A changing environment due to globalization and innovation is forcing banks to change their focus. This article provides a set of 4 Ps, personal computer, personnel, peers and people, on which banks should focus. This will make Indian banks globally competitive and help in a smooth implementation of Basel II. Besides focusing on these 4Ps, banks should continue the current process of reforms in product innovation, process reengineering and customer capturing.
There has been a growing recognition of India in the world as a strong financial entity, being Asia's fourth largest economy. International perception of the Indian banking sector is of great potentialities. The banking industry witnessed sea changes after the financial sector reforms in 1991. Simultaneously, there was also the entry of technology and new generation banks, which have caused concern among old generation banks and Public Sector Banks (PSB). In the new millennium, if there are two things that have grabbed the world's attention, they are IT and communication, and the two together have shrunk the world. Today, both IT and communication are indispensable for carrying out any business activity. As far as the banking sector is concerned, it has witnessed radical changes in its operations after the introduction of IT. The hitherto labor-intensive industry is now one of the most automated.
The Basel II banking regulation code, involving a massive overhaul of bank capital rules to strengthen the financial system, stipulates additional doses of capital to mitigate credit risk, operational risk and market risk. The new prescription calls for IT orientation of the system. The changes are to be effected by individual banks by January 2007 and January 2008 depending on the nature and method of risk assessment. |
