The business models for retail banking show interesting revelations across types of banks. The models adopted by banks vary among the public sector, private sector and foreign banks. The main approaches are as follows:
(a) Strategic Business Unit (SBU) Approach,
(b) Departmental Approach,
(c) Integrated Approach (part of the overall business plan).
Public Sector Banks in India generally have adopted the Departmental Approach as their retail banking business model.
The business model for retail banking is built as a part of the overall business plan and not done as a separate departmental activity, leave alone SBU.
In new generation private sector banks, the business model is very clear. They had set up Strategic Business Units (SBU) to have clear focus and business objectives.
The demarcation as a SBU is more a Management By Objectives (MBO) process wherein the business model is dealt as a modular strategy for achieving targeted profits with a provision to knockdown the module, if the retail plans are not translated as per the objectives.
Banks generally structure their retail banking models mainly on a positioning platform.
Foreign banks generally do not go by positioning objectives but purely on business objectives.