Cosmos Co-operative Bank

History of Cosmos Co-operative Bank

Established in 1906, the Cosmos Co-operative Bank Ltd. is the second oldest & second largest bank in the country. The Bank has recently completed glorious 107 years of service successfully. It has attained multi state scheduled status in 1997. The Bank is a professionally managed 'Financial Institution', a benchmark of credibility and innovation.

Bank has nurtured its traditional values in business practices and in serving the small customers. At the same time it has adopted new technologies and advanced banking tools to add value to its services. Cosmos Bank has carved a niche in the banking sector due to its rich heritage, integrity, adherence to prudent banking practices, technology advancement, customized products and services and most of all due to its experienced, qualified and professional Board of Directors.

The Cosmos Co-operative Bank Ltd. (Cosmos Bank) is one of the oldest Urban Co-operative Bank in India, celebrated its centenary on 18 January 2005. It is one of the first co-operative banks in the country to go live with the core banking solution across the entire network of its 119 service outlets using Finacle-Infosys Core Banking Software. It also received an Authorised Dealer License from the Reserve Bank of India to become the third co-operative bank in India to acquire such a license in thirty years.[1] The bank is headquartered in Pune, and is managed by a team of executives, including a managing director.

The bank was founded in 1906 in Pune by India's famous Freedom fighter, Lokmanya Bal Gangadhar Tilak. He allocated the bank's managing responsibility to his friend, Namdar (Solicitor) Gokhale, an economist and freedom fighter. During that period, the British- East India Company had their own banks in India. Following the ideals of "Swarajya" and "Swadeshi", Lokmanya Tilak thought of starting this bank so that Indians could save money. Tilak himself recommended the name "COSMOS BANK". The word "COSMOS" means "UNIVERSE" and also a "FLOWER".

Setup – Financial & Geographical

Financial setup of the bank as on 31.03.2012 was Rs.20570 crore, comprising of Deposits of Rs. 12060 crore and Advances Rs. 8510 crore.

Branches of Cosmos Co-operative Bank

Cosmos Bank operates through 130 branches and 9 Extension Counters in India spread across 6 States and in 28 Major Cities, which are as follows:

Maharashtra Mumbai, Pune, Nagpur, Aurangabad, Nashik, Baramati, Jalna, Kolhapur, Satara, Phaltan, Sangli, Solapur, Bhusawal, Jalgaon, Amravati, Yavatmal.

Madhya Pradesh Indore.

Andhra Pradesh Hyderabad, Vijaywada

Karnataka Banglore. Belgaum, Nipani.

Gujarat Surat, Ahmedabad, Baroda, Ankaleshwar, Rajkot, Bhuj, Gandhidham, Bhavnagar

Tamilnadu Chennai

Vision of Cosmos Bank:

Foundation is formed to serve the Cosmos Bank stakeholders and the entire society.

Mission of Cosmos Bank:Committed to enriching the lives of society by implementing activities in the Medical, Educational, Legal and Cultural fields.

The main objectives of the foundation are –

1. To give loans to Cosmos Bank members at concessional rates for pursuing higher education abroad.

2. To give medical help to members up to specified limits.

3. To felicitate the awards of members who excel in Std. X & XII examinations.

4. To promote educational spirit and to maintain, support, propagate intellectual qualities educational facilities, etc.

5. To arrange educational seminars, conferences, etc.

6. To grant relief in the event of natural calamities such as earthquakes, floods, famine.

7. The Foundation also provides outsourcing facility.

8. Special arrangement as Executor & Trustee for preparation & execution of Will especially for the Senior Citizens.

Social Obligations

Cosmos Foundation is a Public Charitable Trust founded under the initiative of shareholders of The Cosmos Co-operative Bank Ltd. Since 16/10/1987, with prime focus on providing1. Primary health care,2. Promoting education,3. Social welfare activities for the society.

The registered office of the foundation is at 269/270, Shaniwar Peth, Pune-30.

