In the run up to the 21st century digitization Banking industry is transforming to the different paradigm which is sea different what we have witnessed so far in the last five decades since it’s nationalisation in 1969. Today’s banking scenario and yesterday’s banking sector, the paramount difference is obvious DIGI -BANKING. The basic objective of today’s Socio-Economic situation is differential customer service which has reached in different level all together , All the banks National or Private Entity vying to woo the clients providing max. benefits in short stint , all are trying to play with customer’s patience and how fast they can serve the customer hassle free , seamless , customised service with value added features.
Recently AXIS BANK is placing advertisement on digital & print Media on improved & caring customer service that both the lady customers approached the Bank Manager for their -start- up venture loan, during their close parley on their venture suddenly phone call comes on Manager’s mobile but Manager did not pay heed to call bur continued the discussion envisages the customer priority and focus and magnitude of seriousness on customer dealings.
DBS bank pioneer in DIGI-BANK in the south East Asia expanding it’s operation from corporate banking to Retail Banking focussing on Digital based payment & other banking activities through the Netbanking dawning the new era of Digitalbanking. Right from deposits, bill payment, investment, managing finance. BANKING THROUGH APPS – The buzz word of DBS Banking squeezed the entire banking into the Smart phone thus integrated the automation and customer orientation to a new height through STP ( Straight Through Process )with No manual intervention thus reduces the manual timing of banking through Digital platform . A well composed system with performance driven agile team through IPA (IntelligentProcess Automation ) helps the customer’s journey in the banking process to reduce theTAT and mitigate the Human error.
DBS bank’s CHATBOTS comes very handy streamlines attached with Facebook or Messenger also very user friendly interactive system guides the clients about check balance, Track Expense make payments on client’s behalf. It is available 24/7 like call centre hence Banking is moving towards the customer’s fingertips so reaching bank for banking activities are becoming irrelevant. Banking time is becoming anytime banking in line with the global practices realm of international standards where other developed countries like USA, UK, CANADA, CHINA , JAPAN , FRANCE and other super powers are in vogue .
Currently Indian Banking system is plagued with one single most challenge is poor quality of asset. ie- NPA , currently clocked is around 7.5 lacs crore roughly 0.5% of Indian GDP which is very staggering what banking Industry is not able to come out of the cobweb of NPA.
IBC ( Insolvency & Banking code ) is also a revolutionary step in the banking spectrum in India is the process of reconciliation in the special court for the defaulting companies in India for bank dues which has though simplified the due amount clearance of Banks but certainly not full proof process to get the total outstanding amount clearance rather bank is heavily losing money hence the health of the Banking industry in India is dwindling .
Fiasco in the Telecom Industry in India having very adverse impact on Banks there is again high chance of NPA what the Chairman of SBI has reiterated ultimate bank will be sufferer of any disaster happens in the country since bank is not insulated from any eventualities of financial changes of Corporate sector and it’s legal tangle . Telecom Industry is grappling with 1.5 lac crore debt due with Govt. of India which is yet to be paid , Supreme court has also intervened to clear the dues but the stalemate is going which if they resort to IBC Bank will lose abysmally high amount which will further dent the banking Industries health.
Joint Venture In the Banking in the Insurance created different dimension in the Banking sector for last 2 decades almost created huge revenue and considered as the best Revenue generating product what all the banks irrespective of volume focussing now a days because of highest revenue and recurring income.
Now We see 5G in Banking where bank will do every job on client’s behalf what other developed countries like USA, UK , Japan does because of the busy schedule of people . banks are considered as true friend of clients from counselling to the financial matter discussion to urgent arrangements of Funds in emergency thus from planned expense like Education, House purchase, marriage, medical Exp. Auto loan and for any other contingency funds bank usually stands by thus manages the finances of individual has become the order of the day now a days and dependence of people on Bank which bank is leveraging also. No charges on OD or No charges on foreign transaction, Integrated security system, protection from any unwanted wrong use of bank A/C or criminal access on account is also added advantages.
Fintech Companies are also future of Mini Banking in India , Approx. 50 Fintech Companies under the supervision of RBI working well to cater the on- line payment banking , loan arrangement , comparison of financial instruments , Insurance Policy comparison, providing health & general Insurance , Equity investment, online Mutual Fund , Credit card, Credit Score analysis, Start Up venture supporter , through digital platform dawned the new era of Payment banking in India as an Example PAYTM, BHUMI APPS, BILL DESK, MOBIKWIK, RAZORPAY, BANK BAZAR, POISA BAZAR, POLICYBAZAR, PHONEPE, ACKO, LOANTAP to name a few.
Crypto Currency is also one of the important innovation in the banking industry though has not been popular like libra, The digital Currency of Face Book poised to be popular in the next couple of years subject to the Rules & Regulations of RBI & other central banks different countries.
Mc Kinsey Report suggests that Banking Industry in India in on the Crossroads and digital growth would certainly scale up the world class business opportunity and also would push world’s fastest growing economy to the new height with challenges strength to strength. Macroeconomic fundamentals continues to be strong since the country is in the mid of Digital revolution and the ongoing disruptive changes within the regulatory framework from time to time and the AADHAR linked with Bank is also created new dimension in the Banking Sector inclusiveness promoting competition among the domestic Banks with foreign Banks created level playing field for everyone . Continuous Innovation of new services, out of box strategic approach and earning customer loyalty will be the key indicator of survival and success in the dynamic changes in the banking sector .
