Modern Trends in Banking
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Transcript of Modern Trends in Banking
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8/8/2019 Modern Trends in Banking
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PLAYERS in the Banking Arena
Public Sector Banks-SBI, Indian, PNBLarger Network, Larger Manpower, good growth rate, selective channels,
average productivity
Old Private sector Banks-Federal, KVB, LVBLimited Network, Medium Manpower, fair growth , limited channels,
medium productivity
New Private Sector Banks-HDFC, ICICI, IDBIGrowing Network, faster growth, high productivity, partnership with third
parties
Foreign Banks-HSBC, SCB, CitiLimited Network, Partnership with third parties, Lesser Manpower, higher
productivity, faster growth rate, all channels,
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Changes in Banking Scenario
Sellers Market to Buyerss market
Institutional to Universal Banking to Niche
Banking
Corporates move into Capital Market
Hotting Competition in SME /EC Market
Exploring Retail Market
Experimentation with fee based income / value
added services
Delivery thro multiple channels
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Past vs Present/ Future Banking
Past Banking Present/ Future Banking
Market Place Confined Unlimited
Competition
between
Banks Brands
Product One for all- limited One for each- extensive
Delivery channel Single Multiple
Revenue thro Margin Fees/ Value added
services
Focus on Business Growth Revenue increase, cost
decrease
Presence of
Customer
Physical Not needed, E-Banking
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Milestones in Banking
Regulatory control by RBI
Banking Sector Reforms (Narasimham)
Standards of disclosureCapital requirements- Basle
Alignment of Indian to InternationalStandards
Provisioning norms
Risk based control
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Indian banks are facing substantial competitive pressures as bankinglandscape gets redefined
BANKS
Deregulation
Increasingfinancial
disclosure
requirements and
credit rating
requirements for
banks
Basel-IIrequirements,
income
recognition and
provisioning
standards
Greater managerial
autonomy to banks
Consolidation /
Increasing M & A
activity
Privatisation /
corporatisation / IPOs
Availability of risk
management
products like
derivatives
Managing asset
quality, NPA
Improving
productivity
E-Business
Forces shaping banking sector
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New Business Initiatives
Customer
RelationshipManagement
Infrastructure
Support
Product /ServiceDvpt
Changing customer
profiles
Increasing demands by
customers
Higherexpectationsof
service quality especially
foranytime,anywhere
banking
Increased focusonretail banking
Tie-ups with financialinstitutionsto market
third party products
Foray into merchant banking
Technology upgradation
triggering need forredesigned processes
Increase effectiveness of
the HR function
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Key BankingKey BankingTechnology AspectsTechnology Aspects
Cost Cutting Cost thro Integration
Better Information Management
Risk ManagementComplexitiesEasier Risk IdentificationEasier to Assess Risks
Customer Reaching Customers
Faster Managing Diverse
NeedsCompetition Competitive Edge
in its Strategic Group
The winners will be those institutions that tie their technology to theirstrategies in order to meet their challenges.
Performance & Evaluation Better Metrics to Benchmark
Against Objective Evaluation Process
Key Banking Technology Aspects
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Importance of Core Banking Solution
Faster Response toCustomer Demands
AllowsFaster New Product Developments
CBS Architecture Allows for Existing Products to be QuicklyCustomized
Online Validation of Data at the Time of Entry
Independent from the Organization Structure and Supports thefour Primary Entities Customer, Account, Product and Business
Organization
Runs in Real Time UpdateMode
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RISKS associatedwith BANKING
Strategic Risk
Operational Risk
People Risk
Credit Risk
Market Risk
Financial Risk
Interest rate Risk Maturity Risk
Information Risk
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Changesinthe Banking Environment
Changing Delivery Channels
Changes in Core Banking Solutions
Changes in Support Functions
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CHANGING DELIVERYCHANNELS
Post Office
Internet
Tele-Marketing
Branch
Third Party
ATMs
Point of Sale Sales Force
Call Centre
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CHANGES INCORE BANKING SOLUTION
ProductManagement
Marketingproducts
Developproducts Maintain
Review portfolios
Modify products Studycompetition
Operations
Process &Maintain
Accounts Moneytransactions
Complywith
Regulations- KYC,AML, Risk
provisioning
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CHANGES IN SUPPORTFUNCTIONS
Asset Recovery- DRT, SARFAESI
Manage Fixed Assets
Finance and Accounting
TreasuryOperations Domestic , FX
IT support innovations
Risk Management
HR Recruitment, Training and retention
Audit Risk Based Audit, Sampling
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CHALLENGES IN FUTURE
Increased Competition and Customer Retention- CRM
Reduction in Customer Response time
Complexity of Business
Highly demanding Customer- CRM, Product Innovation, Mobile
Banking, Anywhere Bkg, Internet based Banking
Increase level of efficiency & productivity- HR Culture, skills/
knowledge improvement
Process Outsourcing
Lending Long-term skill set & ALM Increased Technology- RTGS, Core Banking Solution, INFINET
(Indian Financial Network)
Security of Data
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FUTUREOF BANKING
Re-structuring and Re-positioning
Mergers and Acquisitions and Takeovers
Regulatory Supervision / Intervention
Financial Supply Chain Management
Outsourcing of non-core activities
In-sourcing of Cash / Receivables Management
Management of Asset quality..
BUTBanks will continue to manage liquidity, create
& sustain trust and manage risk.