Delivery Channels in Retail Banking | PAPER IV – RETAIL BANKING & WEALTH MANAGEMENT | Module C: Support Services – Marketing of Banking Services/Products

Delivery Channels in Retail Banking

---

1. Introduction

Delivery channels in retail banking refer to the various platforms through which banks offer their services to customers. These include physical outlets like branches and ATMs, as well as digital interfaces like internet and mobile banking. A seamless and integrated customer experience across these channels is essential for customer satisfaction and retention.

2. Physical/Direct Channels

Branch Banking

The traditional and most direct form of banking. Branches serve as full-service centers for customer interaction, account opening, deposits, loan processing, etc.

Example: A customer visits a branch to apply for a personal loan and simultaneously opens a savings account with assistance from a bank officer.

3. Automated Teller Machines (ATMs)

ATMs offer 24x7 banking services like cash withdrawal, deposit, mini-statement, and balance enquiry. Banks often partner to form ATM networks to reduce costs.

4. Point of Sale (POS) Terminals

POS machines allow card-based payments at merchant outlets. With the rise of digital payments, POS usage has increased in both urban and rural sectors.

5. Mobile Banking

Mobile banking apps offer convenience for balance checks, fund transfers, bill payments, and service requests. They are secured with OTP, biometric, or app-based authentication.

6. Internet Banking

Internet banking enables customers to access their accounts online through a secure web portal. It facilitates fund transfers, account management, and investment services.

7. Channel Experience

Customer experience should be consistent across all delivery channels. Features like personalization, security, ease of use, and minimal downtime improve overall satisfaction.

8. Customer's Liability on Unauthorized Electronic Transactions

The RBI has issued guidelines to limit customer liability in case of unauthorized digital transactions. Liability depends on reporting time, negligence, and system faults.

Example: If a customer reports an unauthorized transaction within 3 working days, their liability is zero as per RBI norms.

9. Mathematical Examples (Medium-Hard Level)

1. A bank has 200 ATMs operating at ₹2,000 per day per ATM. What is the total monthly ATM operating cost?
Solution: ₹2,000 × 200 × 30 = ₹12,000,000

2. A mobile banking platform processes 5,000 transactions/day with an average value of ₹2,500. What is the monthly transaction value?
Answer: 5000 × 2500 × 30 = ₹375,000,000

3. A bank charges 0.5% fee on POS transactions. If ₹10 crore is transacted in a day, what is the daily revenue from POS?
Answer: ₹10,00,00,000 × 0.005 = ₹5,00,000

4. A customer withdraws ₹10,000 from an ATM with a fee of ₹20 per transaction. What percentage of the amount withdrawn is the fee?
Answer: (20 / 10,000) × 100 = 0.2%

5. If a branch handles 1,200 customers/day and each customer takes 10 minutes, how many staff are needed for 8 working hours?
Answer: (1200 × 10) / 480 = 25 staff

6. Internet banking logins increase by 15% monthly. If 20,000 customers log in this month, how many are expected next month?
Answer: 20,000 × 1.15 = 23,000

7. A bank plans to deploy 300 new ATMs over 6 months. How many ATMs per month need to be installed?
Answer: 300 / 6 = 50 ATMs/month

8. Mobile banking fraud losses total ₹10 lakhs with 50 cases. What is the average loss per case?
Answer: ₹10,00,000 / 50 = ₹20,000

9. If a POS terminal costs ₹12,000 and 1,500 are procured, what is the total cost?
Answer: ₹12,000 × 1500 = ₹1,80,00,000

10. A customer had an unauthorized transaction of ₹25,000 and reported it on day 4. Liability is ₹5,000. What percentage was borne by the customer?
Answer: (5,000 / 25,000) × 100 = 20%

10. Multiple Choice Questions (MCQs)

1. Which of the following is NOT a direct delivery channel?
a) Branch
b) Mobile Banking
c) ATM
d) POS Terminal
Answer: b) Mobile Banking

2. What does a Point of Sale terminal primarily facilitate?
a) Cash deposits
b) Account transfers
c) Card-based payments
d) Loan applications
Answer: c) Card-based payments

3. Which of the following is considered an e-delivery channel?
a) Branch
b) ATM
c) Internet Banking
d) Teller Counter
Answer: c) Internet Banking

4. RBI’s guideline limits customer liability to zero if unauthorized transaction is reported within:
a) 1 day
b) 3 days
c) 5 days
d) 7 days
Answer: b) 3 days

5. Which channel is most cost-effective for a bank?
a) Branch
b) ATM
c) Mobile Banking
d) POS Terminal
Answer: c) Mobile Banking

6. What security feature is commonly used in mobile banking?
a) Passbook
b) Physical token
c) OTP and Biometrics
d) Teller authentication
Answer: c) OTP and Biometrics

7. Internet banking is also known as:
a) Branch banking
b) Online banking
c) POS banking
d) Telebanking
Answer: b) Online banking

8. Which delivery channel supports real-time fund transfer and service requests?
a) ATM
b) POS Terminal
c) Internet Banking
d) Cheque Drop Box
Answer: c) Internet Banking

9. Customer liability in case of fraud due to bank system fault is:
a) Full
b) Shared
c) Zero
d) Depends on transaction value
Answer: c) Zero

10. Which delivery channel is best suited for rural outreach?
a) Mobile Vans
b) POS Terminals
c) Internet Banking
d) Telebanking
Answer: a) Mobile Vans