Banking in the Digital Age: It is technology plus….

B K Mukhopadhyay | Published: April 20, 2016 18:09:15 | Updated: October 24, 2017 12:06:32


In this age of 'innovention' (innovation plus invention) and fast changing techno-savvy world, the buzzword is there -- strengthen the marketing team so that the market share is broadened over time following a set of strategies that are customer- centric and at the same time risk-centric in approach.
Obvious enough banks have learnt a good lesson from the recent recessionary experience. As the incidence leaned heavily on failure of the internal risk management system, the banks have become much more cautious compared to the earlier times. It is also a fact that the risk management practices have been there prior to such incidences. Current trends are reflecting a departure from traditional practices in a number of ways - auditing is attached more importance (compliance is taken seriously than before), interest rates are being revised more frequently responding to changing market situations and risk management practices are being widely practised.  
Though as a whole the trends are encouraging, yet regarding management of assets and liabilities a lot of things are to be done - the assessments made more specifically especially keeping in view the newer risks factors and so also so far as talent retention strategy is concerned.
The branch expansion drive even by the minnows since initiated is also another area, which could help sustain the growth process via extending fresh services to the rapidly growing urban / suburban settlements.
Providing new/improved services vis-à-vis meeting customers' needs at lower costs that are being followed could help protect deposits growth moving south.  Innovations could exert a considerable competitive impact on other banks. Since quality has become a commodity quicker customer-friendly-environment backed services hold the key on this score. There of course remains a high possibility of netting more deposits from the public as the economy is moving north steadily.
Well-managed, aggressive branches are sure to attract an increasing proportion of the banking business in a particular region while at the same time boosting efforts towards retaining the existing customers. It is crucial to provide bank customers with a pleasant environment and naturally the focus must be for improving ways related to the service quality. It is for enhancing customers' experience - the value proposition that is given is relationship - the sort of relationship management that gives the personal attention they would not typically get from the larger competitors.
Recent evidences suggest that finance is not only pro-growth, but also pro-poor and economies with better developed financial systems experienced faster reductions in income inequality and poverty. For ensuring fast and consistent economic and social development a well functioning financial system is an essential pre-requisite and so also are the depth, capability and efficiency of the financial system. Appropriate financial sector policies calls for encouraging on  one hand competition and provide the right incentives to the individuals and on the other extending necessary support to foster growth, poverty reduction and better distributive justice making full use of the capacities. Improving financial access in a way that most benefits the poor calls for adoption of strategy for inclusion that travels well beyond credit for poor households and as such it is vital to broaden the focus of attention to improving access for all who remain excluded.
In fact, crisis period calls for a careful assessment of the causes, effects as well as the future plans and as such any sort of complacency is out of question. What is more under the ongoing scenario - especially keeping in view the fast changing banking scenario - where a particular technology is being replaced rapidly by another technology -- it is better to take for granted that in the near future there would be intense competition - intra and inter (players being government-owned banks, old private sector banks, new private sector banks and foreign banks) not only at the macro level but at the very micro level also. Naturally, formulation of strategies, continuous upgradation of skill and making the best use of talent backed by effective planning techniques that take care of the forthcoming series of happenings/things, pose the biggest challenge. Thus the future is for them who emerge to be top risk managers through optimal utilisation of all of the resources - physical, financial, technological and the most important one - the human resource.  
 Business boosting does not have any short-cut formula. Reality is something where one has to keep pace with the changing needs and thus correcting the strategies to be followed. What is more, one particular strategy is not going to necessarily give lasting success. As the very term strategy is borrowed from military science - the process followed should adhere to the situation warranted.
In fact, stability and resilience during financial turbulence is to be closely watched and practised. Dr Rangarajan, former Governor of Reserve Bank of India, is very correct in saying that with judicious action plan India can weather the storm earlier than others. The Committee on Financial Sector Assessment (CFSA) clearly stated that the banking system had not exhibited any significant vulnerabilities and cautions against any sort of complacency. Bankruptcy proceedings need to be reformed for effective enforcement of creditor rights and for enhancing creditor's confidence-level.
It remains also a fact that privatisation alone cannot solve the banking sector's problems. If the public sector banks go on showing a growth trend, why not encourage them? A better coordination between the players would be beneficial since both the sectors have plus minus points. Synergy enables the banking sector to counter the foreign players effectively.
Time is ripe for taking achievable, target oriented strategies so that the banking sector earns better respect from foreign customers as well. Techno-savvy nature is one part of the game. Talent search, competent board members, corporate governance, flexibility in decision making, updating of knowledge through continuous training system, borrowing the knowledge from the biggies, concentrating on pure banking activities etc. could definitely enable the banking sector to offer a tough fight to the foreign counterpart.


Dr B K Mukhopadhayay, Management Economist, is currently Director, Netaji Subhas Institute of Business Management.

m.bibhas@gmail.com
 

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