INTERNATIONAL MANAGEMENT INSTITUTE

Driving use of Alternate Delivery Channels without Customer Disconnect

Summer Internship Project - Proposal
Amanbajaj 4/7/2014

This document includes study of Alternate delivery channels in retail banking being used by Bank of Baroda. Going deeper it includes the competitive environment, marketing dynamics, changing consumer preferences. It also gives a roadmap on how this research will be taken forward and the results be implemented.

Synopsis
Executive Summary
In this study I explore the development of alternate delivery channels in Bank of Barodas retail banking and the forces that are shaping them up. A thorough study of how these delivery channels work and the glitches present currently in the implementation will be done. Going deeper I research on the needs of more urbane, demanding and diverse customer base and identify how to drive the use of these delivery channels without disconnect from the customers. A review of how competitors are creating and adding value for the customers will be done and then a strategic plan will be devised for creating greater value for customers and increasing the customer base for these delivery channels. Finally a review of effectiveness will be conducted thus evaluating the techniques applied.

Contents
Synopsis ........................................................................................................................................................ 1 Executive Summary................................................................................................................................... 1 Alternate delivery channels or Branchless Banking .................................................................................. 3 Alternate delivery channel Technologies.................................................................................................. 3 Dynamics leading to shift towards use of ADCs....................................................................................... 3 Challenges in implementation and adoption of ADCs ............................................................................. 3 Deliverables............................................................................................................................................... 3 Objective ....................................................................................................................................................... 4 Action Plan .................................................................................................................................................... 4 Stage 1 (Identifying the problems and the opportunities) ....................................................................... 4 Stage 2 (Devising a strategy) ..................................................................................................................... 4 Stage 3 (Implementation of the strategy)................................................................................................. 4 Stage 4 (Review)........................................................................................................................................ 4 Schedule ........................................................................................................................................................ 4

Alternate delivery channels or Branchless Banking

Branchless Banking or Use of Alternate Delivery Channels is a distribution channel strategy use to deliver financial services without relying on bank branches. Though it is majorly used as a complementary distribution strategy but can be used as a separate channel strategy that completely forgoes bank branches.

Alternate delivery channel Technologies

1. 2. 3. 4. Online Banking Mobile Banking ( SMS Banking and Banking through mobile apps ) Automatic Teller Machines POS ( Point of sale )

Dynamics leading to shift towards use of ADCs

1. Revenue generation from new branches, opened outside the banks existing footprint is weak and more challenging. 2. Transaction processing is becoming independent of bank branches. 3. Customer demographics are shifting and so are their preferences. ( Increasing Literacy levels, Bulging middle class, higher percentage of younger working population ) 4. Higher adaptability towards technology 5. Increasing consumption mindset of Indian customers 6. Rising criminal cases 7. Stress on spread of internet access by mobile companies

Challenges in implementation and adoption of ADCs

1. 2. 3. 4. 5. 6. Security: Fear towards risk of fraud. Spread: knowledge about the benefits and uses limited to a smaller segment Confidentiality: Apprehensions in making private data public i.e. confidentiality of data. Charges: Misconceptions of charges involved in using these channels. Knowledge: Difficulty faced by certain users in using the interface and technology Personalization: More personalized customer preference driven changes to be incorporated in these channels. 7. Banking relationship: Customers disconnect which would lead to very less customer retention and will be the biggest opportunity loss for the bank.

Deliverables
Identify current target segments for each of the alternate delivery channels. Look for segments to target in future. Devise a strategy/plan for driving the use of these channels.

Implement the plan practically to the extent possible considering timelines and restrictions. Measure the effect of the marketing plan by comparing the results of different time periods.

Objective
To drive the use of alternate delivery channels without having any disconnect with the customers.

Action Plan
Stage 1 (Identifying the problems and the opportunities)
Use secondary data to find major reasons for customers who are not willing to use ADCs Conduct primary research on the people visiting bank branch and also customers of other banks regarding the knowledge, usage and popularity of ADCs. Open a bank account myself in Bank of Baroda and a private bank to compare and identify the mismatch between services and Turnaround Times for private banks and BOB.

Stage 2 (Devising a strategy)

Based on the results of research done in stage 1 devise innovative strategies to promote the use of ADCs.

Stage 3 (Implementation of the strategy)

Implementing the devised strategic plan at one of the bank branches for a period of at least one month.

Stage 4 (Review)
Compare the results of numbers of users registering and using the ADCs after the implementation period with the data from the previous period.

Schedule
Task Secondary and Primary research Strategy Formulation Strategy Implementation Strategy revisiting Time 4-April to 19-April 21-April to 26-April 1-May to 31-May 15-May

Review of Result after implementation

2-Jun to 4-Jun