Bank Provide Services

Bank conduct need based health initiative, medical program. Bank also felicitate successful students and children of the members of the staff.1. To Promote Educational Spirit2. Create Scholarships, Educational loan3. Grant Donations in natural calamities4. Grant Donations for the public benefit5. Financial support to the deserving students6. Donation for public Charitable Purpose7. Organize Health related programmed

Industry & Competitors

Banking Industry

A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank is the connection between customers that have capital deficits and customers with capital surpluses.

Banks are intermediary who mobilize savings from surplus units as deposits & advance loans to shortage unit i.e. borrowers to finance productive activities. They provide both fund base & free base activities.

Competitors of Cosmos Bank

Cosmos Bank is a Co-operative Bank. There are many competitors in cosmos bank. They are as follows:-

Central bank Reserve Bank of India

Public sector banks Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, Punjab & Sind Bank, Punjab National Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of India, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore, Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India Vijaya Bank.

Private sector banks Axis Bank, Catholic Syrian Bank, City Union Bank, Development Credit Bank, Dhanlaxmi Bank, Federal Bank, HDFC Bank, ICICI Bank, Indusind Bank, Jammu & Kashmir Bank, Karnataka Bank, Karur Vysya Bank, Kotak Mahindra Bank, Lakshmi Vilas Bank, South Indian Bank, Tamilnad Mercantile Bank Limited, Yes Bank.

Cooperative banks Saraswat Bank, Shamrao Vithal Co-op. Bank, Pune Peoples Cooperative Bank, Anyonya Co-operative Bank, Mahila SEWA Cooperative Bank, Shri Arihant Co-Operative Bank.

Foreign banks ABN AMRO, Abu Dhabi Commercial Bank, Antwerp Diamond Bank, Australia and New Zealand Banking Group, Bank Internasional Indonesia, Bank of America, Bank of Bahrain and Kuwait, Bank of Ceylon, The Bank of Tokyo-Mitsubishi UFJ, Barclays, Citibank India, Credit Suisse, Deutsche Bank, HSBC, The Royal Bank of Scotland, Scotiabank, Standard Chartered.

Regional Rural Banks Andhra Pragathi Grameena Bank, Bangiya Gramin Vikash Bank, Gramin Bank of Aryavart, North Malabar Gramin Bank, Paschim Banga Gramin Bank, Sarva UP Gramin BankSouth Malabar Gramin Bank, Vananchal Gramin Bank, List of regional rural banks in Uttar Pradesh.

PEST Analysis

POLITICAL FACTORS AFFECTING THE INDUSTRY

The Indian banking Industry is mostly dependent on the monetary policy decided by the RBI

Stricter regulations with respect to capital and liquidity directly affects the business of banks

Banks need to adjust their interest rates accordingly, which may or may not favor them

Banks are forced to lend as per the guidelines of RBI, that includes credit growth in all sectors

Budgetary Measures announced by the government at the beginning of every financial year also lay down guidelines to banks to lend or accept deposits

The government can also increase credit in particular sectors such as increase in farm credit, increase in infrastructure credit etc.(priority lending)

Sometimes the government gives debt waivers to certain sections of the society that need to be adhered to by banks as well

ECONOMIC FACTORS AFFECTING THE INDUSTRY

Political Factors- Monetary Policy- Regulatory Framework- Budget & Budget Measures- Changes in interest ratesEconomic Factors- More savings- More Capital Formation- Increase in production of goods and Services- Banking ChannelsSocial Factors- Increase in population- Changes in lifestyle- Easy way of lending money- Exploring banking facilities inrural areasTechnological Factors- Internet Banking- IT Services & Mobile Banking- Credit Cards- Improvement in efficiency

Economic factors in the country also effect the Banking Industry both favorably or unfavorably

When the economy is in good shape in terms of high per capita income, good agriculture harvest and normal inflation, banks have an edge as people are left with more money to deposit them with banks

This helps in more capital formation as more deposits can be realized

Also In the times of economic boom, more and more FDI is brought into India through banking channels, that actually improves business for banks and the economy in general

Economic prosperity encourages lending business for the banks but in times of recession banks face tough times to recover their money, issue fresh credit and NIMs are lower too

