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A good brand, relationships, technology and smart marketing can open doors but after that the business has to be sustained by delivery.
Ishaat Hussain, a director on the board of Tata Capital Ltd, said that big industrial houses like the Tatas and the Birlas do not face any difficulty in accessing bank finance, but their customers and suppliers find it difficult. HDFC Bank grabbed that important niche. It became a pioneer in vendor and dealer financing.
A smart bank tries to ensure that a customer chooses the bank for his or her primary savings account.
A smart bank also tries to make a customer have only one account for salary, dividends, making utility payments and so on. A customer will do so with a bank that offers an entire suite of products, including credit cards, car loans and home loans.
Retail banking is a volume game. A bank needs wide distribution, a lot of branches, a plethora of products and a completely different mind-set. One needs to have many products to straddle the economy of the country.
Globally, investors give much better multiple for retail earnings than for wholesale earnings because wholesale earnings are considered risky, volatile and uncertain, while retail earnings are sticky and long term.
