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Retail Banking Short Notes for CAIIB – Part 2

Retail Banking Short Notes for CAIIB – Part 2

Exams of CAIIB are conducted by IIBF. CAIIB is one of many the flagship courses offered by IIBF, twice a year. It is conducted in the months of June & December every year. This course of CAIIB has a total of 3 subjects out of which 2 are compulsory and Retail Banking is one of the electives available as an option.

While you prepare for CAIIB, going through the retail banking notes for CAIIB helps immensely in the preparations! And Learning Sessions has prepared retail banking CAIIB notes (pdf) so that you can easily get an overview of the CAIIB topics.

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Read Also:- Retail Banking Notes for CAIIB – Part 1

CAIIB Retail Banking (short notes) has been prepared based on the 4 modules which are further divided into several units.

PAPER MODULE
CAIIB Retail Banking Notes
  1. Introduction
  1. Retail Products
  1. Marketing/Selling of retail products, MIS & Accounting
  1. Other Issues Related to Retail Banking

To check out the detailed syllabus of CAIIB- ABM, BFM & other electives click here.

RETAIL BANKING NOTES FOR CAIIB:

MODULE – A: INTRODUCTION

Unit – 3: Applicability of Retail Banking Concepts and Distinction Between Retail and Corporate/Wholesale Banking

OUTSOURCING: End to end outsourcing, partial outsourcing, predominant outsourcing and in-house sourcing are some of the common strategies that are employed in the banking sector.

Regulatory prescriptions are one of the major determinants of outsourcing or lack of it in these banks.

Foreign Banks: In some foreign banks, both front-end & back-end operations are outsourced and, in some others, the back-end operations are outsourced while the front-end operations such as sourcing of HNI clients are done through captive resources.

Outsourcing has been classified into four broad classifications (envisaged by the Boston group). These were defined based on the technology & customer interface capabilities of the banks. The classifications are as follows:

Important Topic:- CAIIB RETAIL BANKING STUDY MATERIAL

  • Horizontally Organised Model
  • Vertically Organised Model
  • Predominantly Vertically Organised Model
  • Predominantly Horizontally Organised Model

Horizontally Organised Model: This is a modular structure that uses different process models for different products and offers product-wise end-to-end solutions.

Vertically Organised Model: This model provides functionality across products with customer database orientation as well as where a centralised customer database is used across the products.

Predominantly horizontally organised model is mostly product-oriented with common customer information for some products. In a Vertically organised model, predominantly, common information is available for most of the products there are.

Most of the Public Sector Banks employs a Horizontally Organised Model as the standard norm while the new private sector banks generally follow a Vertically Organised Model.

Important Topic:- CAIIB 2022 STUDY MATERIAL 

Overall segmentation game plan of the bank, branches are usually classified into the following Centres to have a clear business focus:

  • Resource Centres, 
  • Profit Centres, 
  • Priority Centres and 
  • General Centres.

This concept works effectively as a business model for the Public Sector Banks that have a large network and it is useful for focused strategies and is also getting implemented in some public sector banks.

Important Topic:- IIBF CAIIB RETAIL BANKING SYLLABUS 2022

Liability products: These are offered to retail banking customers under three spaces are – 1. Savings Accounts, 2. Current Accounts and 3. Term Deposit Accounts. Product differentiation: The differentiation among the liability products is best achieved by adding different value propositions in the products. (For example Value from a plain vanilla account to a value enriched account.)

Retail Products: The financing of the Retail Assets forms a major component of the retail banking model of banks and banks adopt different process models for retail asset products.

Not all the Public Sector Banks are in the credit card business because of its big volume game and because it needs process efficiencies.

In the development process: In the process of development, geography is not given importance but branch type & centre and business potential are given due importance.

Centralised Retail Assets Processing Centres: The common form of process models is Centralised Retail Assets Processing Centres where all the retail loans (that are sourced at the branches and marketing team) are processed at a single point and assets are financed through that centre or processing is alone done at the centre and financing is done at the branches.

