Delivery Models | PAPER IV – RETAIL BANKING & WEALTH MANAGEMENT | Module C: Support Services – Marketing of Banking Services | Products

Delivery Models in Banking

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Descriptive Notes

In banking and financial services, delivery models refer to the methods and channels through which products and services are offered to customers. The goal is to maximize reach, improve customer experience, and enhance operational efficiency.

1. Internal Customers – Staff at the Branch Level

Internal customers are employees who directly or indirectly serve the end customer. In banking, staff at the branch level play a vital role in service delivery, cross-selling, and relationship management. Their performance impacts the customer experience.

2. Dedicated Marketing Managers

Banks deploy marketing managers to handle sales and marketing efforts, drive product awareness, and support frontline staff. These managers are responsible for area-specific campaigns, customer acquisition, and lead generation.

3. Direct Selling Agents (DSAs)

DSAs are third-party individuals or firms hired to source business (e.g., loans, credit cards). They are paid commissions based on performance. DSAs help banks reduce overhead costs while expanding reach.

4. Tie-up with Institutions/OEMs/Dealers

Banks collaborate with institutions, Original Equipment Manufacturers (OEMs), and dealers to offer financing at the point of sale. For example, a bank may tie-up with a car dealer to offer auto loans to customers purchasing cars.

Example

A bank ties up with a large electronics retailer to provide consumer loans at 12% interest. The retailer earns a commission of 2% per successful loan disbursal, while the bank gets access to walk-in customers without additional branch load.

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10 Medium-Hard Mathematical Examples

1. A DSA processes 150 personal loan files per month. If each successful loan earns the DSA ₹2,000 and the success rate is 60%, what is the total earning?
   Answer: 150 × 60% × ₹2,000 = ₹180,000
2. A bank offers a loan via an OEM tie-up at 10% annual interest for 3 years. Calculate the total interest on a ₹2,00,000 loan.
   Answer: SI = (200000 × 10 × 3)/100 = ₹60,000
3. A branch staff member achieves ₹1.2 crore in cross-sell business in a month. If the target was ₹1 crore and incentive is 1.5% on excess only, calculate the incentive earned.
   Answer: ₹20 lakhs × 1.5% = ₹30,000
4. A DSA is paid 1.8% commission on loans above ₹5 lakhs. If 8 loans of ₹6 lakhs and 4 loans of ₹7 lakhs were sourced, calculate the commission.
   Answer: (8×6 + 4×7) lakhs = ₹80 lakhs; 1.8% of 80L = ₹1,44,000
5. Marketing managers are given a budget of ₹3 lakhs to generate 1,000 leads. What is the cost per lead?
   Answer: ₹3,00,000 / 1,000 = ₹300 per lead
6. A dealership tie-up results in 120 loans of ₹3 lakhs each at 11% interest. Calculate the bank’s interest income for 1 year.
   Answer: 120 × 3,00,000 × 11% = ₹39,60,000
7. A staff team has to achieve ₹5 crore in sales. If they achieve ₹6.2 crore, and are rewarded 2% on the overachievement, find the bonus.
   Answer: ₹1.2 crore × 2% = ₹2.4 lakhs
8. A bank branch spends ₹75,000 on DSA commission in a month. If commission is ₹2,500 per file, how many loans were processed?
   Answer: ₹75,000 / ₹2,500 = 30 loans
9. An institution tie-up results in loan disbursal of ₹15 crores annually. If the net profit margin is 1.2%, calculate the profit.
   Answer: ₹15 crores × 1.2% = ₹18 lakhs
10. A bank’s marketing campaign spends ₹1 lakh and results in 250 new savings accounts. Find customer acquisition cost.
    Answer: ₹1,00,000 / 250 = ₹400 per customer

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10 MCQs with Answers

1. Which of the following is an example of an internal customer in a bank?
   a) Direct Selling Agent
   b) Marketing Manager
   c) Branch Staff
   d) OEM Representative
   Answer: c) Branch Staff
2. What is the main advantage of using DSAs in banking?
   a) Increased internal control
   b) Reduced interest costs
   c) Lower operating expenses
   d) Better risk profiling
   Answer: c) Lower operating expenses
3. OEMs typically collaborate with banks for which type of banking product?
   a) Fixed Deposits
   b) Mutual Funds
   c) Auto Loans
   d) Credit Cards
   Answer: c) Auto Loans
4. What role do marketing managers play in a bank's delivery model?
   a) Auditing accounts
   b) Approving loans
   c) Driving customer acquisition
   d) Managing credit risk
   Answer: c) Driving customer acquisition
5. Which of the following is NOT typically part of an external delivery channel?
   a) OEM
   b) DSA
   c) Branch Staff
   d) Dealer
   Answer: c) Branch Staff
6. A successful DSA model depends mainly on:
   a) Internal audit
   b) Branch profitability
   c) Sales volume and conversion
   d) Inventory turnover
   Answer: c) Sales volume and conversion
7. Why do banks partner with dealers?
   a) To reduce staff training
   b) For point-of-sale financing
   c) To sell bank insurance
   d) For foreign exchange services
   Answer: b) For point-of-sale financing
8. Which is a direct benefit of using internal customers effectively?
   a) Lower credit risk
   b) Enhanced customer service
   c) Reduced interest spread
   d) Better inflation hedging
   Answer: b) Enhanced customer service
9. Commission to DSAs is usually based on:
   a) Credit score
   b) Total footfall
   c) Loan disbursals
   d) Account closures
   Answer: c) Loan disbursals
10. Which department typically manages tie-ups with OEMs?
    a) Audit
    b) Treasury
    c) Marketing/Sales
    d) IT
    Answer: c) Marketing/Sales