Indian banking has been evolving ever since the reforms in 1991. Banks are realizing the importance of new technology and convenience banking. Customer satisfaction is at the top of their agenda. Due to intense competition, the survival of smaller and non-competitive banks is at risk. Liberalized norms for entry of foreign banks could exacerbate the situation. Many PSBs are seeking the merger route to strengthen their positions. The next decade will be challenging for banks in terms of outsourcing, recruiting staff with specialized skills and maintaining a high level of relationship with customers.
Indian banking is becoming more and more technology-driven since the 1990s. Hitherto, only foreign banks were known for technology banking. Thanks to the liberalization of the economy, there has been a boom in information technology and software development in India. As a natural corollary to this, the entry of new private banks in Indian banking has led to technology banking becoming a norm rather than an exception. New private banks with their aggressive approach have given a stiff challenge not only to public sector banks but to foreign banks as well.
By spreading their branch network, the new private banks are focusing on large volumes of business to get the economies of scale to compete with public sector banks on the one side and adopting the latest technology with constant upgradation in order to counter foreign banks on the other. This is leading to a huge investment of capital in technology and high cost of skilled and trained manpower. |
