View of A COMPARATIVE STUDY OF FINANCIAL ANALYSIS OF WHOLESALE AND RETAIL BANKING

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ACCENT JOURNAL OF ECONOMICS ECOLOGY & ENGINEERING Peer Reviewed and Refereed Journal (International Journal) ISSN-2456-1037

Vol. 05,Special Issue 03, (IC-WESD-2020) March 2020, Available Online: www.ajeee.co.in/index.php/AJEEE

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A COMPARATIVE STUDY OF FINANCIAL ANALYSIS OF WHOLESALE AND RETAIL BANKING

Dr. Amrita Soni, Assistant Professor,

Institute of Management Studies, SAGE, University Indore

Abstract:- Wholesale banking in India is set for a period of sharp growth. Revenues from wholesale banking activities are likely to more than double over the next five years as infrastructure investment, expansion by Indian companies overseas, and further

“Indianization” of multinational businesses, among other trends, drive new business. Retail banking aims to be the one-stop-shop for as many financial services as possible on behalf of individual clients. Consumers expect a range of basic services from retail banks, such as checking accounts, savings accounts, personal loans, lines of credit, mortgages, debit cards, credit cards, and CDs. Most consumers utilize local branch banking services, which provide onsite customer service for all of a retail customer's banking needs. Through local branch locations, financial representatives provide customer service and financial advice.

Financial representatives are also the lead contact for underwriting applications related to credit-approved products. Retail banking, also known as consumer banking or personal banking, is banking that provides financial services to the general public. Retail banking is a way for the everyday consumer to manage their money, have access to credit, and deposit their money in a secure manner. The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. As most of the banks are offering retail products of similar nature, the customers can easily switchover to the one which offers better service at comparatively lower costs. The quality of service that banks offer and the experience that clients have, matter the most. Hence, to retain the customers, banks have to come out with competitive products satisfying the desires of the customers.

Key factors:- Wholesale, Retail Banking, Function of Banking.

1. INTRODUCTION

Wholesale banking in India is set for a period of sharp growth. Revenues from wholesale banking activities are likely to more than double over the next five years as infrastructure investment, expansion by Indian companies overseas, and further “Indianization” of multinational businesses, among other trends, drive new business. Foreign players and the country’s domestic banks, however, will find themselves in a tough commercial environment and must overcome a range of challenges if they are to maintain, or assume, a leading position in the market.

Prospects for India’s wholesale banking market are intriguing. Wholesale banking revenues, which in India account for close to 30 percent of total banking revenues, are expected to more than double, from roughly $16 billion in fiscal 2010 to between $35 billion and $40 billion by 2015 (Exhibit 1). McKinsey’s analysis shows that returns on equity are typically in the range of 15 percent to 30 percent. Wholesale Banking operates ten major lines of business, serving diverse market and customer segments including business banking, middle market, and large corporate, as well as financial institutions.

1.1 Function of Wholesale Banking Primary Function:-

1. Making advances.

2. Accepting Deposits.

3. Credit Creation.

Secondary Function:-

1. Merger and acquisition.

2. Trust and Consultancy Services.

3. Fund Management.

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Retail banking aims to be the one-stop-shop for as many financial services as possible on behalf of individual clients. Consumers expect a range of basic services from retail banks, such as checking accounts, savings accounts, personal loans, lines of credit, mortgages, debit cards, credit cards, and CDs. Most consumers utilize local branch banking services, which provide onsite customer service for all of a retail customer's banking needs. Through local branch locations, financial representatives provide customer service and financial advice.

Financial representatives are also the lead contact for underwriting applications related to credit-approved products. Retail banking, also known as consumer banking or personal banking, is banking that provides financial services to the general public. Retail banking is a way for the everyday consumer to manage their money, have access to credit, and deposit their money in a secure manner. Services offered by retail banks include checking and savings accounts, mortgages, personal loans, credit cards, and certificates of deposit (CDs).

A retail bank stores the cash deposits of its retail clients. It then uses these deposits to make loans to other clients. The Federal Reserve requires that all banks keep 10% of their demand and checking deposits in-house overnight. This is known as the reserve requirement and is seen as a safety and liquidity measure. This means that the remainder of the deposits is allowed to be loaned out. The banks charge interest rates on these loans at a higher rate than they pay on customer deposits, which is how banks earn income.

The main three important functions of retail banking is:- 1. Give Credit

2. Accept deposit 3. Money management Types of Retail Banks:-

1. Community development banks.

2. Private Banks.

3. Postal savings Banks.

 Retail banking provides financial services to individual people as opposed to large institutions.

 Retail banking aims to be the one-stop-shop for as many financial services as possible on behalf of individual clients.

 Retail banks can be local community banks or the divisions of large commercial banks.

2. LITERATURE REVIEW

In any research study, the problem is formulated after a thorough review of literature related to the problem is carried out. It is felt necessary to probe into the previous research

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works relating to the banking service. For the purpose the researcher has referred to multifarious journals, books, internet, previous studies, etc., which are all connected to the nature of the problem chosen by her. Here, through literature review, the various aspects of service quality in retail and wholesale banking.

 Anderson (1984):- the notion of service quality has become increasingly important because competition in service industries has increased. Service quality has been identified as a determinant of market share, return on investment and cost reduction.

 Gronroos (1984):- identified two dimensions of service quality (technical quality and functional quality). He defined technical quality as “what the consumer receives as a result of interactions with a service firm” and identified employees’ technical ability, employees’ knowledge, technical solutions, computerized systems and machine quality as its five attributes. He defined functional quality as “the way in which the technical quality is transferred” and identified behavior, attitude, accessibility, appearance, customer contact, internal relationships, service-mindedness as its seven attributes. He concluded that the technical and functional quality of service built up the corporate “image” of the company.

 Schmenner (1986):- classified the retail banking industry as a mass service. Mass service industries have a low degree of variation in customer interaction/

customization. Mass service firms face several challenges including the problem of making their services “warm” or responsive (dimension of SQ), developing innovative marketing practices to attract and retain customers and paying attention to physical surroundings (the tangible dimension of the SQ construct).

 Danton (1991):- state that numerous attempts have been made to examine the relationship between bank choice and socio-demographic characteristics. In these studies significant differences in attitudes and opinions between the sex, language, age, income and level of education are revealed. Furthermore, consumers with a higher income level will choose a bank which provides a wider range of services than consumers with a relative low income.

 Vibhore jain (2012):- observed that in the banking sector, it is the HDFC bank which is perceived to be offering better quality of services followed by the other private banks. With the increasing competition amongst banks, the findings can act as a strategic tool to achieve competitive advantage and customer satisfaction. It is also an eye-opener for the banks to see the gap between customer expectation and perception regarding the quality of services rendered which should further act as a motivation to increase reputation and to achieve customer loyalty.

2.1 Objective

To know the financial position of Retail and Wholesale Banking. The main objective of this paper is to study the financial analysis and satisfaction of customers regarding Retail and wholesale Services providing by banks.

1. To highlight the financial position of Retail and wholesale banking.

2. To understand the customer preference of retail and wholesale banking.

3. To create the comparative analysis of Retail and Wholesale banking.

2.2 Hypothesis

In this paper we analyze the comparative situation of retail and wholesale banking service.

To know the actual situation of banking we prepare this hypothesis.

1. Customers are satisfied with Retail banking?

2. Minimum loss is there in whole sale banking?

3. Wholesale banking creates the huge profit?

3. RESEARCH METHODOLOGY

A research methodology is an overall action plan for research. Methodology is the logic or series of steps that connects a given set of research questions (uncertainties or gaps in our knowledge about the social world, about human behavior) to the conclusions arrived at. It encompasses the selection of research methods, the design of data gathering instruments

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like interview or self-administered questionnaire schedules, gaining access to the research site, sampling, research ethics and data analysis.

1. To analyze the banking services.

2. To rank the best performing banks on the basis of retail and wholesale banking.

Retail banking refers to that banking which targets individuals and the main focus of such banks is retail customer whereas wholesale banking refers to that banking which targets corporate or big customers and their main focus is providing services to corporate clients.

3.1 Probable Outcome

This study is creating the future option to choose the best banking service for customer. In this study we analyze the good financial position of retail and wholesale banking.

 Several trends will shape the evolution of India’s wholesale banking markets and create new opportunities for foreign and domestic players alike:

 An expected surge of infrastructure investment, creating demand for additional banking products and services.

 The continuing globalization of Indian companies, bringing with it the need for acquisition expertise, trade-finance and treasury services, and cash-management skills.

 Regulatory change in bond and equity markets.

4. CONCLUSION

The customer database available with the banks is the best source of their demographic and financial information and can be used by the banks for targeting certain customer segments for new or modified product. As most of the banks are offering retail products of similar nature, the customers can easily switchover to the one which offers better service at comparatively lower costs. The quality of service that banks offer and the experience that clients have, matter the most. Hence, to retain the customers, banks have to come out with competitive products satisfying the desires of the customers.

 Customers were satisfied from the quick response and good customer relationship.

 Quality service and quickness in delivery

 Customers are more influenced for taking loan from Banks because of trust on Banks.

BIBLIOGRAPHY

1. Anderson (1984), ― Performance of Retail Banking in India‖, Asochem Financial Pulse (AFP).

2. Manoj Kumar Joshi (1984), ― Customer Services in retail banking in India.

3. Divanna, J.A. (2009), ― The future retail banking, Palgrave Macmillan, New York.

4. Dhanda Pani Alagiri, (2006), “Retail Banking challenges”, ICFAI university press, Hyderabad, pp-25-34.

5. www.google.com.

6. www.scribd.com.

7. www.investopedia.com.

8. www.retailbanking.com.

9. www.rbi.org.