In view of the prevailing scenario, the financial services industry must explore the potential of some new-generation technologies such as social media, mobile, analytics and cloud (SMAC), according to a CII-KPMG report that was unveiled during the Banking Conclave 2013 in Kolkata.
With the Indian banking sector at an inflexion point, the CII-KPMG report notes that the sector must live up to the challenges, particularly in view of the government’s ambitious financial inclusion plans and its decision to spend substantially on infrastructure building.
Sudhir Deoras, chairman, CII Eastern Region, said, “The volatile economic scenario has forced banks to try various business models either to increase their bottom line or manage risks better. The industry needs to understand the emerging strategies needed to manoeuvre through these times of turbulence and high risk.”
The report attempts to capture the current scenario and recommends strategies for compliance and governance, operating efficiencies, managing market risks, financial inclusion, and technology in banking.
The increased commoditisation of service offerings from banks places incessant demand on them to adopt variable cost structures, increase revenue, improve products and services, expand market share and also achieve nonlinear revenue growth, it says.
The report suggests banks strengthening their risk management strategies while reviewing the trading book positions and take prompt, appropriate actions to save the interest of the institution. To aid the process, strong technology platform along with appropriate analytics are essential pre-requites, the report adds.
The CII-KPMG report report also states that it is imperative for individuals to gain easier access to basic banking facilities such as savings account, affordable credit and remittance services as well as investment and insurance products, to deem them financially included.
“The Banking sector has an important role to play in stimulating economic growth and can really help in deploying the national savings towards infrastructure development. This will in turn stimulate economic activity on one hand, and help sustain a high growth rate on the other,” said Deoras.
The report also scans how an unstable economy can lead to deteriorating asset quality thereby causing stress to the banking sector.
The RBI estimates that the gross NPA ratio of banks