Home CAIIB Distinction between Retail and Corporate/Wholesale Banking

Distinction between Retail and Corporate/Wholesale Banking

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Distinction between Retail and Corporate / Wholesale Banking
Distinction between Retail and Corporate / Wholesale Banking

The most common strategies are end to end outsourcing,
predominant outsourcing, partial
outsourcing and in-house sourcing.
Regulatory prescriptions are one of the major determinants
of outsourcing or lack of it in these banks.
In some foreign banks, both front and back end operations
are outsourced and, in some banks, the back end operations
are outsourced while the front-end operations like sourcing
of HNI clients are done through captive resources.
The four broad classifications as envisaged by Boston group
were defined based on the technology and customer
interface capabilities of the banks and are:
(i) Horizontally Organised Model
(ii) Vertically Organised Model
(iii) Predominantly Vertically Organised Model
(iv) Predominantly Horizontally Organised Model
Horizontally organised model is a modular structure using
different process models for different
products offering end to end solutions product wise.
Vertically organised model provides functionality across
products with customer data base
orientation and centralised customer data base are used
across products.

Predominantly horizontally organised model is mostly
product oriented with common customer
information for some products. In predominantly vertically
organised model, common information is
available for most of the products.
In most of the PSBs, horizontally organised model is the
standard norm. New private sector banks
generally, follow a vertically organised model.
As a part of overall segmentation game plan of the bank,
branches are classified as Resource Centres,
Profit Centres, Priority Centres and General Centres to have a
clear business focus.
This concept is an effective business model for PSBs with
large network and useful for focused
strategies and already getting implemented in some public
sector banks.
Liability products are offered to retail banking customers
basically under three spaces – Savings
Accounts, Current Accounts and Term Deposit Accounts.
Product differentiation among these
accounts is best achieved by adding different value
propositions. (from a plain vanilla account to a
value enriched account.)
Retail asset financing is a major component of retail banking
model of banks.
Not all PSBs are in the credit card business since it is a big
volume game and needs process
efficiencies.
In the development process, geography is not given
importance but type of branch and centre and
business potential are given due importance.
Banks adopt different process models for retail asset
products.
The common form of process models are Centralised Retail
Assets Processing Centres where all the
retail loans sourced at the branches and marketing team are
processed at a single point and assets
are financed through that centre or processing alone done at
the centre and financing done at the
branches.
Opening of account, issue of Pass Book, Cheque Book, ATM
Card/Debit Card, PIN Mailers for the
Cards are the stages in the tangibilisation
process.(Centralized Processing)
Process time is a major differentiator in the efficacy of retail
banking operations. Process Time is
business sensitive and customer sensitive.
Stand alone pricing for different products and services is the
basic structure.
Regarding Price Structuring quantum and volumes are two
important determinants.
Structuring also involves price bundling where a holistic
pricing is offered across a specific bundling of
products and services so that the total price proposition is
attractive than the stand alone pricing for
the individual products of the bundle.
This structuring is a cross selling strategy to entice the
customer to avail more products so that
profitability per customer is enhanced.
The technology models basically adopted by banks are In
House Models, Outsourced Models,
Partially In House and Partially Outsourced Models.

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