Future of Information Technology in Indian Banking Sector
Evolving technology, rising middle class income levels and increasing demand from a consumer-oriented financial market characterise the current Indian Banking Sector. This transformed banking sector into customer centric, technology driven financial super market catering to diverse needs of customer. Banks now prominently feature technology driven delivery channels to reach maximum customers at lower cost and in most efficient manner. The beauty of these banking innovations is that it puts both banker and customer in a win-win situation. There is no denying the fact that technology is one of the most important driving factors in the growth of the Indian Banking Sector. Thus, to make this system more efficient and effective, the need of the hour is to design a system to promote marginal efficiency of investment in technology and widen the gap between marginal benefits and marginal cost.
India’s banking sector is growing rapidly and is expected to enjoy greater opportunities in the future. Post-independence, the nationalisation of major private banks in 1969 – a key milestone in Indian banking history- made bank accessible to majority of unbanked population of India. After the economic liberalization in the early 1990s, many new private banks – the ‘new generation tech-savvy banks’ – were launched. Now, several Indian banks are pursuing global strategies as Indian companies globalise.
At the same time, a large number of global banks have stepped their focus on India, keen to participate in growth of sector. Hence, the competition among financial institutions in India is ever increasing.
Further, Regulations are expected to see drastic changes, especially with introduction of Bessel-III norms. Increasing financial inclusion, rising literacy rate, deeper mobile & internet penetration and wider technology exposure have also transformed Indian socio-economic environment. Hence, the new age customers are
knowledgeable and demanding. To retain and woo customers, banks are required to embrace advance technology. Also, the delivery channels for banking products is increasingly varied and complex. Thus the sector has new challenges to face and milestones to conquer. Today, the question to be asked is- how prepared are banks in India to face these challenges and what technological advancements are required for this sector to be future-ready?
Krishnendu Saha,
FMS, Delhi
Nilesh Pokharkar,
FMS, Delhi