebs.com/scooby317/Scooby-Doo-Shaggy%2520clipart%25201.gif&imgrefurl=http://www.spug.sg/forums/showthread.php%3Ft%3D91674&h=254&w=142&sz=5&hl=en&start=7&um=1&usg=__IwJXxyhCnp5i3pJwrNMvDSXPuyU=&tbnid=UXYCeoDnHp_MdM:&tbnh=111&tbnw=62&prev=/images%3Fq%3Dhouse%2Bclipart%26um%3D1%26hl%3Den%26cr%3DcountrySG%26sa%3DX


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Electronic Fund Transfer (EFT)

is thetransfer of funds from one bank account to anotherthat is initiated by electronic means, such as anelectronic terminal, telephone, computer or ATM

Examples EFT payment systems are:

NETS (also known as EFTPOS)

Interbank GIRO (IBG)

Phone Banking

Internet Banking
http://en.wikipedia.org/wiki/Image:EFTPOS_Logo.gif


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Interbank GIRO

(a) Credit Transfer:

Credit a/c
http://www.dbs.com.sg/http://www.singtel.com/http://www.singtel.com/http://www.singtel.com/http://www.singtel.com/http://www.singtel.com/http://images.google.com.sg/imgres?imgurl=http://weblogs.cltv.com/news/local/chicago/Money%2520stacks.jpg&imgrefurl=http://weblogs.cltv.com/news/local/chicago/2008/04/&h=309&w=339&sz=15&hl=en&start=1&usg=__89PMfuW-Ik7_z6G_livIOAR2gYA=&tbnid=8kRIkifjsVYtYM:&tbnh=108&tbnw=119&prev=/images%3Fq%3Dmoney%26gbv%3D2%26hl%3Denhttp://images.google.com.sg/imgres?imgurl=http://images.acclaimimages.com/_gallery/_SM/0093-0705-2913-3719_SM.jpg&imgrefurl=http://www.acclaimimages.com/_gallery/_pages/0093-0705-2913-3719.html&h=300&w=286&sz=40&hl=en&start=2&usg=__NVV-A_DTnnnqe39qpyVPRANInDQ=&tbnid=XYxnuVkCWX47SM:&tbnh=116&tbnw=111&prev=/images%3Fq%3Dcartoon%2Bcomputer%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DXhttp://images.google.com.sg/imgres?imgurl=http://www.topnews.in/files/Asian.Wages.Increase.happy.Employees222.jpg&imgrefurl=http://www.topnews.in/salary-increase-india-estimated-14-4-year-2008-26802&h=334&w=484&sz=23&hl=en&start=11&usg=__csEbLsXdBOuQsoAMMvIh_xgSyB8=&tbnid=H75b4tz2RevcQM:&tbnh=89&tbnw=129&prev=/images%3Fq%3Demployees%26gbv%3D2%26hl%3Den


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Retail BankingLoan Services


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Credit Facilities

Amortizing loans /Overdraft

Secured / unsecuredloans


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Amortizing loans

Periodic payment of principal + interest.

Loan will be fully-paid off at end of loan tenure.

Loan disbursement is one-off.

Eg. David takes up a loan of $300 with $30 interest.

The loan is to be repaid over 3 months. Howmuch is the monthly installment?


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Overdraft

a loan facility where banks allows withdrawals to

exceed deposits in a deposit account borrower draws against a credit line approved

interest is charged on funds utilized

borrower pays interest and principal partiallymonthly

revolving in nature


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Unsecured Loans

Personal Loan

a loan which can be used forany purpose

the amount is usually up to 2 times the monthly salary

Line of Credit

a type of personal loan

borrowings of any amount when the need arises upto an agreed-upon limit

one in which a loan is backed only by the reputationand credit-worthiness of the borrower

MAS NOTICE 635

Annual Income >= $30,000

Credit Line


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Secured Loans

For most loans, the collateral is the purchased item For Housing loan, the collateral is the house For Car loan, the collateral is the car

The collateral will go to the lender if the borrower failsto make the payment

one in which some item of value orcollateral backs the loan in case theborrower defaults on the loan


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Card Services

Credit Card

Store Card

Debit Card

Charge Card

Store Value Card


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Credit Cards

Bank allows customers to make purchases on creditup to a pre-arranged credit limit

Customers make purchases and pay later

Bank allows customers to pay all or part of their billsto the bank each month and finance (rollover) theunpaid balance


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Store Cards

Same features as a creditcard

Tie-up with respectivemerchants to enjoy

discounts / rebates.


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Debit Cards

A debit card allows customersto make payment from theirbank account to the account

of the merchant

Funds are withdrawn directlyfrom the cardholders bankaccount


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Charge Card

A charge card is similar to acredit card, except that the

charges made to it must bepaid-off each month in full

No roll over is allowed


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Stored Value Card

Incorporates amicroprocessor

Use the embedded logic tochange values and recordtransactions

Can be used as electronicpurse/wallet


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Cash Advance

a loan facility wherebanks allow consumers to

obtain (borrow) cashthrough the credit card

account

il S i li Ch l


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Retail Services Delivery Channels

Branches

ATM

EFTPOS

Phone Banking

Internet Banking

Mobile Banking

EFTPOS Electronic Fund Transfer at Point of Sale


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Features /Charges

MortgageLoan

CreditCard

PersonalLoan

Overdraft/ Line of

Credit

Auto Loan Golf ClubMember-

ship Loan

DebitCard

Amortizing

Revolving

Secured

Unsecured

Credit Facilities In a nutshell

Documents

Retail Banking Processes(2)