What is in store
for banking?
At present and in future the banking will face a
biggest challenge of Low rates, over regulation, technical revolution and
security and millennial.
Let us understand as to how these challenges affect the bank.
Low
rates
The low rate post the challenge on
profitability and the banks have to work on very thin margin. In order to be
cost effective the banks should reduce the operating cost constantly. This will be difficult in the expansionary
phase.
Over
regulation:
The regulationary
measures increased day by day both at the domestic and international
environment leads to increase in investment in technology and training of
staffs. Non compliance attracts heavy penalties which impact the profitability
besides causing reputational risk. It
may also leads to losing business license as well.
Technology:
The technology changes very fast and banks are on
the constant look out to update the same which always comes with high cost.
Today’s secured environment need not be secured tomorrow. Hackers are getting
smarter and smarter and try very hard to find ways and means to penetrate into any
system. Even a weak link in the technical environment of a bank will be
sufficient to cause a huge loss. It is
believed that the swift system is highly secured but when this can be hacked
there is no need to tell about other systems
Millennial
The millennial do not want to visit the bank for
completing the transaction, which helps
the banks propel
and catalyze digital transition as well as embrace digital excellence
to go digital
Need of the hour to
meet the challenges and ensure successes in furtre?
The fundamental
common factor in all the four threats are strategic challenges which can be
addressed starting from the Board room and the new paradigm between competition
and co- operation which addressed by moving from competition to cooperation.
What will the bank/
banking of the future look like, in my opinion?
ü
Banks in 2050 will
be cashless and paperless and branchless. May be there will be couple of branches for a
million people.
ü
All
cash transactions will be chargeable including the ATM and cash deposit
machines.
ü
The
technical team of the Bank will be bigger compare to the operational team who
will be working round the clock in upgrading the technology and security.
ü
Everything
in banking is digital including compliant / customer relationship management
and the human interface will be very few.
ü
Plastic
card may vanish and the digital banking will get embedded into the hand-phone
of the customer.
ü
Financial
inclusion will be better than currently and is near total. People will have the
so called One-Number, which, stands for their personal ID, their primary phone
number, their primary bank account number, their passport number and their IP
address. This One-Number will be globally granted at birth.
ü
Everyone
will have a credit score and the loans are decided based on the credit scores.
The assets and liability of everyone is linked with their credit score. This
will make the processing of loans faster and easier.
ü
Central
bank and all global compliance agency will issue their circular digitally which
will get automatically updated into the banking system without any human
intervention.