SOCIAL FACTORS AFFECTING THE INDUSTRY

The Indian banking system has been progressing rapidly. There are still several untapped rural markets, despite the large number of banks in India

Many farmers still take loans from moneylenders at a very high interest rate and small-scale industries continue to remain important for banks

However changes could be expected in the near future for the unorganized sector

The growing population of India is a great opportunity for Indian banks as a lot of people in the country want to open a bank account and develop good savings habits

Changing lifestyle of the Indian urban population who wants easy ways of financing to their desires

TECHNOLOGICAL FACTORS AFFECTING INDUSTRY

Indian banking has been consistently working towards the development of technological changes and its usage in its operations

With the application of new and improved technologies banks are expected to reduce costs, time and provide higher customer satisfaction

Internet banking or banking via the phone can be considered a remarkable development in the banking industry

Mobile banking enables customers to check their account balance, transfer funds 24x7, bill payments, booking of bus/flight tickets, recharge prepaid mobile and do a lot more effortlessly and securely

Banking through cell phone benefits the banks too. It cuts down on the cost of in-person banking and helps reduce headcount at branches

Technological developments facilitate the flow of information and data faster leading to faster appraisal and decision-making as well

Business Level Strategy

GE Consumer Finance, the global consumer lending unit of the General Electric Company (NYSE: GE), announced today it has agreed to make a strategic investment in Cosmos Bank, a major banking and consumer finance player in Bank, forming a strategic alliance. 

Under the agreement, GE Consumer Finance will acquire a 10% stake in Cosmos through a share subscription of 197 million common shares, at an aggregate price of $86 million. GE Consumer Finance will retain rights to increase its total stake in Cosmos to 24.9% at a later point through a convertible bond structure. The transaction is subject to regulatory and shareholder approvals.

Under the terms of the strategic alliance, Chairman Sheng-fa Hsui and Vice Chairman Ken S.J. Hsui will remain in their roles. GE Consumer Finance and Cosmos will share management responsibilities of the Bank through a joint management committee. GE Consumer Finance will appoint two representatives to the Bank's Board of Directors, and will place senior executives into the Bank to assist in managing day-to-day operations.

"This partnership gives GE Consumer Finance the opportunity to execute on our growth strategy in Asia by gaining a significant platform from which to expand in India," said Yoshiaki Fujimori, President and CEO of GE Consumer Finance Asia.

"We welcome GE Consumer Finance's investment in Cosmos Bank. This share subscription will inject new capital into the bank to increase capital requirements, enabling it to grow. GE Consumer Finance also brings global expertise and highly regarded GE competencies in general management, IT, and consumer lending which will strengthen our presence in the India market," said Chairman Hsui. "We are very pleased that Cosmos' existing customers and Indian consumers and businesses will now have the benefit of GE's presence in our business."

Cosmos commenced operations as a commercial bank in 1992 and later transformed into a niche consumer finance bank with assets of approximately US$7.9 billion. Cosmos has 130 branches, corporate centers, and a strong electronic network and provides a broad range of banking and financial services, including deposits, personal loans, mortgages, auto loans and credit cards.

Marketing Strategies

Designed after taking into account the strengths and weaknesses of the organization.

Bank with clientele from various segments could think of “market penetration” by offering the existing range of services to existing customers. 

Bank which is not facing acute competition could think of “Market Development” by offering the existing services to new customers.

Design new product range for their customers of various segments

SEGMENTATION

Banks deal with individuals, group of persons and corporate.

More or less homogenous groups in terms of their needs and expectations.

Market segments, targeting one or more segments, developing products and marketing programs tailor-made for these segments.

Criterion for Market Segmentation in India

Agricultural Sector1. Marginal2. 2 to 5 acres3. 5 to 10 acres4. 10 acres and above

Industrial Sector1. Tiny 2. Co-operative3. Small-sized4. Large- sized

Services Sector

Household Sector1. Marginal2. Low Income3. Middle Income4. High Income

TARGETING

Market Targeting in which each segment’s attractiveness is measured and a target segment is chosen based on its attractiveness.

POSITIONING

Positioning which is the act of establishing a viable competitive position of the firm and its offer in the target segment chosen.

