Alternative channels of banking

ALTERNATIVE CHANNELS
Alternative banking, as the name
suggest, is the NEWER
METHOD OF CARRYING ON
BANKING OPERATIONS

1. ATM (AUTOMATIC TELLER MACHINE)
2. POS TERMINAL
3. INTERNET BANKING
4. MOBILE BANKING
5. NEFT
6. RTGS
7. ECS

 Invented in 1960’S by JOHN
SHEPHERD-BARRON.
FIRST USED BY BARCLAYS BANK IN
1967.
First ATM in India was set-up in 1987
by HSBC in Mumbai.

Figure:- The number of ATM’s in India is growing at a brisk pace….

POS is the place where a retail
transaction is completed.
It is the point at which a customer makes
a payment to the merchant in exchange
for goods or services.
The merchant will also normally issue a
receipt for the transaction.

RAPID GROWTH IN NEW ATM & POS TERMINAL DEPLOYMENT

Online banking is an electronic
payment system.
It enables customers to
conduct financial transactions on a
website operated by the banks.
 Online banking is also referred
as Internet banking, e-banking, virtual
banking.

Mobile banking allows customers to
conduct a financial transactions
through a mobile device such as
a mobile phone or tablet.
The earliest mobile banking services
were offered over SMS, a service known
as SMS banking.
The Mobile Banking was introduced in
1999.

IN 5 YEARS, WE COULD SEE A VERY DIFFERENT DIGITLA INDIA- SMART
PHONES TO BECOME PRIMARY BANKING CHANNEL IN 5 YEARS

 It is one of the most prominent electronic
funds transfer systems of India, Started in
November 2005.
NEFT is a facility provided by the bank to
enable customers to transfer funds easily and
securely on a one-to-one basis.
This is a "net" transfer facility which is
executed in hourly batches resulting in a time
lag.

The structure of charges that can be
a) Inward transactions at destination bank branches (for credit
to beneficiary accounts): Free, no charges to be collected from
beneficiaries.
b) Outward transactions at originating bank branches (charges
for the remitter):
For transactions
up to Rs 10,000/- not exceeding 2.50 (+ Service Tax)
above Rs 10,000------ Rs 1 lakh not exceeding 5 (+ Service Tax)
above Rs 1 lakh------ Rs 2 lakhs not exceeding 15 (+ Service
Tax)
above 2 lakhs not exceeding 25 (+ Service Tax)

Real time= continuous settlement.
Gross settlement= settlement of funds
transfer instructions occurs individually.

The structure of charges that can be
a)Inward transactions – Free, no charge to be
levied.
b) Outward transactions
Rs 2 lakhs- Rs 5 lakhs not exceeding Rs 30.00
per txn;
Above Rs 5 lakhs – not exceeding Rs 55.00 per
txn.

ECS is an electronic mode of payment / receipt for
transactions that are repetitive and periodic in nature.
ECS is used by institutions for making bulk payment
of amounts towards distribution of dividend, interest,
salary, pension, etc., or for bulk collection of amounts
towards telephone, electricity, water dues, tax
collections, loan installment repayments, periodic
investments in mutual funds, insurance premium etc.
ECS facilitates bulk transfer of money from one bank
account to many bank accounts or vice versa.

COST PER TRANSACTION
Transaction Mode Cost per Transaction
Branch Rs 55/- (cash txn)
Rs 45/- (transfer txn)
ATM Rs 18/-
Internet Banking Rs 8/- appr.
Mobile Banking Rs0.50/- paise
0
50
100
BRANCH
(CASH TXN)
BRANCH
(TRANSFER
TXN)
ATM INTERNET
BANKING
MOBILE
BANKING
55
45
18
8 0.5
COST PER TRANSACTIONS
AMT. IN RS.

TECHNOLOGY CAN ALSO INCREASE PRODUCTIVITY OF BRANCH
SALES

MASSIVE GROWTH IN DIGITAL TRANACTIONS FOLLOWED BY ATM/CDM-
TOMORROW’S WINNERS IN DEPOSITS WILL NEED TO MASTER DIGITAL TRANSACTIONS

CASH RELATED AND CHEQUE TRANSACTIONS DOMINATE CASA- RAPID PHASE OUT CASH
RELATED AND CHEQUE TRANSACTION WILL HASTEN DIGITAL REVOLUTION

EMERGING PARADIGMS THAT WILL GET STRONGER OVER NEXT 5
YEARS

75% RETAIL CUSTOMERS NOT USING CASH-LESS CHANNELS

LOW ENGAGEMENT AND ACTIVATION OF RETAIL CUSTOMERS ON
DIGITAL CHANNELS

BHARAT VS. INDIA- SEMI URBAN/RURAL % GROWTH FASTER IN
RETAIL/AGRI/MSME

LARGE PUBLIC SECTOR BANKS INVESTING AGGRESIVELY IN
TECHNOLOGY; PRIVATE SECTOR IS CONSOLIDATING

Alternative channels of banking

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