Wednesday, March 16, 2011

Alternate channels to drive union bank growth

Union Bank of India, one of India's leading public sector banks, is betting big on alternate delivery channels like online banking, phone banking, mobile banking, ATMs and banking correspondents to drive its operational growth.

These alternate channels which till a couple of years back, contributed barely eight per cent of the bank's transactions are poised to account for 45 per cent of its transactions by the end of 2010-11.

The bank is leveraging IT in a major way to expand its volume of transactions from alternate delivery channels. And with mobile banking and financial inclusion emerging as new buzzwords, the contribution to the bank's volume of transactions from these alternate channels is only poised to grow.

"In 2008-09, the alternate delivery channels accounted for only eight per cent of our overall transactions but in the last fiscal, their share jumped to 35 per cent. In the current fiscal, we have achieved 40 per cent of our transactions through such channels and their share is expected to reach 45 per cent by the close of this fiscal”, S Govindan, general manager (personal banking & operations), Union Bank of India told Business Standard.

“Our bank is leveraging technology in a big way to run operations and the migration of our customers to these alternate delivery channels is very high. We have constituted a separate department to oversee the transactions recorded in alternate channels. Though there is no comparable data among PSU banks in business clocked from such channels, we believe that our bank is among the top public sector banks in this category”, he added.

The alternate banking channels are set to play a key role for achieving the Financial Inclusion goals of the bank. Union Bank aims to cover around 3500 unbanked villages across the country by March 2012 as per the target set by Reserve Bank of India (RBI).

In Orissa, the bank would provide banking services to 30 villages in Jajpur district. While 10 villages would have brick and mortar branches, 10 other villages would be served through mobile van banking and banking correspondents would cater to the remaining 10.

Besides, Union Bank, as a part of its Business Process Re-Engineering initiative, has planned 'Project Nav Nirman' to set new benchmarks in customer service.

McKinsey & Company has been roped in as the consultant for working out the modalities of the project. The bank has already started the trial run of the project and its full-scale implementation would take18 months.

“The Nav Nirman project would help us to catapult us to the number one slot in terms of customer service by 2015-16. Under this project, the bank will offer uniform retail banking experience to our customers across all branches.

The bank will be setting up a Customer Service Excellence Academy where our staff will be continuously trained and also a Customer Service Intelligence unit which will give us constant feedback from our customers. Besides, the bank will have back-end research for grievance redressal”, he stated

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