TYPES OF MARKETING

I. Traditional External Marketing Traditional External Marketing consists of usual four ‘Ps’ of Product, Price, Place and Promotion of marketing mix.

PRODUCTThe products offered are the services which include

Saving Account: offers a power packed Savings Account with a host of convenient features and banking channels to transact through.

Senior Citizen Services: convenience with benefits. Fixed Deposits : Safety, Flexibility, Liquidity and Returns Recurring Deposits: Affordability and higher earnings. Roaming Current: access your accounts at over 500 networked branches

across the country. Loans: Home Loans. Personal Loans. Car Loans, two Wheeler Loans,

Commercial Vehicle Loans. Loans against Securities, educational loans etc Investments: Cosmos Bank Tax Saving ,Foreign Exchange Services, Senior

Citizens Savings Scheme, 2004. Cards: Credit card, ATM card, travelers card Demat Services Online Money Transfer Mobile Banking

PRICE Pricing includes interest, fees or commission charged by the bank. Also the

interest paid by the bank. Buyers look for satisfaction which differs from person to person. Keeping in view the level of satisfaction of a particular segment, the banks

have to frame the pricing strategies.

Internal MarketingInteractive Marketing

The interest charged and the interest paid should have a co-relation between them.

PLACE Services are sold through branches. Making Promised Services available to the ultimate users. Branches of Cosmos Bank:

130 in India and spread in 6 different states

PROMOTION Advertising - Television, Radio, Movies, Theatres Print Media- Hoardings, Newspaper, Magazines Publicity- Road Shows, Campus Visits, Sandwich Man, Sponsorship Sales Promotion- Gifts, Discount and Commission, Incentives, etc. Personal Selling- Cross-Sale (Selling at Competitors Place), Personalized

Service.

II. Internal MarketingIt involves the People (5th P) of the bank i.e. the employees.

PEOPLE All people directly or indirectly involved in the consumption of banking

services. Workers, Employees, Management and other Consumers. Employees of a Bank represent the organization to its customers. Internal Marketing

III. Interactive MarketingThe quality of service provided during the buyer-employee interaction.

Efforts for previous strategies will turn futile if the interaction does not takes place satisfactorily.

It involves: Process (6th P) & Physical evidence (7th P)

PROCESS Standardization Customization Simplicity Customer Involvement

PHYSICAL EVIDENCEIt includes signage, reports, punch lines, other tangibles, employee’s dress code etc.

Current Marketing Strategies

Referral services

Direct mailing

Cold calling

Offering items having your brand identity

Using the media

Getting celebrities to endorse the product or service.

Sponsoring events

Using permission-based Marketing

Financial Strategies

HR Strategies

Since Cosmos Bank has undergone a mergers and acquisitions in the past and will continue its efforts in this type of growth in the future also therefore, its HR policies should be in compliance with the growth and diversification strategies followed by the bank which are as follows

HR should focus on smooth integration of employees. HR management system should work in the context of merger as well as on continuous improvement of recruitment, training and performance management processes.

The process of integration should involve defining the organizational structure of the merged entity, people placement in various positions across the business and corporate groups and integration of the grade and remuneration structure of the employees of the merged entities.

In the present scenario the recruitment process is based on appropriate competency profiling tools and matching employee profile to job specifications. The process is streamlined by following a uniform recruitment policy across the merged organization.

In addition to campus recruitment it should also undertake lateral recruitment to bring new skills, competencies and experience into the organization and meet the requirements of rapidly growing businesses. At present a six sigma initiative has been undertaken for the lateral recruitment process to improve capabilities in this area.

Cosmos Bank should encourage cross functional movement, enriching employee’s knowledge and experience and giving them a holistic view of the organization.

The rapidly changing business environment poses constant challenges to the organization therefore it is critical to enhance knowledge and skill sets across the organization to get an edge over competition and meet the customer expectations. Cosmos bank should built strong capabilities in training and development to build competencies.

At present Training on products and operations is imparted through web based training modules. Special programs on functional training and

leadership development to build knowledge as well as management ability are conducted at a dedicated training facility.

