Module-B: Retail Banking

Unit 2: Customer Requirement

 Customer Requirement

Retail Banking
 Retail Products.

 Approval Process for Retail Loans.

 Due Diligence (Verification of KYC with relevant documents, Pan Number, House visit,
etc.,
 Customer Requirement
Quantum of loan:

 Quantum of loan is either related to the product or to the income of the individual.
 The quantum is expressed as 12th times the monthly income in the case of loans
for personal expenses.
 4 times the annual income in the case of vehicles,
 48 to 60 times the monthly income for the purpose of housing etc.
 Margin may vary from 15% to 30% of the value of an asset, depending on the type of
loan/scheme.
 Customer Requirement
Payment Period:

 The repayment period may vary from 3yrs to 30 Years depending on the purpose.
 Loans for personal expenses are to be repaid within 3 years.
 Auto loans are given for the duration of 5 to 7 years.
 Housing loans for 5 to 30 years.
 Customer Requirement

Customer Requirements:

 Understand the customer segment first before their requirements.

 Broadly customers are segmented based on their income levels as their need pyramid
will vary with the rise in their income levels.
 Banks develop and market their products based on this segmentation and target the
relevant segment for maximum conversion of business.
 Customer Requirement
The basic segmentation of customers based on their income levels is presented below:

Income Levels (₹ Lakhs) Customer Segment

2-10 Mass Market
10-50 Mass Affluent
50-400 Super Affluent
400-4,000 HNW
4000-120,000 Super HNW
Above 120,000 Ultra HNW
 Customer Requirement
The fundamental assumptions about customers for building retail banking products and
services are briefly explained as follows:

 Customers are different.

 Needs of the customers are different
 Each customer will have different sets of needs for financial services.
 The need requirements of customers for financial services will be unique.
 Customer Requirement
The fundamental assumptions about customers for building retail banking products and
services are briefly explained as follows:

 Customers can be broadly grouped together based on their need pyramids.

 Customers can be grouped together based on their income, age, geography, profession,
employment, vocation gender, and family size.
 Product and services can be developed for a single or a combination of the above
elements to satisfy most of the needs.
 Products and services can be structured on a niche basis within one or any of the above
elements.
 Customer Requirement

 Maslow has defined five needs of individuals in their various stages of life.
 The needs start from the basic requirements and move up the value chain during the life
stage progression.
 Obviously, the need ladder will also move up with the change in the life stage of the
customers.
 If banks structure products and services to match the different stages in the need
spectrum, banks will achieve the twin objectives of customer satisfaction and business
conversion.
 Customer Requirement

Maslow's Theory and Customer Requirements

 Customer Requirement
Let us demonstrate the above concept with the following:
Need Level Matching Banking Investment and Insurance Products

Core Savings Accounts

Physiological Needs Personal Accident Cover
Housing Loans

Security/Safety Needs Recurring, Fixed Deposit Products.

 Customer Requirement
Let us demonstrate the above concept with the following:
Need Level Matching Banking Investment and Insurance Products
Endowment Products with low premium, long tenor
and high maturity amounts.
Life Insurance Products
Tax Planning Banking, Insurance and Mutual Fund
Products
 Customer Requirement
Demonstrate the above concept with the following:

Need Level Matching Banking Investment and Insurance Products

Social Needs Consumer Loans
Personal Loans
Home Loans
Car Loans
Loans for Professional Development for Doctors,
Engineers, Lawyers, Chartered Accountants,
Management Consultants, Architects etc.
 Customer Requirement
Demonstrate the above concept with the following:

Need Level Matching Banking Investment and Insurance Products

Social Needs Insurance Cover tagged to above loans.
Retail Gold Coins.
Investment Products like Mutual Fund Schemes.
Systematic Investment Plans of Mutual Funds.
Unit Linked Insurance Products.
 Customer Requirement
Let us demonstrate the above concept with the following:
Need Level Matching Banking Investment and Insurance Products
Special Term Deposit Products.
Term Insurance Products.
Esteem Needs
Second Housing Loans/ Home Improvement/ Home
Decor Loans.
Pensioners Loans
Retirement Solutions in Banking & Pension Plans in
Self Actualization Needs
Insurance
Senior Citizens Term Deposit Products
 Customer Requirement
Customer Requirements about Service Quality:

Service quality is what customers expect from Banks and has different dimensions.
 Customer Requirement
Demat refers to ……

a) Process of converting physical shares (share certificates) into an electronic form

b) Once converted, the shares are held in a Demat account
c) The shares will become interchangeable, identical and fungible assets after demat
d) All the above
 Customer Requirement
CIR refers to

a) Credit Investigation Report

b) Credit Information Report
c) Credit Investment Report
d) None
 Customer Requirement
Credit risk and delinquency rates are more in respect of the following loans

a) Auto Loans
b) Housing loans
c) Personal loans
d) None
 Customer Requirement
Arrange the following stages of a CRM in the order in which they come first.

i. Designing suitable products and services to the targeted and segmented customers
ii. Providing the right sales and service processes
iii. Capturing the customer's profile through a technology-enabled model
iv. Offering the products and services to the targeted and segmented customers

a) i, iv, iii, ii
b) i, iii, ii, iv
c) iii, iv, ii, i
d) iii, i, iv, ii
 Customer Requirement
Mr. Raj is from BUNDI Rajasthan working in OBC bank at KARNAL want to purchase a house
at KOTA by taking housing loan under staff HL scheme, Under simple registered mortgage,
the Deed of Mortgage is required to be registered with the ...... sub-Registrar/Registrar.

a) Kota
b) Bundi
c) Karnal
d) Any where
 Customer Requirement

Mortgage-Backed Securitization (MBS) is backed by ……

a) All retail loans

b) Retail loans other than housing loans
c) Mainly housing loans
d) None of the above
 Customer Requirement

Commitments to customers under BCSBI cover ……

a) Savings Accounts
b) Loan Accounts
c) Credit Cards & Mobile Banking
d) All the above
 Customer Requirement
Which of the following is not a benefit and use of Mobile Banking?

a) Easy and most acceptable delivery channel

b) It is a tool to attract of the old generation clients
c) Lesser transaction costs as compared to other channels
d) Cost effective solution as compared to ATMs
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