The Cusp of Change !!

Indian economy is in the realms of an exciting turnaround. As per the IMF estimates, the Indian GDP is slated to be on its way to regain its past growth rate and is pegged to clock over 7.5 % in fiscal 2018-19, fuelled amongst other measures, by GST reforms. We are also amongst the countries with one of the fastest growing services sector in the world with an annual growth rate above 9%. Typically, banking industry grows at 3 times of country’s GDP. Hence by 2018-19, banking sector will also see an upward trajectory in its annual growth rate, expected at 21-25 % coupled with increase in demand of credit-off-take at all echelons of Industry but skewed more towards MSME and SME. To able to cope up with this surge, there will be two major vectors that will play a decisive role for banking industry – Ubiquitous use of Technology and Optimizing Synergies through alliances. Today's digital age and ever changing environment requires banks to re-imagine their business and business models continuously. India has leapfrogged into the era of innovation in banking by adopting the latest in technology. Disruptive technologies that are changing the face of all businesses like Big Data, artificial intelligence will soon be an order of the day in Banking for personal banking and lending strategies. Parallely, what is relevant today may be obsolete shortly. Concepts like Near Field Communication will change the way we shop. Digital lending on the basis of Data Analytics will change the way banks lend. Block-chain technology which has been already seeing its impact in Banking , will dramatically change anything and everything of banking, from KYC to Transactional Banking to Credit Decisioning. In short, whatever changes we saw in banking technology over the last 10 years, 3x of the same can be expected over the next 5 years. However, since majority of banking demand –both credit off-take and banking facilities - will come from the bottom of the pyramid, i.e. rural India, which are still relatively virgin markets, it’s only pertinent that banks take the technology to the hinterlands and use it more vehemently for Inclusive banking. Unless and until technology reaches and gets adopted in the hinterlands, the “Whats-app moment’ in banking will never come and the supply of credit and banking services will never meet the demand. Secondly, its equally important to note that in today’s dynamic market, no company irrespective of industry can depend on organic/inorganic growth media alone. It applies to banking too, infact more so, for due to the advent of technology, the competitive advantage of banks is eventually going to shrink over the years. Today is an era of alliances, an era of complimenting and leveraging each other’s’ USPs and an era of pragmatism and collaborative advantage. Today we see Fintech companies, having shown stupendous growth by dint of alliances, have grown so big and infact few have also been awarded banking licence by the regulator. Right alliances to create value for business and for the customers, therefore, are equally important for banks for being in the market.

We, therefore, as an economy and as a Banking Industry, are at a cusp of an exciting change, one which promises many never-before opportunities and exciting times ahead where an optimal use of technology, penetration of technology for inclusive banking and forging the right alliances and partnerships for leveraging synergies will hold the key for future.

PS : Though this article was written by me originally for somewhere else, publishing it here for the wider audience. Please do share your views !

Disclaimer : The article contains my personal views and may not represent the views of any other person or body corporate including that of my Employer.