CHALLENGES FACED BY THE BANKING SECTOR IN INDIA By
Description: CHALLENGES FACED BY THE BANKING SECTOR IN INDIA By Sushma Bansal CHALLENGES FACED BY BANKING SECTOR IN INDIA INTRODUCTION Banks in India considered to be lifeline of the economy. They play catalytic role in activating and sustaining
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slide1. CHALLENGES FACED BY THE BANKING SECTOR IN INDIA By
Sushma Bansal<br>
slide2. CHALLENGES FACED BY BANKING SECTOR IN INDIA INTRODUCTION
Banks in India considered to be lifeline of the economy. They play catalytic role in activating and sustaining economic growth. As per KPMG-CII report, India’s banking sector is expanding rapidly and has the potential to become the fifth largest banking industry in the world by 2020 and third largest by 2025.
The pressure experienced by the banking sector over the past few years have been steadily increasing . These result from the emergence of new regulatory frameworks designed to avoid the scenarios encountered during the recent financial crisis and the new governance and compliance demands.
The new and changing paradigms are having a profound impact on customer habits, which has resulted in the requirement for online electronic transactions that are more efficient, secure and friendly.<br>
slide3. OBJECTIVES OF THE STUDY To study the customers perception towards technological banking.
To find out the problems faced by the customers while availing technological banking.
To find out the various issues faced by banking industry in rapidly changing global economy.
To deal with customers expectations.<br>
slide4. LITERATURE REVIEW The Indian banking industry facing multiple and concurrent challenges such as increased competition, rising customer expectations and diminishing customer loyalty. The banking industry changing at a phenomenal speed. While at one end of the customers using physical branch and at the other end customers are becoming familiar with ATM’s, e-banking, m-banking and cashless transactions.
In this complex and fast changing environment, the only sustainable competitive advantage is to give the customers an optimum blend of technology and traditional services.
The various challenges and issues faced by banking industry are as follows
Revolution of Information Technology- Developing and acquiring the right technology, deploying it optimally, and then leveraging it to the maximum extent, managing technology is, therefore, a key challenge for the Indian banking sector.<br>
slide5. Timely Technological Up Gradation – To face competition it is necessary for banks to absorb the technology and upgrade their services.
Global Banking – the impact of globalisation becomes challenges for the domestic banks as they are bound to compete with global players. If we look at the Indian Banking Industry, then we find that there are 36 foreign banks operating in India, which becomes a major challenge for Nationalized and private sector banks.
Intense Competition – the RBI and Government of India kept banking Industry open for the participants of private sector banks and foreign banks. Because of this domestic banking has to face intense competition in the local market.
Industrial Development – the developments in Indian industry and Government ,and the integration of India with global markets also offers innumerable opportunities to the banking sector.<br>
slide6. Employee Retention – The banking industry transformed rapidly in the last ten years, employee retention has become the biggest challenge for banking sector.
High Transaction Cost – A major concern before the banking industry is the high transaction cost of carrying non-performing assets in their books, the growth led to strain in the operational efficiency of banks and the accumulation of non-performing assets (NPA,s) in their loan portfolios.
Also few more issues are as follows
Slow down in the economy
Banking Regulations
Less Client Borrowings
Increase in the number of banks<br>
slide7. METHODOLOGY OF THE STUDY This paper is the outcome of a secondary data on Indian Banking sector with special reference to Indian context. To complete this annual reports, various books, journals and periodicals have been consulted, several reports on this particular area have been considered and internal searching has also been done.<br>
slide9. CONCLUSION The biggest challenge for banking industry is to serve the mass and huge market of India. Companies have become customer centric than product centric. The better we understand our customers, the more successful we will be in meeting their needs. In order to mitigate above mentioned challenges Indian banks must cut cost of services. Another aspect to encounter the challenges is product differentiation. Apart from traditional banking services, Indian banks must adopt some product innovation so that they can compete in the competition. Technology up gradation is an inevitable aspect to face challenges. The level of consumer awareness is significantly higher as compared to previous years. Now-a-days they need internet banking, mobile banking etc.<br>
slide10. SUGGESTIONS As per the above discussion, we can say that the biggest challenge for Indian banking industry is to serve the mass market of India.
Expansion of branch size in order to increase market share is another tool to combat competition. Therefore, Indian nationalized and private sector must spread their wings towards global markets as some of them have already done it.
The security and safety to access the ATM, mobile banking, internet banking, has to been keenly noted.
Make use of technology much easier.<br>
slide11. REFRENCES [1]. Alpesh Shah et.al., Indian Banking 2020: Making the Decades Promise Come True, www.bcg.com, www.ficci–banking.com, www.iba.org.in
[2]. Bartel, A. P. (2004). ―Human Resource Management and Organizational Performance: Evidence from Retail Banking‖. Industrial and Labour Relations Review, 57(2): 181-203.
[3]. Chellaswamy P. (2010), ―Modern Banking Management‖, Himalaya Publishing House.
[4]. Clark, M. (1997) ―Modelling the Impact of Customer-Employee Relationships on Customer Retention Rates in a Major UK Retail Bank‖. Management Decision, 35(4): 293-301.
