8/14/2019 Challenges of Indian Banking 3
1/20
CHALLENGESCONFRONTING
INDIAN BANKINGINDUSTRYArundhati Bhattacharya, State Bank of
IndiaJan, 2010
8/14/2019 Challenges of Indian Banking 3
2/20
Challenges ConfrontingIndian Banking Industry
Background
Challenges
Way Forward
8/14/2019 Challenges of Indian Banking 3
3/20
0
2
4
6
8
10
1900-1950 1951-1980 1981-2002 2003-2009
1
3.5
6
7.54
Avg. Annual GDP Growth%
8/14/2019 Challenges of Indian Banking 3
4/20
Population - Bane orBoon?
8/14/2019 Challenges of Indian Banking 3
5/20
Population Pyramid
Source: National Commission on Population
8/14/2019 Challenges of Indian Banking 3
6/20
Rise in Literacy Levels
1 U b I di ill dd 80
8/14/2019 Challenges of Indian Banking 3
7/20
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
8/14/2019 Challenges of Indian Banking 3
8/20
Challenges ConfrontingIndian Banking
Background
Challenges
Way Forward
8/14/2019 Challenges of Indian Banking 3
9/20
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
8/14/2019 Challenges of Indian Banking 3
10/20
PEOPLE CHALLENGES
ATTRACTINGATTRACTINGTALENTTALENT
TRAININGTRAINING SKILLINGSKILLING RESKILLINGRESKILLING
SPECIALIZATIONSPECIALIZATION RETENTIONRETENTION
AGE PROFILEAGE PROFILEQUALITY OFQUALITY OF
LIFELIFE
CONFLICTCONFLICTMANAGEMENTMANAGEMENT
8/14/2019 Challenges of Indian Banking 3
11/20
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
8/14/2019 Challenges of Indian Banking 3
12/20
SAFETY CHALLENGES
8/14/2019 Challenges of Indian Banking 3
13/20
GROWTH CHALLENGESGROWTHNEEDS
INNOVATIONBUT RISK
MITIGATIONREQD
GROWTHWITHOUT
CONTROL ISDISASTROUS
VIZ NPAMGMT
8/14/2019 Challenges of Indian Banking 3
14/20
GROWTH CHALLENGES
8/14/2019 Challenges of Indian Banking 3
15/20
EXPANSIONCHALLENGES
ALM ChallengesFinding Growth CapitalShape of liability MixStructure of AssetsManaging Regulatory preemptions
Change Management ChallengesResistenceProcesses
8/14/2019 Challenges of Indian Banking 3
16/20
SOCIETAL & ESTEEMCHALLENGES
8/14/2019 Challenges of Indian Banking 3
17/20
Challenges ConfrontingIndian Banking
Background
Challenges
Way Forward
W F d TO SUSTAIN
8/14/2019 Challenges of Indian Banking 3
18/20
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
8/14/2019 Challenges of Indian Banking 3
19/20
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
8/14/2019 Challenges of Indian Banking 3
20/20
THANKYOU
Jan, 2010 A. Bhattacharya, State Bank of India