AI( Artificial Intelligence ) will be off course key parameter and data analytics for better decision on income estimation , standard of living, credit worthiness, problem resolution, financial planning, future income planning , personal relationship and connect , seamless services , personalised data availability and designing for the better service , improved human interaction , innovation . bank should not be settling down on the status quo, close to 90% of customer leaves bank becoz of poor services and no personal touch. Digitalization bridges the gap in cross functional activities helps to collaborate and articulate the multi-dimensional and directional issues to stitch towards the same direction to meet the common objectivity. The major issues Banking industry is going to face is legacy platforms- the pessimistic views that is conventional approach of customer services which continues to dominate indian banking industry particularly in the Rural or semi urban areas becoz of the backward mentality of staffs , they are reluctant to embrace the new fast changing technologies which is off course imperative and the disconnect needs to be wiped out at the earliest and some serious padding required to adopt and adapt the technology and innovation at the grassroot level in order to change and invite the digital culture in the banks to leverage the better and personalized customer services and take the customer to the new height of faster response . it requires rapid reshuffling in every stage of operation even taking some harsh steps needs to be taken to streamline and embrace the changing scenario . If required Govt. should contemplate the idea of reforming the Rules and regulations and amendments of acts will pave the fresh energy and unshackled working culture in this critical moment of transformation. Banking Union happens to be the biggest bottlenecks of change should be taken into confidence in the changing process rather they also should be the part of change since change is imperative has to be addressed in every stage.
The Efficiency Ratio matrix is also very important to be addressed simply the how much cost Bank is incurring to get revenue. Digital changes the paradigm of business process has made the scenario faster , eliminated lot of repetitive work shaved large part of cost structure and add value into system will decide the future of banking industry .
Another important segments what Banking sector needs to touch and target that is millennials roughly 40% of the entire customer base heavily engrossed with social medias sites and highly educated, conscious and knowledgeable and highly digital savvy hence bank should be also geared up and tuned to that extent to deal with such sophisticated class of people.
Recent crisis in PMC BANK of Mumbai & YES BANK which is resultant of serious lapsation of compliance, serious governance issues, poor asset quality , diversion of fund to the wrong entity , promoter’s whimsical behaviour towards compliance and governance , unnecessary luxury and throwing public fund towards unnecessary campaign and earning name and fame without consolidating the financial position , suspected political funding , ironically Financial Regulator we have observed that they have cracked down and intervene when situation goes out of control , fracas starts in the company , thing goes out of hand and proportion , siting an example when YES BANK crisis started in 2017 govt. got ample time to rectify the situation , they could have appointed Administrator that time only, Govt. representative could be deputed that time only ,it has taken almost 3 years’ time to supersede the board of YES bank and ask SBI to infuse fresh capital through Equity investment , it should have foreseen before hence lakhs of depositors and customers and associated people could avert this unwanted situation and severe crisis. We expect mature and proactive approach of RBI to avoid such similar incident in future. People’s trust is crumbled down towards our financial system requires to be restored.
Covid 19 Pandemic -The challenges in the Banking industry is very much explicit apart from banking stock declined by 15 % which is major onslaught on the financial sector’s image, future prospect and inclusiveness . NPA is supposed to be high which is major challenges of banking sector moreover RBI’s 3 months moratorium would further aggravate the situation and banking will be severely hit out of the recession what world is already entered into according to the IMF. The Sept. bad loan expected to surge beyond 10% average compare to 9 % last year , EMI needs to be reworked , the hard hit sectors like automobile, tourism, aviation, hospitality, Hotel, Consumer Durables , Real Estate & Construction would further push the NPA to as high as 15 % which is suspected according to the industry expert and the obvious fall out will be severe pay cut , unemployment , job loss , economy is already out of gear, loan growth decline with high default ratio. Central Govt. should keep and deploy disaster Management Team or quick Response Team for Bank also because of sudden catastrophe bank should be proactively deal with such unforeseen events to safeguard the interests of all stakeholders . In order to improve the liquidity in the market RBI has cut the Repo Rate which is noteworthy cascades the economic revival and infuse more and more confidence among the industrialist . Business continuity and communication with the customers through all sorts of communication channels also key area needs to be addressed by all banks what Banks in India are religiously doing for the betterment of customer servicers through existing as well as new innovative ideas. This COVID 19 crisis has opened new vistas for the Banking sectors as well.
Merger of All Public Sector banks will give banking Sector a new scale of operation.1st of April 2020 we have witnessed the mega merger of 3 banks PNB, OBC & UBI merged into single bank called PNB, Govt’s merger of 10 Banks into 4 bank will certainly give baking industry a major boost for scale of operation, investment into modernisation and digitalization , profitability consolidation of operation, globalisation ill led to customer’s benefit. Cost of operation will certainly go down. As far as corporate governance and standard is concerned will improve including accountability and effective monitoring. Reduction of multiple position and subsequent contraction of surplus unused labour force will dwindle which will augment banking profitability and productivity. It will integrate bank & banking activities to the large extent.