[5]. Dev, S. M. ―Financial Inclusion: Issues and Challenges‖. Economic & Political Weekly
[6]. Export Import Bank of India, www.eximbankindia.com
[7]. Goyal, K. A. and Joshi, V. (2012) ―A Study of Social and Ethical Issues in Major Announcements in the Union Budget 2012–13 for the Banking Sector<br>
slide12. THANK YOU<br>
Sushma Bansal<br>
slide2. CHALLENGES FACED BY BANKING SECTOR IN INDIA INTRODUCTION
Banks in India considered to be lifeline of the economy. They play catalytic role in activating and sustaining economic growth. As per KPMG-CII report, India’s banking sector is expanding rapidly and has the potential to become the fifth largest banking industry in the world by 2020 and third largest by 2025.
The pressure experienced by the banking sector over the past few years have been steadily increasing . These result from the emergence of new regulatory frameworks designed to avoid the scenarios encountered during the recent financial crisis and the new governance and compliance demands.
The new and changing paradigms are having a profound impact on customer habits, which has resulted in the requirement for online electronic transactions that are more efficient, secure and friendly.<br>
slide3. OBJECTIVES OF THE STUDY To study the customers perception towards technological banking.
To find out the problems faced by the customers while availing technological banking.
To find out the various issues faced by banking industry in rapidly changing global economy.
To deal with customers expectations.<br>
slide4. LITERATURE REVIEW The Indian banking industry facing multiple and concurrent challenges such as increased competition, rising customer expectations and diminishing customer loyalty. The banking industry changing at a phenomenal speed. While at one end of the customers using physical branch and at the other end customers are becoming familiar with ATM’s, e-banking, m-banking and cashless transactions.
In this complex and fast changing environment, the only sustainable competitive advantage is to give the customers an optimum blend of technology and traditional services.
The various challenges and issues faced by banking industry are as follows
Revolution of Information Technology- Developing and acquiring the right technology, deploying it optimally, and then leveraging it to the maximum extent, managing technology is, therefore, a key challenge for the Indian banking sector.<br>
slide5. Timely Technological Up Gradation – To face competition it is necessary for banks to absorb the technology and upgrade their services.
Global Banking – the impact of globalisation becomes challenges for the domestic banks as they are bound to compete with global players. If we look at the Indian Banking Industry, then we find that there are 36 foreign banks operating in India, which becomes a major challenge for Nationalized and private sector banks.
Intense Competition – the RBI and Government of India kept banking Industry open for the participants of private sector banks and foreign banks. Because of this domestic banking has to face intense competition in the local market.
Industrial Development – the developments in Indian industry and Government ,and the integration of India with global markets also offers innumerable opportunities to the banking sector.<br>
slide6. Employee Retention – The banking industry transformed rapidly in the last ten years, employee retention has become the biggest challenge for banking sector.
High Transaction Cost – A major concern before the banking industry is the high transaction cost of carrying non-performing assets in their books, the growth led to strain in the operational efficiency of banks and the accumulation of non-performing assets (NPA,s) in their loan portfolios.
Also few more issues are as follows
Slow down in the economy
Banking Regulations
Less Client Borrowings
Increase in the number of banks<br>
slide7. METHODOLOGY OF THE STUDY This paper is the outcome of a secondary data on Indian Banking sector with special reference to Indian context. To complete this annual reports, various books, journals and periodicals have been consulted, several reports on this particular area have been considered and internal searching has also been done.<br>
slide9. CONCLUSION The biggest challenge for banking industry is to serve the mass and huge market of India. Companies have become customer centric than product centric. The better we understand our customers, the more successful we will be in meeting their needs. In order to mitigate above mentioned challenges Indian banks must cut cost of services. Another aspect to encounter the challenges is product differentiation. Apart from traditional banking services, Indian banks must adopt some product innovation so that they can compete in the competition. Technology up gradation is an inevitable aspect to face challenges. The level of consumer awareness is significantly higher as compared to previous years. Now-a-days they need internet banking, mobile banking etc.<br>
slide10. SUGGESTIONS As per the above discussion, we can say that the biggest challenge for Indian banking industry is to serve the mass market of India.
Expansion of branch size in order to increase market share is another tool to combat competition. Therefore, Indian nationalized and private sector must spread their wings towards global markets as some of them have already done it.
The security and safety to access the ATM, mobile banking, internet banking, has to been keenly noted.
Make use of technology much easier.<br>
slide11. REFRENCES [1]. Alpesh Shah et.al., Indian Banking 2020: Making the Decades Promise Come True, www.bcg.com, www.ficci–banking.com, www.iba.org.in
[2]. Bartel, A. P. (2004). ―Human Resource Management and Organizational Performance: Evidence from Retail Banking‖. Industrial and Labour Relations Review, 57(2): 181-203.
[3]. Chellaswamy P. (2010), ―Modern Banking Management‖, Himalaya Publishing House.
[4]. Clark, M. (1997) ―Modelling the Impact of Customer-Employee Relationships on Customer Retention Rates in a Major UK Retail Bank‖. Management Decision, 35(4): 293-301.
[5]. Dev, S. M. ―Financial Inclusion: Issues and Challenges‖. Economic & Political Weekly
[6]. Export Import Bank of India, www.eximbankindia.com
[7]. Goyal, K. A. and Joshi, V. (2012) ―A Study of Social and Ethical Issues in Major Announcements in the Union Budget 2012–13 for the Banking Sector<br>
slide12. THANK YOU<br>