Read Also:- DIGITAL BANKING IN RETAIL BANKING

Tangibilisation Process: Opening of account, Issue of Cheque Book, ATM Card/Debit Card, Pass Book, PIN Mailers for the Cards are the stages in the process of tangibilisation (Centralized Processing).

Process time is a major differentiator in the efficacy of operations of retail banking. Process Time is both business-sensitive as well as customer sensitive.

Standalone pricing for different products & services forms the basic structure.

Important Determinants: There are 2 determinants of Price Structuring i.e quantum & volume. It (Structuring) also involves price bundling in which holistic pricing is offered across a specific bundling of products & services so that the T. price proposition becomes attractive than the standalone pricing for the individual products in the bundle.

This form of structuring is a cross-selling strategy that is used to entice the customer to avail more products from the banks so that profitability per customer is enhanced.

The technology models that are generally adopted by banks are In-House Models, Outsourced Models, Partially In-House & partially Outsource Models.

MODULE – B: RETAIL PRODUCTS

Unit – 4: Customer Requirements

The basic segmentation of customers is based on the income levels of customers & is presented below:

Income Levels (Rs. Lakhs) Customer Segment
2-10 Mass Market
10-50 Mass Affluent
50-400 Super Affluent
400-4,000 HNW
4000-120,000 Super HNW
120,000+ Ultra HNW

 

MASLOW’S THEORY & CUSTOMER REQUIREMENTS: Maslow has argued that human needs are arranged in a hierarchy, having the basic physiological needs (such as food, water, etc.) at the lowest level, while self-actualisation is placed at the highest level.

Need Level Matching Banking Investment and Insurance Products
Physiological Needs Core Savings Accounts, Personal Accident Cover & Housing Loans
Security/Safety Needs Recurring & Fixed Deposit Products.
Life Insurance Products Endowment Products with a low premium, long tenor & high

maturity amounts, tax planning Banking, Insurance & MF Products

Social Needs Loans such as Consumer, Personal, Home, Car etc; Loans for Professional Development for Doctors, Engineers,

Lawyers, Chartered Accountants, Management Consultants, Architects etc., and Insurance Cover tagged to the above loans.

Retail Gold Coins, Health Policies for self and family, Investment Products like MF Schemes, Systematic Investment Plans of MF & Unit Linked Insurance Products.

Esteem Needs Special Term Deposit Products, Term Insurance Products, Second Housing Loans or Home Improvement or Decor Loans.
Self-actualization Needs Pensioners Loans, Retirement Solutions in Banking & Pension Plans in Insurance & Senior Citizens Term Deposit Products

 

Expectations from the customers about the quality of service of the banks basically depend on the following factors:

  • Tangibility in services: physical side of the service
  • Reliability: Sticking to agreed terms & promises.
  • Responsiveness: willingness to help and extend service promptly.
  • Assurance: It includes Competence, Courtesy, Credibility & Security.
  • Empathy: It stands for understanding what are the service expectations that the customers want from the bank.

Hopefully, CAIIB Retail Banking Short Notes above will help you in your preparations for the subject. We will be publishing the 3rd part of Retail Banking Caiib Notes (pdf) soon. You can follow us for finance-related updates on our Instagram handle!

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You may also be interested in:
CAIIB BFM SYLLABUS PRIORITY BFM Priority
How to Prepare for CAIIB – BFM BFM preparation
CAIIB Advanced Bank Management – IT Short Notes Part 1 Notes-1
CAIIB Advanced Bank Management – IT Short Notes Part 2 Notes-2
How to Clear CAIIB in One Attempt? Clear Attempt
CAIIB Risk Management Pattern, Passing Criteria Pattern
What next after CAIIB? IIBF Certifications
CAIIB BFM Previous Year Question Papers (Bank Finance Management) PDF Link
CAIIB Retail Banking Previous Year Question Papers PDF Link
CAIIB Information Technology Previous Year Question Papers PDF Link
CAIIB – BFM- Time Value of Money Time Value
Letter of Credit Calculations Calculations

 

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