The bank must believe in defining clear performance parameters for employees and empowering them to achieve their goal this will help in creating a culture of high performance across the organization.

The bank must have a structured process of identifying and developing leadership potential.

IT Strategies

One important strategic initiative of the bank can be the use of WIRELESS TECHNOLOGY and SMART CARDS in rural banking to provide cost effective financial services to the poor.

It can enhance the level of customer service by offering 24 hr availability, multichannel banking, straight through processing and cost efficiency via electronic channels which allows wider and focused market reach and opportunities for cross selling of various financial products.

SWOT Analysis

STRENGTH

Online ServicesAll the banking facilities of Cosmos Bank have been encircled by online services. They provide their customer the facilities of D-mat account so that those people can have an access of their account from anywhere he is.

Advanced InfrastructureCosmos bank one of the well equipped banks in India with a good deal of advanced infrastructure in each and every branch of it in order to help its customer with a tester banking services. Not only advanced in nature but the computers are situated in such a manner in the branch that it helps both the customers and bank staff with a user friendly approach.

Friendly StaffsCosmos has the number of staff pool in all of their branches who are very much friendly in nature and always ready to help out their customers. Thus by providing faster and customized services they maintain a strong personal relationship with their customers.

12 hrs banking services

Cosmos acts as a savior to those persons who are in urgent need of money by providing a long hrs of services of 8-8hrs as compared to the other private banks.

Late night ATM servicesIn certain branches the ATM centers works even after 11.00 pm and thus able to provide a late night ATM services to their customers.

Brand nameWithin a very short span of time this bank has acquired a strong brand name by providing a quality of services to its customers, thus they have a getting a huge edge over their customers.

Huge networkCosmos bank has a highest number of branches. The bank consists of near about 130 branches all over India. The huge network of ATM has given an added advantage to them in case of salary account i.e. most of the companies have maintained their salary account to this bank as compared to others.

Diversified portfolioThis bank has a well diversified portfolio of products which not only helped them to minimize their risk but also huge customer base. They have a large pool of products to offer to their customers so that once a person if once they have a banker-customer relation with them.

WEAKNESS

High banking service chargesAs compared to other private branches Cosmos charges much more service cost to its customers and that is why they mainly end up with high end customers.

Less Credit periodThough Cosmos provides a huge loan credit facility to its customers but the period of credit limit is very small. Even though the credit period is not over, it sends letters of reminder to their customer which in turn results annoying customers and thus creates a lack of trust among the customers.

Overdependence on domestic marketThough it has felt its present in International market in recent years but their main focus is on domestic sector which increases their business risk.

Increase in NPAs reduces the profitability of the company.

Poor Customer Care/Service

With its aggressive marketing Cosmos Bank is rapidly increasing its customer base. They are not however, increasing the number of employees accordingly. This is leading to deterioration of the standard of customer service.

OPPORTUNITIES

Retail demandIncrease in demand for housing, car and personal loans due to rising living standards of the individuals.

Infrastructure being one of the biggest growth drivers which is expected to grow at about 35% in coming years.

Telecom 3G lending also increased the credit demand.

Rural penetration by private banks.

Consolidations and Expansions

Mergers and Acquisitions are very prevalent in the industries creating demand for the credit.

THREATS

The risks associated with providing banking services differ by the type of service rendered. Risk is the danger of an adverse deviation in the actual result from an expected result. High returns are said to also accompany high risk. So the risks involved in the banking sector are:

Future Plans

1. Mobile Banking FacilityIn future Cosmos Bank provide mobile banking facility to its customer. Mobile Banking of Cosmos Bank (“CosMobile”) is a service of funds transfers and other requests provided to its customers. With this service customer can transfer funds to any other person or directly

to account even pay to any merchant. Also with this service customer can submit multiple requests such as cheque book request, email statement request, Balance Inquiry, Mini statement, stop cheque, Addition of account, ATM PIN regeneration request etc.

With Mobile Banking you can access your account on your mobile, wherever you are. Now, check your account balance, transfer funds, pay bills and make credit card payments with Cosmos Mobile Banking (“CosMobile”).

2. Utility Terminal