NOTE: SBINEWS DOES NOT PERMIT CIRCULATION OF ATTACHMENTS. ATTACHMENTS, IF ANY, CIRCULATED WILL BE ONLY BECAUSE OF VIRUSES. PLEASE,THEREFORE, IGNORE ATTACHMENTS IF ANY IN SBINEWS MESSAGES ************************************************************************ Data to delight - A new age bank branch (Aditya Puri -MD, HDFC Bank. Published in The Hindu dated 26-01-04 Clearly, the traditional model of branch banking has undergone a sea change. Branches have moved on from being primarily service-oriented to sales and service outlets, with the focus on cross selling, says Aditya Puri. The new model of branch banking will require frontline employees to be empowered to make preferential offers to customers. THE CUSTOMER walks into the branch to deposit some cash. He finishes his transaction and walks over to the personal banker's desk for an account detail query. Not only does the personal banker resolve the customer's query, but is in a position to cross-sell product and service options which the customer could avail of, at preferential rates, based on his account and transaction history. Welcome to the new-age branch of the modern bank, a one-stop financial supermarket to fulfil all the financial needs of the customer. Clearly, the traditional model of branch banking has undergone a sea change. Branches have moved on from being primarily service-oriented to sales and service outlets, with the focus on cross selling. However, a change in mindset and focus above is not enough. For the new model to succeed, the front-line employees have to be empowered enough to take important decisions and make preferential offers to customers in an instant. This would depend on the quality of information that the personal banker at the branch has at his/her fingertips. It is also necessary that the information be consistent across all branches and other direct access channels like ATMs, PhoneBanking, MobileBanking and NetBanking, throughout the country. Customers today have become more demanding and expect 24-hour access to their accounts at the bank through these various channels. In order to fulfil the requirements of the bank's employees as well as the customer, centralised processing with a data warehouse is a must. At HDFC Bank, the management embarked on this journey when it implemented the data warehousing solution, which enables the managers to have a holistic view of all relationships of the customers, helping the bank understand them and their requirements better. The bank always had the data required to make informed decisions that would help it meet its business objective. Yet collecting and analysing this data was a lengthy and cumbersome process. It was stored in disparate sources and the task of compiling and analysing this took a lot of time. What was required was a system whereby the business teams could easily analyse customer transactions and banking behaviour in several permutations and combinations and make it available to customer-interfacing staff. Data base Thus, the first step was to create a data warehouse that would eliminate the time-consuming hurdle of working with disparate sources. The warehouse pulls information from different transaction systems and customer interface channels, and centralises it in a single database. The bank can now know how many products a particular customer avails of, how frequently he uses the product, the transaction characteristics and his banking behaviour. The bank can also know the profitability of the customer which is critical in offering preferential pricing so that relationships can not only be sustained but ever enhanced. The profitability metrics are used extensively in service differentiation. Certain profitable customers are given "preferred'' status in service deliveries and pricing. The bank can now know which channels the profitable customers use so that it can step up its investment in those channels. In addition, the bank is now in a position to undertake database driven marketing efforts based on the banking behaviour of the customer. If he has used his card in an apparel shop, send him customised mailers incentivising him if he spends more in certain apparel shops or marketing programmes to merchants who facilitate usage of the bank's cards on the bank's terminals. Aid to risk management On the retail risk management front, the warehouse offers immense decision-making capabilities. It provides a single platform wherein all lending activities are grouped together to help the bank understand the customer profile closely for each product. It also helps the credit manager in optimising the risk-reward ratio. It also helps the business in identifying newer segments and cross-sell opportunities so as to expand the business with low risk high reward ratio. The solution on one hand helps provide marketing inputs on product positioning and customer characteristics, while on the other it helps gauge the quality of the bank's appraisal mechanism by providing the behaviour of customers on the bank's books as well as the credit quality of the lending portfolio. By capturing the data on the lending portfolio across branches and products at one place, the data warehouse is able to look at the clientele across a host of parameters, to gather valuable information on: * Factors that influence the business trends and pattern of various products * Factors that contribute to the performance of each product vis-a-vis the others * Customer behaviour * Credit risk of lending portfolio Undoubtedly, going ahead, initiatives like these when implemented centrally, will be key to better customer service and consequent success. To use an analogy, it is like dropping a pebble in still water - a single act but the ripple effect affects the whole surface and beneath, though that remains unseen. Similarly, the data warehouse is one initiative, but the effects are far-reaching and substantial. The ripples enable the bank to understand its customers and their requirements better, empower its branch employees help it make prudent business decisions all leading to higher customer satisfaction. However, it must be emphasised that this is not a quick-fix solution. It is a long process that calls for total connectivity of all branches, all offices, all channels across the bank network. And, most importantly, it calls for the right attitude. Decreasing costs will, in the future, lead to technological parity among major players. Then, the differentiating factor would be how you derive maximum value from available technology so that it best serves both, the bank and the customer. (The author is Managing Director, HDFC Bank) ---------------------------------------------------------------------- Email From ""Rajendra S. 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