Challenges of Indian Banking 3

8/14/2019 Challenges of Indian Banking 3

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CHALLENGESCONFRONTING

INDIAN BANKINGINDUSTRYArundhati Bhattacharya, State Bank of

IndiaJan, 2010


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Challenges ConfrontingIndian Banking Industry

Background

Challenges

Way Forward


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0

2

4

6

8

10

1900-1950 1951-1980 1981-2002 2003-2009

1

3.5

6

7.54

Avg. Annual GDP Growth%


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Population - Bane orBoon?


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Population Pyramid

Source: National Commission on Population


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Rise in Literacy Levels

1 U b I di ill dd 80


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1 Urban India will add over 80mnhouseholds to the middle class by 2025driving retail banking growth

Note: Figures are rounded to the nearest integer and may not add up to 100%

Income levels in 2009 are 1.6 times that in 2000

SOURCE: McKinsey Global Institute

1

Millions of households

Resulting in massive growth in middle

class households

87

47

7

202520152005

+80

HH income brackets

Rs. 000, 2000

%, millions of households

The Indian demographic composition is changing

60%42%18%

921 12

32

66

202520152005

51

26

6

Strivers (5001000)

62

1021

Aspirers (90200)

100% =

Deprived (1,000)

114

34

53

5

83

Seekers (200500)

Share of aggregate

consumption


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Challenges ConfrontingIndian Banking

Background

Challenges

Way Forward


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HIERARCHYOFCHALLENGES

PEOPLETECHNOLOGY

RISK MANAGEMENT, AUDIT, CONTROL,OVERSIGHT

REGULATORY COMPLIANCE

PRODUCT INNOVATION, MARKETING& SELLING

GROWTH STRATEGY, MARKETSHARE, TOPLINE &

BOTTOMLINE

ALM, CHANGEMANAGEMENT

DEMOGRAPHIC

SOCIETALESTEEMNEEDS

SOCIETALNEEDS

EXPANSIONNEEDS

GROWTHNEEDS

SAFETYNEEDS

BASICNEED

S


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PEOPLE CHALLENGES

ATTRACTINGATTRACTINGTALENTTALENT

TRAININGTRAINING SKILLINGSKILLING RESKILLINGRESKILLING

SPECIALIZATIONSPECIALIZATION RETENTIONRETENTION

AGE PROFILEAGE PROFILEQUALITY OFQUALITY OF

LIFELIFE

CONFLICTCONFLICTMANAGEMENTMANAGEMENT


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TECHNOLOGYCHALLENGES

ADAPTIBILTY TO CUSTOMERPREFERENCE, STAFF TRAINING,

CUSTOMER SUPPORT, EXTRENALUSER SUPPORT

NEED FOR STP, INTEGRATION OFVERTICALS, CRM, DATA WAREHOUSING,

MIS, ANALYTICS

COST, OBSOLESCENCE,PROTOCOL/ADAPTIBILITY/COMPATIBILITY,EXRENA

L VS, INTERNAL OWNERSHIP,CLEAN/GREEN CHALLENGE


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SAFETY CHALLENGES


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GROWTH CHALLENGESGROWTHNEEDS

INNOVATIONBUT RISK

MITIGATIONREQD

GROWTHWITHOUT

CONTROL ISDISASTROUS

VIZ NPAMGMT


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GROWTH CHALLENGES


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EXPANSIONCHALLENGES

ALM ChallengesFinding Growth CapitalShape of liability MixStructure of AssetsManaging Regulatory preemptions

Change Management ChallengesResistenceProcesses


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SOCIETAL & ESTEEMCHALLENGES


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Challenges ConfrontingIndian Banking

Background

Challenges

Way Forward

W F d TO SUSTAIN


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Way Forward - TO SUSTAINLEADERSHIP

INITIATIVES BY MAJOR PLAYERS: Shaping a superior industry structure in a phased manner

through managed consolidation and enabling capitalavailability

Improve corporate governance primarily by increasing boardindependence and accountability

Transiting from capital adequacy to CAPITAL EFFICIENCY

Improving the asset quality as per Basel II norms

Compensating squeezed spread by focusing on fee basedincome

Investing in state of art technology as the backbone to ensurereliable service delivery

Leveraging the branch network and sales structure to mobilizelow cost deposits

W F d


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Way Forward - TO SUSTAINLEADERSHIP

Aggressive forays in the retail segment

Innovative product offerings to capture MIND SHAREand later the WALLET SHARE

Implementing organization wide initiatives involvingpeople, process and technology to reduce fixed &transaction costs

Focus strongly on social development creatingenablers for providing banking services to lower incomeand rural markets

Accelerate creation of world class supportinginfrastructure like PAYMENT SYSTEMS, ARCs, CREDITBUREAUS, BACK OFFICE UTILITIES to help focus on COREACTIVITIES

Enable labour REFORMs focusing on enriching human

capital


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THANKYOU

Jan, 2010 A. Bhattacharya, State Bank of India

Documents

Challenges of Indian Banking 3