Customer Requirements | PAPER IV – RETAIL BANKING & WEALTH MANAGEMENT | Module B: Retail Products and Recovery

Retail Products and Recovery

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Retail banking involves offering banking products to individual consumers, such as:

• Deposit Products: Savings Accounts, Current Accounts, Fixed Deposits
• Loan Products: Home Loans, Personal Loans, Auto Loans, Education Loans
• Cards: Debit Cards, Credit Cards, Prepaid Cards
• Insurance and Investment Products: Mutual Funds, Life/General Insurance

Recovery in Retail Banking

Recovery refers to the process of recovering overdue or defaulted loans. It involves steps like reminders, follow-ups, legal actions, and settlements.

Customer Requirements

Understanding and meeting customer requirements is critical in banking. Common requirements include:

• Quick and hassle-free services
• Transparency in charges and interest rates
• Personalized banking experiences
• Multiple access channels (online, mobile, branches)
• Security and privacy of financial data

Maslow’s Theory and Customer Requirements

Maslow's Hierarchy of Needs explains human motivation and can be used to understand customer expectations in banking:

1. Physiological Needs: Access to basic banking services like savings accounts, ATMs
2. Safety Needs: Security of deposits, insurance, safe transactions
3. Social Needs: Personalized service and customer relationships
4. Esteem Needs: Priority banking, premium services
5. Self-Actualization: Investment advice, wealth management services

Customer Requirements about Service Quality

Service quality in banking is measured by the following dimensions:

• Reliability: Ability to perform promised service dependably
• Responsiveness: Willingness to help customers promptly
• Assurance: Knowledge and courtesy of staff
• Empathy: Caring, individualized attention
• Tangibles: Physical facilities, equipment, personnel appearance

Mathematical Examples

1. EMI Calculation:
   Loan: ₹5,00,000
   Rate: 10% p.a.
   Tenure: 5 years
   EMI = ₹10,624 (Using EMI formula)
2. Interest on Savings Account:
   Balance: ₹1,00,000
   Interest Rate: 4% p.a.
   Annual Interest = ₹4,000
3. Default Rate:
   Total Accounts: 1,000
   Defaulted Accounts: 50
   Default Rate = (50/1000) × 100 = 5%
4. Recovery Rate:
   Total NPA: ₹10,00,000
   Amount Recovered: ₹6,00,000
   Recovery Rate = (6,00,000 / 10,00,000) × 100 = 60%
5. Service Time Analysis:
   Avg. Time Before Training: 12 mins
   Avg. Time After Training: 8 mins
   % Improvement = ((12 - 8)/12) × 100 = 33.33%

Multiple Choice Questions (MCQs)

1. Which of the following is not a retail banking product?
   a) Home Loan
   b) Treasury Bonds
   c) Credit Card
   d) Fixed Deposit
   Answer: b
2. Maslow's third level in the hierarchy of needs is:
   a) Safety
   b) Social
   c) Esteem
   d) Physiological
   Answer: b
3. Which factor is not part of service quality?
   a) Tangibles
   b) Interest Rate
   c) Responsiveness
   d) Assurance
   Answer: b
4. Which of the following improves customer retention?
   a) Frequent product changes
   b) Ignoring complaints
   c) Personalization
   d) Delay in service
   Answer: c
5. What does a 5% default rate imply?
   a) 5 accounts are profitable
   b) 5% of accounts defaulted
   c) 5% interest on loans
   d) 5% of staff are untrained
   Answer: b
6. Which Maslow’s level relates to priority banking?
   a) Safety
   b) Esteem
   c) Social
   d) Physiological
   Answer: b
7. Which product is associated with security of future?
   a) Credit Card
   b) Fixed Deposit
   c) Insurance
   d) Current Account
   Answer: c
8. Service recovery includes:
   a) Loan Disbursement
   b) ATM Maintenance
   c) Handling Complaints
   d) Staff Recruitment
   Answer: c
9. Empathy in service quality means:
   a) Quick processing
   b) High interest rates
   c) Understanding customer needs
   d) Providing only digital services
   Answer: c
10. The term 'Assurance' in service quality refers to:
    a) Building interiors
    b) Staff confidence and trust
    c) Branding
    d) Pricing strategy
    Answer: b