New Delhi, Aug. 30: State-owned banks need to shake off their fusty image and metamorphose into virtual banks, offering a range of new-age products like online services, automated teller machines (ATM), banking over the phone, mobile and internet, as well as credit cards, if they wish to survive in an immensely competitive industry.
Public sector banks have until now focused on their wide networks and huge workforce to establish their pre-eminence in the banking industry. But the rules of the game have changed giving tech-savvy private sector banks with their efficient and nimble operations a chance to cater to a greater clientele.
Virtual banking greatly slashes transaction costs. According to an estimate by Booz Allen and Hamilton, the average cost per transaction is just one US cent against $ 1.07 through normal banking transactions.
“Although PSU banks still maintain their supremacy in terms of market share and business generated, the pendulum can very easily swing in favour of private sector and foreign banks if they fail to upgrade their technology,” UTI general manager (treasury) Partho Mukherjee said.
Four Indian private banks—ICICI, Housing Development Finance Corporation, Industrial Development Bank of India and UTI Bank—are becoming increasingly technology driven. Of the foreign banks, Citibank, ABN AMRO, HSBC and Standard Chartered have gone in for a technology upgrade in a big way. Both Indian private banks and foreign banks are focusing on areas like improving quality of customer services in front offices and have also established large back-office operations to deal with customer complaints.
A Ficci survey ahead of a banking conference, doesn’t paint it too good for the industry. The study says 77 per cent of respondents feel banks should roll out mobile and internet services; 59 per cent said it would require more than two years to introduce mobile banking and one to two years for Net banking.
“The only medium through which private and foreign banks are trying to scale up is through extensive use of technology. We believe that in today’s fast moving world only technology will help us form a wide network,” BNP Paribas operations chief for north India, M. K. Dalai said.