Future of Banking Industry
Essay Preview: Future of Banking Industry
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Future of Banking Industry:The entry barriers of banking industry have already been disrupted with the arrival of specialized players such as small finance banks and payments banks in the banking domain and with the drastic technology changes. Future of banking industry is going to be adopting to these disruptive technology improvements, focussing more on customer satisfaction and some collaboration with players such as payments bank to improve services.Growth through Technology:Internet of Things, Machine learning and Artificial Intelligence are going to change how banks operate. These technologies are going to revamp the customer experience of the traditional banking methods. Data Analytics is going to help create tailor made banking services to each customer based on their income estimation or credit worthiness etc. Changes in technology will allow banks to deliver a faster, more transparent experience to customers.According to the Reserve Bank of India’s (RBI) annual report for 2017-18, mobile banking services witnessed a growth of 92 per cent and 13 per cent in volume and value terms, respectively. The number of registered customers rose by 54 per cent to 251 million at end-March 2018 from 163 million at end-March 2017. With increased usage of digital banking, the brick and mortar model of banks will have a decline in number. But this model will still be in existence to cater to the population which will still be growing in terms of technology. Exhibit 1 – Mobile payments trend in India
The Spectrum of automation will move from process automations to advanced artificial intelligence-based automations. Robotic process automation will be helpful in the repetitive tasks such as comparing with the regulatory requirements, identifying backlogs, etc. It will be helpful in reducing quality issues and significantly improve operational efficiency,For these changes to take place, there will be a huge shift in the skills of the bank employees and the nature of the work they do. Data Scientists, Automation experts, Cyber security experts, digital marketers are going to play along with the traditional bank employees.Growth through Partnerships:With policies focussing on financial inclusion and Digital India, Payment banks and fintech players are already on their way to revolutionize their market. Payment banks are expected to grow further with the sustained government support services through policies like Pradhan Mantri Jan Dhan Yojana and Digital India. According to Association Chambers of Commerce industry & India, m-wallet transactions in India will grow at a CAGR 211% during the period FY2016 to FY2022 (Exhibit 2). By leveraging innovations and technology, they can adopt easily to the changing trends in the banking industry.