21 October 2017
Lavanyaa Moses

Lavanyaa's blog

Lavanyaa Moses - Misys

2Posts 7,102Views 0Comments

Prodding the tiger - Competition in Indian Branch Banking

08 January 2014  |  4188 views  |  0

The Reserve Bank of India (RBI) has a new policy which will let foreign lenders set up branches in India. This represents an unprecedented opening up of the Indian banking industry, which will bring more competition and better services to customers.

Locally incorporated units of international banks will be permitted to open branches “anywhere in the country at par with Indian banks”. Overseas banks will be allowed to set up subsidiaries with minimum capital of 5 billion rupees ($80 million) and a capital adequacy ratio of 10 percent, the Reserve Bank of India said in its statement.

RBI’s new policy to open more branches eases the way for overseas banks to compete in a market where big banks, like Citigroup and HSBC Holdings Plc (HSBA) haven’t opened a branch since 2010. In fact they operate only around 0.1% of India’s 92,000 outlets.

The new policy will create more competition for banks in revenue generation and areas like customer service.

So what does this mean for the big incumbent Indian banks? The top 5 banks – State Bank of India, ICICI, Punjab National Bank, Bank of Baroda and Union Bank, as well as the other 16 public sector banks, 80 regional banks and 18 private sector banks will have to manage competition by innovating new ways of banking. Adopting new technology is one way to achieve this.

Indian banks can start by using technology to ensure that sales happen. Indian banks do have a track record in innovation. Back in 2010, YES Bank introduced a system which used RFID chips to recognize customers as they walked into a branch. Identifying customers and suggesting suitable products to them will be a critical factor in the success of Indian branches. Making use of CRM applications, which will analyze customer data and provide sales and service prompts, is one way to do this. By ensuring that relevant and consistent sales prompt information is provided to the teller/ bank user across different screens and systems while posting transactions or accessing customer accounts, banks can ensure that customer needs are consistently being understood and met.

I hope that the introduction of more competition will encourage Indian banks to innovate harder – this could be just the yank of the tail required to make the tiger roar.






TagsRetail bankingTransaction banking

Comments: (0)

Comment on this story (membership required)

Latest posts from Lavanyaa

Branches need to evolve - or they will wither

05 June 2014  |  2915 views  |  2 comments | recomends Recommends 1 TagsRetail bankingTransaction banking

Prodding the tiger - Competition in Indian Branch Banking

08 January 2014  |  4188 views  |  0 comments | recomends Recommends 3 TagsRetail bankingTransaction banking

Lavanyaa's profile

job title Business Analyst
location Bangalore
member since 2014
Summary profile See full profile »
Business Analyst for BankFusion Teller, providing functional consultancy to the Misys technical team.

Lavanyaa's expertise

Member since 2013
2 posts0 comments
What Lavanyaa reads
Lavanyaa writes about
Retail bankingTransaction banking
Lavanyaa's blog archive
2014 (2)

Who's commenting on Lavanyaa's posts