The Indian economy is likely to recover from the impact of demonetisation and the GST, and growth should revert slowly to a level consistent with its proximate factors — that is, to about 7.5% a year. Businesses across several key sectors are experiencing firm growth in sales and orders, indicating better capacity utilisation and higher investment expectations.
India’s financial development experienced a significant increase in bank account coverage in recent years due to the Government’s mandate of linking Aadhar, subsidy for LPG, crediting the benefits of several welfare schemes like MNREGA, Scholarships, Pensions : the number of basic savings bank deposit accounts has increased by more than 600 per cent between 2010 and 2017, driven in large part by the Pradhan Mantri Jan-Dhan Yojana Scheme which alone has led to the opening of more than 300 million bank accounts since its inception.
Banks play a very critical role in the economic development in future. All these factors suggest that India’s banking sector is also poised for robust growth as the rapidly growing business would turn to banks for their credit needs.
New Technologies that power the Banks
The banking and financial services sector is today buzzing with several technology initiatives that are going to power the future growth of the sector and also to provide improved services to their clients. Considerable investments are made in building / revamping the IT and digital infrastructure of banks in order to offer various solutions to banking.
- Payments have been one of the most happening segments in the sector with lots of innovations happening and it continues to lead the chain with the advent of UPI 2.0 and the innumerable discussions around blockchain, social payments and other fintech-led initiatives.
- With Mobile having gained increased acceptance as a payment mode, API-based banking and financial services are becoming the norm.
- Many banking institutions are already in midst of this transition into the BOTS by shifting their routine tasks to this technology.
- Most Customized Proposition, or MCP - Analytics is empowering organizations to hand over customized propositions not just to top segments of customers but to mid and lower levels as well.
- Corporate payments and corporate banking have also seen several developments in the last one year with SWIFT GPI and the blockchain-based remittances having been made possible thereby making global payment transactions more transparent, faster and versatile giving banks more possibilities to offer additional services to corporate customers.
- Overall, digitisation of financial transactions in India is also gathering pace, thereby spurting the need of POS terminals.
- It is estimated that non-cash payment transactions, which today constitute 22% of all consumer payments, will overtake cash transactions by 2023.
- With the Indian Government having a dedicated budget for Cyber Security, banks have also enhanced their cybersecurity spending.
Some of the banks have set up their own innovation labs as they hunt for digital growth.