(The Economic Times (India) Via Thomson Dialog NewsEdge)Banks offer the following services to account holders at their specified branches - multi-city / Payable at Par (PAP) cheque facility, anywhere banking facility, trade services, phone banking facility, internet banking facility, credit card, debit/ATM card, mobile banking and Real Time Gross Settlement.
Foreign banks are expanding the number of products on offer, their complexity such as derivatives, leverage financing. Doorstep banking facilities are being offered by some of these banks to cater to convenience lifestyle of its customers. Private banks are extending services including wealth management and equity trading apart from credit cards.
How do banks price their services?
The pricing mechanism is dependent on client relationship and the nature of the transaction. The pricing can be arrived at by profiling customers into different segments. The large corporate segment comprises of the bulk and large value transactions.
This segment is characterised by multiple service relationships. The pricing in this segment is transaction based and depends on the size of transactions and on the banks' relationship with the corporate. Hence, the pricing is decided on a one to one basis and public.
The other segments comprise the brokers, small and medium enterprises (SME), other banks and the retail segment. In each of these cases, the pricing is not made public and is determined on the basis of the nature of the transaction and the banks' relationship with the client, on a one to one basis.
Typically, high volumes and low value characterise the SME segment. Therefore the pricing for this segment differs from that of the large corporates. Similarly the pricing for the banks is very different. In the retail segment, the bank publishes its tariff.
How do services contribute to the bank's income?
Increasingly banks are witnessing a...