challenges to next gen banking
TRANSCRIPT
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Challenges toNext Generation Banking
Anirban Mukherjee (Roll No.56)
Jayesh Kamble (Roll No.36)
Muralidharan R (Roll No.58)
Nirmal Pattnayak (Roll No.74)
Sameer Kasawkar (Roll No.120)
Sanjay Pednekar (Roll No.77)
Yogesh Gupta (Roll No.122)
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India : DemographicChallenges India is the only Country where the
working population would increase forthe next twenty years
Estimates of United Nations suggestthat by 2041, working age populationin India will increase by 312 million,while in China it will decline by 126
million. Creating gainful employmentfor this order of new entrants to thelabour market is a daunting challengebut not impossible.
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India : DemographicChallenges Indias Current Growth Rate is around
8% and it is expected to be around10% during 12th Five Year Plan
With this growth rate Indias share inWorld GDP would go up from currentlevel of 2% to 10% by 2030.
While Services form a major part of
our GDP at 65%, it would be achallenge to absorb the hugeworkforce. Focus needs to be diverted
to industry and agriculture.
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Major Challenges for the bankingSector
Change in customer service delivery
Change in product design and
manufacturing
Change in product availability anddistribution
Change in risk and credit decisioning
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Customer Service
Close Relationship between a Customer
and Profitability
Customer Centric Institutions are a mix
of highly profitable customers providing
todays profit and those with a calculated
potential of growth
Goal of Financial Inclusion
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Customer ExpectationsKeep your Customers Happy and Survive
Shifts in demographics, income, attitude and
behaviour, in addition to easily accessible
information, are empowering customers to
demand greater autonomy, responsiveness
and transparency from their banks.
Freedom of Choice
Personalised Products
Shift Loyalties
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Customer Expectations
Channel Amplification
Service Accessibility
Customer Serviceability
Data Privacy and Security
Customer Expectations
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Customer Imperatives
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Channel Amplification
Better Communication : Increase Profit
Potential
Better Mobility : Increase Competitive Agility
Better Customer Insight : Find new
Opportunities
Magnify Existing Channel Offerings (ATMs,
Kiosks, Mobile banking)
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Simplified BankingExperienceCustomer Demands would be for :
More Choice in terms of Product
Selection Simplified Banking Forms and
Procedures
Prompt Services and Alerts through
Multiple Channels
Zero Tolerance to Hidden Charges and
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Risk Management
With reference to the overall risk
management challenges the risks, a
bank may face, can be divided into three
categories :
Operational Risk
Credit Risk
Market Risk
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Managing Operational Risk
As Operational Risk management is centralized functionto ensure quality of data and standardized reportingacross the organization. This will require technologysolutions to meet the operational risk challenges inenterprise-wide deployments, data security and identitymanagement.
It is also felt that that advanced and sophisticatedsystems should be introduced to ensure that suspiciousevents which can lead to fraud can be tracked andlogged.
Incident/Event should also be tracked in a similar
fashion. Tools can be used to derive patterns and analysis of
such events using data mining techniques to manageoperational risk.
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Managing Credit Risk
Credit Risk is the most important riskcomponent of a bank as it has directimpact on the banks books
Banks needs to look beyond CIBIL forcustomer credit worthiness and shouldlook into creating a more matureinformation system and rating model.
Financial Innovations needs to becautiously used and a detailed impactstudy should be done before banks gofor enhanced exposure
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Managing Business or MarketRisk
The role of technology was identified tobe of paramount importance inmanaging business risk. With all
requisite information available, systemsare in place to generate ad-hoc reportsand single source of truth can bemaintained. This would help
organization not only to managebusiness risk but also providecompetitive advantage which businessintelligence, analytics and data mining
techniques.
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BanksWay Ahead
Providing a Simplified, yet fully loaded
banking experience is the need of the hour
for the banks. Banks will need to take the
participative view of the customers and
design banking processes, products and
channels in such a way that bankingexperience remains easy and simplified and
at the same time can offer world class
products and services at competitive prices.
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Conclusion
The economic downturn coupled with the growing
competitive environment has led to a new era of
consumerism.
The long term success by any bank cant be achieved
without the development of new business ideas,
innovative products and services and customer
retention.
Banks would have to instill in their DNA the enablement
of a positive and consistent customer experience that
would transform them to a trusted partner.
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