Future of the Indian Banking Sector

– Manisha Sharma

 

Introduction:

A decade ago, visit to a bank would mean spending money on travel, waiting in long queues and missing a half day’s work. Now, with the growing usage of digital banking, the number of visits to bank branches have reduced.  The latest innovation by HDFC Bank in the self-service channel is the humanoid robot, so you no longer need to wait in long queues. Banks are aggressively using digital marketing strategies to attract new customers and enhance the experiences of existing customers. However, much of the banking sector depends on investment cycle, working capital demand, monsoon, commodity prices and government spending in some sectors such as infrastructure sector.

An assessment of the current scenario indicates that the credit growth has declined to 4.4% in 2016-17 from 8% in 2015-16. The asset quality has deteriorated further in the current fiscal leading to a Gross NPA Ratio of 9.5% with Public Sector Banks contributing the most. The macroeconomic indicator – inflation has dipped to a record low in 2017 and RBI intends to keep it at ~4% by the end of 2017-2018. This, coupled with softer commodity prices induces difficulty in recovery of credit growth. Is this scenario going to change in future?

The future of the banking sector will revolve around evolving customer expectations, technological innovations, improved regulatory requirements, increased competition and change in demographics. Following is the detailed explanation of how these forces will shape the banking sector in future.

A shift from product-centric approach to customer-centric approach:

The demand from customers are evolving and banks are focusing on providing tailor-made products in order to satisfy their needs.  Banks in India are also establishing their footprints in the hinterlands. With the advent of technology and deep branch penetration, agricultural loans will be delivered within 2-3 days in the future, a change from the current 3-4 days. The corporate loan portfolio’s growth rate is declining. This will lead to a shift in focus of the banks towards the retail lending. The banks will invent new loan products in the future to target the retail segment.

Evolving Technology:                                                                                                                  With the growing influence of fintech companies in India, banks will use new technologies like Artificial Intelligence, Machine Learning, Blockchain, Robotics, IOT, etc. not only to enhance customer experience but also to achieve operational efficiency.

 

Picture1Source: PWC Report

 

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Applications of Blockchain in Healthcare Industry

Author: Harish Sankar

Introduction

In the present time, it would be hard to find a buzzword as trending as Blockchain. What is Blockchain? How does it provide disruptive solutions to transactional problems in finance industry? How can the same fin-tech solutions solve crucial problems in healthcare industry? These are the questions I intend to answer in this article.

What is Blockchain Technology?

When your cousin from USA transfers 500$ to you, the banks don’t literally put 500$ on a plane to deliver to you. What really happens is a movement of digital numbers from one account to another. Your money and identity is just data in the ledgers. The bank is an intermediary which completes this transaction. The problem is that, such a centralised system can be hacked.

Blockchain solves this by being a distributed system. Your ledger is shared in a distributed network. As the transaction is made, other miners in the network are notified. Each miner rushes to be the first to check whether the transaction is valid. The first to validate the transaction with their logic (Proof of Work) are paid salaries in Bitcoins. If other miners corroborate it, the ledger is updated. While all users can access, inspect or add to the data, they can’t change or delete it.  This makes it tamper- proof, leaving a permanent and public information trail of transactions.

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Figure 1: Types of Database Structures

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