Key Trends Ruling the Indian Banking Sector

by Samiksha S. Author

For the longest time now, we have been familiarised with banking as an activity that deals extensively with accepting and safeguarding money belonging to a certain individual or entity, which is then let out as a loan towards a profit-making activity mostly to cover expenses. Even though this definition of banking is true, there is more to it!

Today, apart from the regular saving and deposit functions, banks make available add-ons like insurance, mutual funds, and even source account linked DEMAT facility. Cross-selling has become a central agenda at most banks. Likewise, the government introduces multiple schemes in the public interest, which are delivered through banks to the end recipient.

To develop an all-round understanding of this sector, it is essential that today's youth, who will become tomorrow’s policymakers, bankers, and individuals responsible for managing their own finances, do have the requisite know-how of banking along with economics and other branches of finance.

This is one of the key aims with which we, at the Indian School of Business & Finance, one of the best B.Sc. economics and finance institutes in Delhi, have introduced an undergraduate program in the said stream. The idea is to enable our youth to understand the various facets of banking so that they can go on to make a successful career in the same.

So today, in this article below, we, at ISBF, will shed light on some common trends in the Indian banking sector that can essentially make or break the economy as a whole. Read on.

Hard-Core Digitalisation:

With Prime Minister Narendra Modi led government focusing its attention extensively on digitalisation, we can confidently state that the digital era has successfully made an entry into banking operations. The government today focuses extensively on promoting a cashless economy, where online transactions through platforms like internet banking, mobile banking, and UPI are thoroughly backed in every big and small way possible.

The idea is to ensure that banking can be carried out from the comfort of one's home without having to physically visit the branch premise. There are exceptional cases like the one where you wish to access your safety vault, but otherwise, all the other transactions can be initiated without having any sort of physical contact or conversation with the banker.

Right from getting to know your account balances, downloading account statements, initiating transfers within and outside your bank of operation, creating and managing fixed deposits, and taking care of bill payments – all of these functions and more can now be managed digitally.

As one of the best B.Sc. economics and finance institutes in Delhi, we, at ISBF, strongly believe that promoting the digital age in the banking sector is indeed a great initiative. To a great extent, the COVID-19 pandemic can be credited for the digital breakthrough in the Indian Banking sector.

Lasting Relationships over Transactional Ones:

Gone are the days when customers continued to bank with the same bank for years. Today's customer has become highly goal-oriented and practical, which is why banks have no option but to go out of their way to meet the evolving expectations and service levels of both the current and prospective customers.

In fact, one look at the Indian banking sector, and we are likely to bump into multiple banks, which are essentially a mix of nationalised banks, private banks, cooperative banks and scheduled banks. This only means that the customer has multiple choices at hand and can at any moment choose to switch to a bank that offers better services not just in terms of the front-end staff but also with respect to technological know-how.

To survive and sustain the ever-rising demands of the Indian banking sector, it is necessary that banks invest in the training and development of their staff members, especially relationship managers, marketing personnel, and field staff. Likewise, it is necessary that equal focus be laid on introducing systems and applications that are new age and in line with the expectations of today's customers.

We, at ISBF, one of the best B.Sc. economics and finance institutes in Delhi, believe that a bank may try its best to inculcate learning among its staff members. However, nothing can beat the strong base of banking-related knowledge that staff members tag along, which is something, we pass on to every student who is pursuing his undergraduate degree in the field of Economics and Finance at our Institute.

Focus on Right Hiring:

Even though most banks follow a dedicated on-boarding procedure as far as selecting banking staff is concerned, it has been observed that there is a further possibility of refining the process. The way banking professionals functioned a decade ago is not something that can be replicated today. Hence, one of the first steps is to ensure that the banking staff that was recruited a couple of years ago is encouraged to pursue relevant courses and up their banking skills and knowledge so that delivering becomes easier.

Likewise, the focus should be moved to recruiting the right talent and brushing them so that taking the path to success becomes easier.

In today's date, the ambit of banking is not restricted to basic banking functions, such as receipt and deposit of cash, recurring and term deposits or safe vault operations. A major part of banking today deals with cross-selling, with bancassurance being one of the major rollouts in the sector. Apart from insurance, banking today has directly or indirectly collaborated with service providers in areas like mutual funds, DEMAT, and the number of other yojanas that the government introduces from time to time.

Hence, it is safe to state that in the years to come, the banking sector will be dominated by the best hands, who will be on their toes to offer exceptional service levels to the esteemed banking clientele.

