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Banking Inustry Vision 2020 - Consequent to nationalisation in 1969 and economic liberalisation in 1991, banks. in India are on fast track growth in size, technology and deliverables to customers.
Every aspect of banking will be transformed by new technology by 2020. Customer friendly products, delivery channels, relationship banking, dependency on IT systems and competitive pricing would be the driving forces, but a pressure cooker atmosphere cannot be avoided.
The most successful institutions will be those that combine visionary technology and very competitive pricing with strong relationships and brands built on trust with previous indepth experience of the client business.
Banks would have adopted the following strategies to move to hi-tech banking as a necessity of e-commerce, e-banking etc.
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(a) Identification of select branches from out of the entire spread of the branch network to provide innovative services.
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(b) In the scenario of severe competition and escalating expectation of the customers for newer products and improved as well as alternative delivery channels, the nerve centre of banking will be redefined.
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(c) The key to survival of banks, therefore, is retention of customer loyalty by providing value added services tailored to their needs, using state-of-the-art technology, instead of relying on outdated practices.
(d) With the identified select number of branches for creating hi-tech banking, an ideal centralised solution can be considered. A countrywide network of computers could offer banking products to select corporate clients and high net worth individuals.
(e) Needless to say, flawless security and seem less integration of operations through untiring efforts of employees and cohesive support from the management would be the key factors that will enable banks to make successful inroads into enabled 'New Age' banking.
(f) Once the centralised topography is put in place, the infrastructure required for banking and commerce'(with the necessary security) can be built to provide state-of-the-art innovative services.
(g) Flexi-work atmosphere with banking officials working out of their homes, without the need to go to offices, may be put in place. Instead of intrabank crosscountry transfers, there may be interbank movement of senior officers in the public sector domain, if at all it remains so.
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(h) Allocation of capital for each product/service and also borrowerwise capital allocation, as far as credit, market and operational risks are concerned, through sophisticated risks management techniques.
(i) All performance measurements shall be risk-adjusted, as Risk Adjusted Performance Measurement (RAPM) plays a key role in assessing the effectiveness. Risk-adjusted salary packages cannot be ruled out.
(j) In the case of settlement in the retail segment, extensive use of debit card by the public and acceptance by merchant establishments would replace cheque cutting habit of customer, as currency/paperless financial deals would dominate.
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There is no way banks can remain lukewarm in their attitude and lackadisical in their approach to hi-tech banking and yet hope to grow. It is clearly a choice of either survival or extension, and that which survives would provide core commercial activity, instead of providing just financial services.
The internet would be the engine of the banking revolution in the decade to come, and e-commerce its fuel. An April 2005 survey by the IAMAI indicates that the total value of e-business in India could grow horn Rs.570 crore in 2004-2005 to Rs. 2300 crore by 20062007. As e-commerce would involve banking facilities, one can imagine how much turn over would be put through the banking system.
Business to Business (B2B) involving business organisation as buyer and seller; Business to Consumer (B2C) involving customisation of business would all pave way for a radical change in the banking habits of the Indian consumer. E-commerce through client and server and M-commerce through mobile agent would fuel the change in banking requirements. Companies need visionary leadership; mere management skills are not enough
What's the point of managing people and products well butin the wrong direction? Visionaries in iarge organisations are often marginalised because by definition they are constantly challenging fundamental assumptions about the future. It is better to bring forth the vision, and infuse fresh and independent thinking.
Quality people often need more than money to relocate themselves. Nearly four decades ago, man landed on the moon. Within a decade and a half from now, perhaps man can avail of banking services there, if the exponential technology boom both in the art and science of banking can be taken as an indicator. (Excerpts from Vision 2020: Banking Industry. Courtesy: Indian Banking Conclave: Bankers' Conference 2006)
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