IS419 RETAIL BANKING & MOBILE TECHNOLOGY
KEY LEARNING POINTS
Retail Bank Customers
3 types of customers: Individuals, Institutions, Government
4 Core Retail Customer segments:
1. Wealthy
2. High Net worth ($1M - $10M in funds excluding primary residence; focus on
wealth preservation; designated relationship manager; considerations: taxes,
estate planning, privacy)
3. Mass affluent (net worth: $250,000 - $3M, higher disposable income, less
risky customers of large-ticket consumer goods loans)
4. Non-affluent (largest group, limited money deposits, individual credit risk
exposures small and with low correlation to economic conditions)
Customer needs: Funding for cash-flow mismatches > The Considerations:
Repayment/Finance costs, Service quality, Information
Customer Decision Points: Terms & Conditions, Expertise, Availability
Retail Bank Products
Products:
• Deposit related Products
o Savings accounts
o Current or checking accounts
o Fixed or time deposits or certificate of deposits
o Foreign currency accounts
• Credit related Products:
o Secured credit (e.g., mortgages)
o Unsecured credit (e.g., overdrafts, personal loans)
• Other Banking Products:
o Investment
o Insurance
o Islamic Banking
Bank Requirements:
1. Risk Controls (pre, during, post transaction)
2. Information (Credit Market, Operational Physical, Others; Customer Interface)
3. Performance
1
,Data (Customer Data, Transaction Data, Market Information): Collection, Analysis,
Reports
Execution Process Flow: Customer Engagement → Customer Order Acquisition
→Transaction Fulfilment → Maintenance → Reviews
Retail Bank Services
PAYMENT
Types of Payments:
• Bank Account based
o Payment cards (debit & credit)
o Cheques—Cheque Truncation System (CTS) to electronically capture
and transmit cheques between banks and clearing house; reduce cost
and time
o Direct debit
o Credit Transfer
▪ Electronic / mobile banking
▪ Online Bank transfer
▪ Electronic Bill presentation & payment
• Non Bank Account based
o Electronic Payment Account Systems
o Electronic purse
o Money surrogates
▪ Electronic prepaid cheques
▪ Electronic cash
• Cash
Payment system—a set of mechanism for the transfer of money between two
entities; requires: instrument, transfer mechanism, member institutions, central
clearing facilities, rules and procedures
Payment systems types: small value (low-value, high-volume transactions); large
value (large interbank and B2B payments)
EMV—standard for interoperation of IC cards (chip cards) and IC capable POS
terminals and ATMs for authenticating credit and debit card payments; started by
EuroPay, MasterCard, VISA; benefits: fraud reduction, manage offline card
transactions, ensure interoperability
2
, ADVICE
Emerging Banking Technology Trends
Challenges
Financial Institutions Priorities:
• Growth (top line)
• Safety & Soundness (enterprise)
• Efficiency (bottom line)
Retail Bank Focus Areas:
• Operational excellence
• Customer excellence
Changes in Banking Landscape Financial Services Sector Imperatives
Competitive Pressures Reducing Cost
Customer Pressures Improving Customer Value
Regulatory Pressures Managing Enterprise Risk
3
KEY LEARNING POINTS
Retail Bank Customers
3 types of customers: Individuals, Institutions, Government
4 Core Retail Customer segments:
1. Wealthy
2. High Net worth ($1M - $10M in funds excluding primary residence; focus on
wealth preservation; designated relationship manager; considerations: taxes,
estate planning, privacy)
3. Mass affluent (net worth: $250,000 - $3M, higher disposable income, less
risky customers of large-ticket consumer goods loans)
4. Non-affluent (largest group, limited money deposits, individual credit risk
exposures small and with low correlation to economic conditions)
Customer needs: Funding for cash-flow mismatches > The Considerations:
Repayment/Finance costs, Service quality, Information
Customer Decision Points: Terms & Conditions, Expertise, Availability
Retail Bank Products
Products:
• Deposit related Products
o Savings accounts
o Current or checking accounts
o Fixed or time deposits or certificate of deposits
o Foreign currency accounts
• Credit related Products:
o Secured credit (e.g., mortgages)
o Unsecured credit (e.g., overdrafts, personal loans)
• Other Banking Products:
o Investment
o Insurance
o Islamic Banking
Bank Requirements:
1. Risk Controls (pre, during, post transaction)
2. Information (Credit Market, Operational Physical, Others; Customer Interface)
3. Performance
1
,Data (Customer Data, Transaction Data, Market Information): Collection, Analysis,
Reports
Execution Process Flow: Customer Engagement → Customer Order Acquisition
→Transaction Fulfilment → Maintenance → Reviews
Retail Bank Services
PAYMENT
Types of Payments:
• Bank Account based
o Payment cards (debit & credit)
o Cheques—Cheque Truncation System (CTS) to electronically capture
and transmit cheques between banks and clearing house; reduce cost
and time
o Direct debit
o Credit Transfer
▪ Electronic / mobile banking
▪ Online Bank transfer
▪ Electronic Bill presentation & payment
• Non Bank Account based
o Electronic Payment Account Systems
o Electronic purse
o Money surrogates
▪ Electronic prepaid cheques
▪ Electronic cash
• Cash
Payment system—a set of mechanism for the transfer of money between two
entities; requires: instrument, transfer mechanism, member institutions, central
clearing facilities, rules and procedures
Payment systems types: small value (low-value, high-volume transactions); large
value (large interbank and B2B payments)
EMV—standard for interoperation of IC cards (chip cards) and IC capable POS
terminals and ATMs for authenticating credit and debit card payments; started by
EuroPay, MasterCard, VISA; benefits: fraud reduction, manage offline card
transactions, ensure interoperability
2
, ADVICE
Emerging Banking Technology Trends
Challenges
Financial Institutions Priorities:
• Growth (top line)
• Safety & Soundness (enterprise)
• Efficiency (bottom line)
Retail Bank Focus Areas:
• Operational excellence
• Customer excellence
Changes in Banking Landscape Financial Services Sector Imperatives
Competitive Pressures Reducing Cost
Customer Pressures Improving Customer Value
Regulatory Pressures Managing Enterprise Risk
3