The Buy Now, Pay Later Module:

At times, you really want to buy a certain item but are unable to go ahead with the purchase because you do not have enough finances at hand. While you may be quick to think that in such a case, you can avail of a retail loan and direct the disbursement towards the purchase of the item of your choice, you are missing an important element here.

The moment you avail of a retail loan, a certain percentage of interest becomes chargeable on the amount of loan availed. Moreover, as compared to secured loans like housing loans, interest on retail loans, such as personal loans, is much higher. This only means that if you end up buying the item you have been longing for on loan, you will end up paying much higher than the original price of the item. Thus, availing of a personal loan may not be a good idea unless the matter is very pressing.

Does this mean that you need to postpone the purchase of an item that you otherwise wish to get immediately? Well, absolutely not! Instead, you can take benefit of the buy now pay later module introduced by banks in order to support routine purchases.

For instance, you may head to an electronics store to purchase an air conditioner. Finally, you select one, and it is time to complete the payment for the same. As you head to the counter, you come to know about the EMI module available for such purchases. Here, what banks do is allow you credit for a certain time period, wherein all you need to do is make a down payment towards the purchase of your item and ultimately pay the remaining amount in the form of EMIs in the upcoming days.

Do you know what is the best part, though? You do not have to cough out any interest amount or hidden fees towards availing of this facility. Hence, we can confidently state that the buy now pay later module is working fantastically well for the Indian audiences to realise their aspirations.

Technological Shift:

With Bots, Artificial Intelligence, and Machine Learning coming to the forefront, it is not even remotely possible for the banking sector to overlook the rising technological demands. One of the major needs of the banking sector as a whole is record keeping. When a person shows up at the bank requesting a certain transaction record from a few years back, banks cannot simply turn down such requests. Having said that, it is not really feasible to maintain physical records. This is exactly where cloud technology comes to the rescue of banks.

The idea remains to migrate all necessary information on a cloud platform so that accessing the same becomes possible from anywhere and at any time. With cloud technology in place, banks do not have to worry about losing crucial information or individuals/entities finding loopholes in the banking functions and information dispersion if at all a query was to pop up.

To a great extent, it can also be said that a technological upgrade has helped banks with improving their service quality and retaining customers by making banking easier for them. For instance, it would help to introduce customers to a holistic banking platform like internet banking. Once this is done, customers will be in a position to access information related to not just their savings or current accounts but every other recurring deposit, term deposit, or credit card related information that they are seeking only at a click of a button.

Let us say the customer has reached the end of the tax filing period and urgently needs an account and interest certificate. In this case, the customer need not call upon the banker and instead get the same generated online by simply entering his credentials and filling up the account details.

Apart from this, there are many other banking channels that are backed by technology, which are making the lives of both bankers and customers easy.

Keeping this in mind, at ISBF, we have made sure that our undergraduate program in economics and finance focus on the technological side of this field as well so that our students are well prepared before making an entry into the banking sector. The very reason why we focus on a rightful mix of theoretical and practical knowledge delivery is by keeping in mind every single facet that gives completion to this sector. No doubt, we are viewed as one of the top B.Sc. economics and finance institutes in Delhi!

Final Thoughts:

All this while, if you have been living under the impression that the Indian banking sector has hit stagnancy, then it is high time you give your perception a re-visit. It is important for you to note that the banking sector has transformed and evolved for good over the years.

When banking as an industry was introduced in India, its working was highly primitive. In fact, banking operations were 100% manual, with every banking transaction being maintained in physical ledgers. As time passed, the level of operations increased, the Indian economy progressed, and more individuals and entities started trusting the organised banking sector, which led to a major switch being introduced in the banking arena, which was to introduce computerisation. Every transaction found its way into the basket of technology soon after.

From then to now, individual banking units have carried out many such technological upgrades. In the wake of this all, one major event that came into existence in the banking sector is the merger of Nationalised banks. In the years to come, the banking sector is expected to grow multi-fold and better swiftly, not just in the interest of the people working inside the banks but also in support of every individual and entity that believes in India's banking culture.

At ISBF, we understand that all those ambitious minds who are pursuing their undergraduate and postgraduate programmes in banking, finance, economics, and related subjects are most likely to go on to hold pivotal positions at these banks in the future. With this in mind, we, at ISBF, recognised as one of the best B.Sc. economics and finance institutes in Delhi, have gone ahead and introduced an undergraduate degree in economics and finance. The goal is to prepare students for a satisfying and thriving banking career that awaits them!