Tuesday, September 25, 2012


When I was about 6 years old I used to travel to the bank with my father. I use to be one of the events for my small life that point of time. Going to the bank and the ambience of the bank system was an of great experience to my life. Waiting at the counter for withdrawal of money use to help me skip hours from my study schedule since it use to take more time to withdraw money. The Pension day use to be hectic for the banks since they have to deal with so many papers of pension withdrawal forms.

Today the same banking system has changed more than any one dreamt about it. Technology has worked as an accelerator for turning around the entire banking system process. Now we get scared to hear that we will have to visit bank branches for any work. Passbook has been replaced with soft copy of statements. Free Services have now turned into paid services and moreover banks have become small in structure size.

Internet has replaced the business operation module of the banking system. The banking system adopted technology with the prime focus of reducing the crowd arriving at the banks door. With the growing new generation adoption of internet and other technology helped banking system to introduce internet banking which reduced their cost of operation as well as reduced their fixed cost of operating too. Earlier banks required huge space for running their operations and managing the crowd at their door step.

With internet banking physical office got replaced with virtual office which reduced the fixed cost part of the banking system. Introduction of internet banking further reduced the stationery cost of the banks primarily in the form of papers. But more than cost savings banks went ahead with expansion of their business models which has increased the banking network penetration. By saving cost on paper and rent banks invested heavily on product innovation married with marketing. Earlier banks never used to do extensive marketing of its products but with technology innovation they came up roaring up products marketing which mainly focused on 3rd party products. Today banks are offering services married with products. Technology has increased the efficiency levels of the banking system in terms of internal data management and better customer efficiency.


• Straight-through processing.

• Transformation of service channels.

• Collaborative channel management strategy.

• Branchless banking for financial inclusion.

• Business correspondents.


• Enterprise risk management.

• Real-time executive dashboards.

• Real-time security management.

• Risk-based authentication.


• Customer analytics.

• Efficient customer data management.

Today banks are more able to design products according to the customer usage simply by grilling hard the data management system. The design the credit card limits according to the usage through efficient data management. ATM has becoming banking withdrawal centre for all of us. Today we have to wait for few minutes to get the money in hand. Mobile banking has also increased and reduced efficiency and cost respectively. Banks are now promoting mobile apps demonstrating their easy process of services.

Now I find the competition among various banks stands at efficient process of internet banking with less cumbersome process. Designing of easy process of apps is the new innovation being derived by the banks through which further business growth in acquisition of new clients. Indian banks are finding more business growth through innovation of apps and banking software even at the back end of the system which will help them to get on to the nerves of the consumers.

Trends in innovation in products and services offered:

• Savings Accounts with Auto Sweep Facility

• Smart Cards

• Virtual Bank

• Electronic Data Interchange (EDI)

• Image Processing

• Business intelligence and customer relationship management applications

• Optimizing Customer Reach

• Innovation in Delivery Channels

The recent foray of the Indian banking system towards mobile banking is the biggest proof of the growing hunger of increasing the banking network in India. India has 700 million+ mobile subscribers, but only 240 million individuals with bank accounts, 20 million credit cards, 88,000 bank branches and 70,000 ATMs. Of the households without a bank account, 42% have at least one mobile phone. This is just a snapshot into the penetration that mobile has achieved in a relatively small period of time.

Transferring of money has increased over the past couple of years which gives immense opportunity for Private Equity segment to do investments in Technology. Mobile banking in India is set to generate a fee-based income of INR202.5 billion (approx. US$4.5 billion) over the next five years, mainly driven by lower transaction costs, favorable regulatory environment and the UID project. By 2015, US$350 billion in payment and banking transactions could flow through mobile phones, compared with about US$235 billion of total credit-and debit-card transactions today. As mobile-money initiatives take shape, the projected fee income in India from mobile payment and banking transactions could exceed US$4.5 billion by 2015.

The above data is well clear to make one understand that Private Equity will find substantial growth in investments from the this gen next banking business models. The success of MPesa in Kenya has provided an appetite for a host of global players whose entry into the Indian market is only a matter of time. In other words it has opened up the gates for more investments to come and build the business growth opportunities.

NPCI, encouraged by the launch of IMPS for individual-to-individual money transfers, is all set to foray into the field of merchant payments. RBI has already permitted the payments institution to go ahead with merchant payments and NPCI is all set to start the operation with 7 banks. A question might come up that what type of revenue growth one Private Equity investor will get from this segment in coming days. Well electronic payments from below 5% of the total value in 2005 went up to 88% in FY10, largely due to the electronification of business-to-business payments. Now, one can easily make the calculation of ROI being generated through this industry. At the same time Indian banking space is yet to penetrate into India as compared to the developed nations. In simple words we are still far behind. More penetration will lead to more development and use of these services which results to stupendous growth for the investments.

