Twitter
Advertisement

For Finance St, 2005 has been a year to remember

For the finance industry, the year could not have been better. The agenda now should be to continue to grow to meet the demands of a growing economy.

Latest News
article-main
FacebookTwitterWhatsappLinkedin

It has been six years since Y2K. Half of the first decade of the 21st century is behind us. 2005 was undoubtedly a memorable year. It was a year in which the Sensex touched the 9000 mark, India pipped US to become the 2nd most attractive destination for FDIs, the economy grew at a dream rate of 8%, retail revolution, the BPO boom… the story of India in the making.

For the finance industry, the year could not have been better. The agenda for the industry now should be to continue to grow to meet the demands of a growing economy.

We have to brace up for the challenges of change. There are already 130-plus banks operating in India. An increasing number of foreign banks are either entering India or are diversifying to offer services to retail as well as corporate customers or increasing their geographical strength. I am sure our counterparts in the world are waiting for 2008 to dawn. Domestic players anticipate a fascinating consolidation drive to create globally competitive organisations, while smaller banks will need to sharply define their value proposition.

With the Sensex scaling new highs, we are going to see some action in the broking and the funds management industry. Some of the foreign banks have already announced their venture into broking. As the world’s focus shifts to India, we will see more international players looking to come here. It was a watershed year for the mutual fund industry, with record number of new fund offerings and record collections.

The insurance industry has seen some shakeout as well as new faces. We are bound see a lot more M&A across all sectors. The biggest beneficiary of these changes will be the customer. The presence of a large number of globally competitive players will see product and service innovations on a much larger scale. Banks will need to work much harder to keep themselves differentiated and at the very least to keep themselves abreast with the market offerings.

Another thing that the financial services industry will need to brace up for is the high level of service quality consumers demand. It could become the single-most important factor in keeping that customer or losing him. The driving force behind all this will be technology.

In the arena of banking and financial services, the future is clearly owned by technology. Be it product service innovation or cost reduction, all of these initiatives will ve to be technology led. Technology will shape processes, shopfloors and define the skillsets. It may fragment the knowledge base and it may well become difficult to find well rounded, experienced bankers.

I think there is a big change happening even in the mindset of consumers. A customer today is not happy with waiting in a queue for his cash — he wants his service to be quick, cheap and of good quality.

He expects his bank to not just offer him a plain vanilla savings account but other services built around it. He does not invest only in bank deposits; he is becoming more and more aware of other investment options around him.

As I say, our nation of depositors is now turning into a nation of investors. Indians are investing in farms, factories, small and large businesses, services, the capital markets …. Banks today have to be ready to offer him the entire range of services that can satisfy all his aspirational needs.

In another 12 months, 2006 will be behind us, later, the decade and in the not too distant future, we will enter the BRIC era. The challenge is in proving our admirers right.

The author is vice-chairman & MD, Kotak Mahindra Bank

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement