Continuing from where I left of in my previous post let me continue on why the banks need to redefine themselves

I also strongly feel that the Banks should be on alert and planning for the inevitability of multiple, non-bank entrants for a number of reasons.

1. Erosion of branch-based transactions can significantly reduce the natural advantage retail banks have had for decades to blunt the invasion of new bank entrants.

2. Today, several non-bank companies have stronger sales cultures, higher customer service approval ratings, and more formidable brand equity than many private or public sector banks.

3. Each type of non-bank competitor offers customers an individual value proposition that may include, for example, bundled insurance and deposit or savings products, one-stop shopping with a single financial institution, convenient store locations, or innovative products such as mobile payments.

4. Finally, some non-banks such as online retailers or search firms may bring approaches and a set of economics that envelope and overwhelm the traditional economics of the “old retail banking payment systems” making banks little more than commodity vendors of a low-cost banking service within these emerging customer paradigms.

Bank should go the other way around!!

1. Enabling the Retailers/Agents with appropriate technology would enable the banks to go where the customer is present instead of the other way round.
2. Extending traditional mode of banking by targeted branch expansion in identified districts
3. The Business Facilitator/Business Correspondent (BF/BC) models riding on appropriate technology can deliver this outreach and should form the core of the strategy for extending financial inclusion.

Banks should now reach to the Remote Locations
1. Expansion of telecommunication network in the hinterlands of the country have provided the perfect launch pad for extending banking outposts to remote locations without having to open bank branches in the area.
2. The world over, banks are increasingly using outsourcing, as a means of both reducing cost and accessing specialist expertise, not available internally and achieving strategic aims.

In my view the BC/BF led retailer-distributor model, where the customer walks-in to a store and procures the banking services after making an informed choice from the available products, is the new paradigm to stay forever. This will make the chain viable as well as provide it non-linear scalability.