Banks should come up with a model for educating the knowledge level of the consumers so that they could link the innovation at their level with the consumers. This will further translate to generate more consumers particularly those who never used Banking system. Technology alone has given growth mainly from Urban India but the rural India still remains to be untapped zone


Miss selling the concept which cannot be eradicated form the financial market. Fulfillment of targets and stupendous pay packages married with death of ethics and business principles are the ways to grow the business and AUM of a financial market. When SEBI introduced the NIL Entry Load structure it was acclaimed that the step was taken to eliminate the miss selling concept and I remember very well that many financial papers were favoring the same implementation of the law. After 3 years we find that miss selling did not get stopped but got new modified miss sellers in the financial market who are one of the biggest resource holder as well as misuse.

Banks are the new leaders in miss selling of financial products. Even after IRDA reduced and capped the limits of commission for insurance products, volume based miss selling is being practiced judiciously. There are numerous cases where Banks are cheating the investors with an brave heart and even in majority of the cases we find that banks are exploiting the trust of the account holders. Miss- representation, powerful fake sales pitch and power packed ditching of trust of the bank account holders are being practiced by the banking staff. Well all are in the game of Targets which have been taken by the banks to earn some quick bucks followed with hefty perquisites from the various AMC and Insurance companies.


Banks are judiciously converting the funds from Fixed Deposit to ULIP, Traditional insurance product and Mutual Funds. Well one might deny all the above statement and only exclusively for them I have some facts to provide them from some genuine sources.

As per the data from AMFI as on July 2012 Commission income from sales of mutual funds have gone up considerably which comprised of top 10 players among which 8 Banks are the leaders. From the Insurance perspective Banc assurance model of the banks holds and average rate of contribution of 50% towards the insurance Industry. If one of my readers is bankers then they will feel proud about the stupendous growth being achieved by them in the financial market. But all these numbers are at the cost of the miss selling.RBI has been complaining that bank’s deposits are declining but we find they same decline is being pocketed into Mutual Fund and Insurance.


Low penetration of Mutual Funds, insurance and financial inclusion are the few jargons well used by the Indian banking system to miss sell the products. Banks holds an very important role in the Indian economy and it has strong trust among the people. Banks are being taken as the safest option for parking hard earned money. Banks are now the leaders for breach of the trust built over the last 66 years of Indian independence. But why banks are converting the Fixed Deposits into Mutual Funds and Insurance. A Fixed Deposit gives earnings of 0.25% where as insurance gives 10%-15% where as mutual funds give 0.75 to even 4% (Hybrid Funds). Banks gives great illustrative presentation about the gains one can achieve through investments in ULIP compared to Fixed Deposit. RBI can easily crack the numbers of the banks to find the third party product sales volume corresponding to the growth in Fixed Deposit.

Banks are Not Financial Planners

Why the banks are being converted into a financial solution provider when they don’t know about the wealth management or financial planning. Banks cannot provide financial planning such type of solutions which an IFA or a financial planner can provide. Banks are just now turning to be street hawkers who simply dupe the consumer for their product sales. We knew that there were couples of banks who use to take advantage of the financial jargons and lack of proper disclosure to consumer earn quick money. Bankers are asking their sales force in many banks to forget financial planning and just focus on revenue planning. Individuals seeking financial advice about what to do when they get married, or how to plan for when they retire, or what to do if they want to start up a college fund for their children, will go to a financial advisor in order to get his/her assessment of their current financial position and recommendations for the best possible way to plan for the future.

Perhaps the most important thing a financial advisor can do - the thing that is hardest for an advisor to learn in any school - is condense and communicate their vast knowledge of finance and investment planning into layman's terms for the everyday fellow with a wife and kids. Since they do not work as often with cutthroat business types, it is important for financial advisors to be charming and eloquent so that everyday individuals trust them with their money. After all, many financial advisors are self-employed and make their connections by good word of mouth, so being well liked and well spoken is a must.

Banks have mostly targeted the ones within the age bracket of 45 to 60 since they have large corpus of savings and retirement benefits which is being used the bankers to dupe them and sale due investments. Children’s plans are the most lucrative product being used by the banks to sale to the consumers.


I know that there are many new join’s into the banking space coming from closed distribution houses getting job into the banking space that are using various strategies well proven in their business practices into the banking practices. In West Bengal/Delhi/Bangalore/Hyderabad, one of the leading broking houses has winded up its various branches and many of the employees have taken job in various banks where duping of consumers is the main experience required for entry into the banking jobs. This is the story of every place in India. Distribution houses are closing up their business and the same man power is being absorbed into private banks.

Banks have wide resources in their hands through the KYC documents. KYC documents helps banks to crack on the investor wealth status which further helps them to decide category of product they will pitch. This categorization helps the banks to design the miss representation and lucrative sales pitch for miss selling products. Hence the strategy of banks to miss sell products is very much pre defined. Based upon the resources of the KYC, banks gives personal call to consumers to present the lucrative sales presentation. Well these are the common bets by banks to catch the clients under the trap of banks false presentation.

