In an recent interview our finance minister talked about india’s plan to open up Indian Banking sector for foreign banks and reforming the sector to take advantage of international practices. Though this may sound good news for the Barclays, Citibank’s etc. Its also good news for indians who have higher rate of bank account usage against their other third world counterparts.
With Virtual banks becoming established brand names in the west example ING this brings us to a new chapter of opportunities which may open up in financial sector. Though before we discuss the opportunity lets look at the market available. With increasing penetration of internet connectivity at work place we do see a increase in usage of net banking atleast to query account transaction details or to save cost associated in getting paper statements. With more options available people are now understanding difference between banks and charges imposed. Underlying statement is if bank has fully computerized its operations then most of the charges to be levied can be done away with.
Lets take an example what kind of product an Virtual Bank would offer and how optimal they can operate to reduce cost and offer quality service to customer. One Bank per city. Account sign up via website to reduce paper application processing cost. Zero minimum account keeping fees and higher interest earning savings account. Money deposit facility via inter bank net banking facility only. Tie up with other banks for letting own customers access their accounts via ATM.
All operations supported by 100% contact center operations. Keeping in mind current RBI regulations a cooperative bank can also enhance its operations and deposit base with such initiative.
Target Base : Existing account holders which need a saving account which does offer higher interest rate but charges high transaction fees for accessing the money which acts as a detterant. Second availability of money via any banks ATM will be added advantage as it increases reach .All account view is available via internet,phone banking and ATM.
As indian market has become mature enough to take full advantage of NET BANKING. Such products even if introduced b by existing banks would find takers with right branding and targeting.