I welcome all my reader particularly the bankers who reading my article to express their severe strictures for this article.

Sunday, September 16, 2012


India is sold in the hands of US and European economy. This is the new slogan which might be used across the nation from Monday 17th September 2012 onwards. Every political party will come up with various types of activities like Traffic Jam, and Violence Activities in order to protest against the reform which has been declared on last Friday by the Indian Government.

Much of the debate is concentrated towards the FDI in retail business. The topic has been described as a most sensational topic from the time the concept was printed on an paper. Various states at the same time have welcomed this move like Assam.

But the most astonishing thing is these that will FDI eradicate the retail business or will eradicate the political based middle man engaged in the process of this business.

Farmers will be derived from their rights is the most common verdict being spread across the country right from the time the concept of FDI in retail came into papers. Well those who are saying that farmers suicide cases are increasing and government is not doing anything to save the lives of the farmers for them FDI in retail is the best policy action being provided. Moreover till date Indian farmers were struggling to make a living. Over the past year with 18 of the 28 states reported more suicides among the farmers. The farmer suicide graph has been steadily rising. According to the National Crime Records Bureau (NCRB) data from 2009, more than 216, 000 farmers have killed themselves since 1997. Add the figures for 1995, 1996 and 2010 and the total crosses 250,000. That is, two farmers a day for the past 15 years. Well where are those political parties who have been crying today protesting against the FDI in retail.

Now please don’t pass on the blame of the suicides on the UPA government. The state governments were the prime players behinds such activity. Farmers' demands were not taken into account while preparing the relief package. Neither were civil society organizations, local government bodies, panchayats etc. consulted. All these are being designed at state levels and then it’s being sent to the Central Ministry who governs at that point of time. Hence now one can understands why political parties are crying over the FDI in retails. The relief packages were mostly amalgamations of existing schemes. Apart from the farmer helpline and the direct financial assistance, there was scarcely anything new being offered. Pumping extra funds into additional schemes shows that no new idea was applied to solve a situation where existing measures had obviously failed. In total no one ever heard the voices of the farmers. All these political parties who are against of FDI in retail are due to loss in their business of being an middle man.

Manny of my friends will come up and say that Indian retail is an huge unorganized market. Did anyone tried to make the market organized so that middle man management got eradicated. Keeping an market unorganized gives immense opportunities to the middle man to make stupendous return at the cost of farmers and common people.

Inadequate storage facility is one of the biggest blessings for the farmers along with ruthless low prices being offered to a farmer for his productivity. For example we all know that a piece of a cauliflower cost an farmer Rs.2 whereas the same is being purchased by us at Rs.20 ten times of what the earnings being made by the farmers is being pocketed by the middle man. Those political parties who are saying that farmers will be deprived can any one of them explains till today how much they have already being deprived. When the farmers struggle with lack of irrigation facilities and when they are not getting justified money from their hard works how the political parties who are crying will justify the same. Veteran journalist and The Hindu Rural Affairs editor P. Sainath said that India have been undergoing the largest catastrophe of our independent history — the suicides of nearly a quarter of a million farmers since 1995. We are talking of the largest recorded rate of suicides in human history. In 2007, Agriculture Minister Sharad Pawar, in a written reply in the Rajya Sabha, had said that there were more than 149,000 farmer suicides between 1997 and 2005.

If the FDI comes at least to some extent this middle man management will get eradicated and some real benefits will pass on to the farmers. These political parties who are crying for the same has the biggest vote banks which comprises from these middle man management segment. The political parties made billions of money being a simple middle man management fellow. NREGS and such other type of job opportunities were created since farmers were unable to make proper living from farming. Did any single political party come against of NREGS and other schemes? No they never came since middle man was present their also to make their own livings from such government policies and schemes.. Then what happened with FDI in retail and why is this being objected so highly. The answer is simple middle man will be removed and direct contact will be established with the farmers. Loan waiver was executed by UPA1 to Rs.60000cr (defined in books) and also an equivalent number over the last decade. The government provides this waiver at the cost of tax payer’s money. Hence further waiver will increase the tax slab of the common people. Those political parties who are crying are the ones who live at the cost of common people.

Agriculture employs 60% of the Indian population today, yet it contributes only 20.6% to the GDP. (Isaac, 2005) Agricultural production fell by 12.6% in 2003, one of the sharpest drops in independent India's history. Agricultural growth slowed from 4.69% in 1991 to 2.6% in 1997-1998 and to 1.1% in 2002-2003. (Agricultural Statistics at a Glance, 2006). There is a significant drop in the agriculture productivity and gen-next is moving to other sectors and shifting to urban areas since farming and agriculture does not provide them living. An NSSO2 survey in 2005 found that 66% of all farm households own less than one hectare of land. It also found that 48.6% of all farmer households are in debt.
Where was these political parties at that point of time who are raising voices against FDI in retail. A food price has gone up and we have to cut down on other segments to manage with our daily expenses. As more famers move out from agriculture import bill of India will keep on increasing since we have no productivity at home. Indian political animals need to be educated so that new ideas and policies get understood by them.
Above all these the movies Called Peepli Live gives an better picture of the Indian farmer story. Well now we have to wait to see a movie opposite to Peepli Live.

Saturday, September 15, 2012


Change in Process.
Sales process has changed over the years across the globe across the every market segment. In my recent study I find that not only banking sector which has lead to a strategic change in its business process through online transaction but the same theory has already spread across other industries. Sales and Brand use to move in parallel ways but now with the innovation of technology sales have found a new identity beyond brands. Technology has only accelerated the payment mechanism married with brilliant virtual presentation tactics. The changing digital age is well found within the retail segment of the market.

In the coming decade the more industries adds to the organized market segment we will find more virtual business modules coming up. Innovation is a never ending game hence more brilliant and quality virtual sales process is about to come in coming decades. More importantly the technology innovation in sales process has pushed up the number of unorganized players to shift towards organized market segments. Today the competition is not of getting more number of sales but to get the online segment of commercial business to grow parallel or beyond the traditional mode of sales.

Where we shop now?
Today we have Flipkarft, Yebhi.com, HomeShop18.com and many more has changed the culture of shopping as well as for the companies to have all their products under one platform without having a fixed cost component like a shop where one has to bear rents in all periods. Business process needs to identify the changes in the virtual consumer market and rightly align strategies accordingly. Reading and mapping data days are now about to get over. One needs to have a deep understanding of behaviors of the virtual consumers since consumer change brands according to their easiness. Days are gone when the brand change used to happen due to product prices, now consumers change products and brands which act as a small glitch to them in the process of buying the same.

According to ‘India Online Retail Market Forecast & Opportunities 2016’, India will witness changing shopping trends in the next few years. India is set to become the third largest nation of internet users in the next two years itself. The online retail market in India is expected to grow immensely, given the rising middle class in India, with growing disposable income in hands and lesser availability of time to spend the same. ‘India Online Retail Market Forecast & Opportunities 2016’ discusses the following aspects related to online retail market in India:

- Global Online Retail Market Size & Forecast

- India Online Retail Market Size & Forecast

- Online Retail Market: Segment Wise Forecast

- Distribution Structure & Sales Channel

- Market Trends & Developments

- Competitive Landscape.

Indian Financial markets are yet to explore the M-commerce. Mobile trading options have been opened up but for the payment segment we are still flocking around the internet system. M-commerce has not yet taken up the broking and financial business market. Recently Reliance Mutual fund came up with M-commerce platform for investments in mutual funds. Indian markets over the next 5 years will make a stupendous turn around.

M-Commerce the Game Changer

Innovation is now an integral part of M-commerce. Ecommerce has changed the virtual presentation style buy M-commerce will change the payment process. Smart phone is not a luxury for all of us hence we find consumers prefer easy ways or handy steps of payment. In most of the world particularly in the developed economies that are struggling to meet their inflation and GDP growth are shifting their business in virtual format since cross trade business models are on the verge of collapse since trade practices might be imposed in coming days. The days of PayPal through internet are about fade about since a smart phone has opened up the gates of Mobile payments. PayPal has also changed it business process with its introduction of Pay Pal mobile app which is being now replacing the internet age. Smart phones are coming up with PayPal software so that M-Commerce takes a new giant step towards the consumer market. Its similar like the E commerce, when it came into the system the market of retail took a giant step similarly M-commerce is all set to change the consumer payment system.

Invest in M-commerce
In European economy we find that businesses of leasing properties are being done exclusively through E-commerce and rents are being remitted primarily through M-commerce. Smart phone has changed the business process of M-commerce. Private equity finds the business to be very lucrative in coming decades which has resulted increased demand of M-commerce investments projects. Indian banks needs to spend more resources towards M-commerce. Internet has changed their business process now M-commerce is all set to change the payment process of the banking system. I find the risk management segment of the banking space needs to be stronger since any failure of the system will hit back the Indian banking and retail market. Big giants of the consumer market needs to understand in detail about the various grades of risk and threat which might later on kill their M-commerce business strategies linked with sales and revenues.

Well the market size of online retail industry in India is likely to touch Rs 7,000 crore by 2015 due to increasing internet penetration across the country, according to a survey. Currently, the online retail market stands at Rs 2,000 crore and is growing at an annual rate of 35 per cent according to industry chamber Assocham. Hence a long way is yet too travelled and the journey might just have started.

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