Banking In A Transforming Economy Essay

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Banking in a transforming economy
IDRBT Foundation Day
November 6, 2012

Agenda
Technology & disruptive change in banking
A transforming India
The future of Indian banking

Agenda
Technology & disruptive change in banking
A transforming India
The future of Indian banking

Disruption in banking
Banking sector early adopters of technology

Improve operation al efficiency Minimise costs Enable highspeed processin g Allow data capture and data mining Improve customer experience with enhanced internal efficiency

Developments post the year
2000







Advent of retail banking
Growing presence of foreign banks
Emergence of a universal banking model
Banks and non banks competing to serve similar customer needs
Technology driven innovation in products and access to services
Focus shifting to inclusive banking

Technology impact on banking post 2000




Infrastruct ure 



RTGS (2004)1
NEFT (2005)2
Interbank Mobile Payments
System (2010)
ATM installed base of over
100,000 (over 27% compounded growth from
2006 to 2012)
POS terminals over 700,000

1. Real time gross settlement system
2. National electronic funds transfer

The disruptive power of technology Share of
Share of
ICICI Bank

transactions in 2001

transactions in 2012

Branches

94%

12%

ATMs

3%

41%

Internet

2%

35%

POS

-

7%

Call centre

1%

2%

Mobile

-

2%

Technology is in a continuing state of flux
From mainframe to minicomputer to desktop PC








And now, mainframe in a pocket Higher capacity and processing capability
Software to run the devices
Ability to connect through broadband and wireless Mobility, new platforms and the ecosystems in handheld devices
New platforms such as for payments are now challenging the traditional bank channels

The next wave: being connected  2.25 bn (32%) of world population is online today, and 1.10 bn users are on 3G
 Mobile internet is ramping up dramatically
 57

mn 3G users in China, y-o-y growth of 115%
 39 mn 3G users in India, y-o-y growth of 840%


Mobile internet now makes up 50% of internet traffic in India

Source: KPCB



Out of 1.80 bn mobile users in China and India
 One

billion will go online in two years

Connectivity in India ..
Third largest largest Third internet user user internet base base






Second largest largest Second mobile mobile subscriber subscriber base base

100 mn internet users, 800 mn mobile subscribers Broadband connectivity a catalyst
Consumers are becoming part of the cloud seamlessly without consciously realising it
Device costs will continue to drop
More and more capabilities would be available at lower costs

.. would have a significant impact on banking Agenda
Technology & disruptive change in banking
A transforming India
The future of Indian banking

India’s current positioning
China
(USD)

2003

2005

2010

2012
(E)

GDP (bn)

1,641

2,257

5,930

7,992

Per capita
GDP

1,270

1,726

3,738

5,899

1.29
2003

1.31
2005

1.34
2010

1.35
2012
(E)

GDP (bn)

590

808

1,598

1,779

Per capita
GDP

549

729

1,342

1,455

Population
(bn)
India
(USD)

Population
1.07
1.11
1.19
1.22

(bn)
India
India in in 2010
2010 was was at at the the juncture juncture where where China
China was was in in 2003
2003

(E) - estimate
Note: GDP is on nominal basis
Source:IMF

Rapid urbanisation
GDP USD bnIndia’s large metros in 2030: by GDP

India’s metros in
2030 will be as large as some countries were in 2005
Assuming an annual GDP growth of 8.0% between 2009-2018 and 7.0% between
2018-2030
Source:
Mckinsey

Resurgent rural India



Over 700 mn people across 600,000 villages
Rural growth supported by:



Changing characteristic of rural economy with reduced dependency on agriculture
Rising wealth creation with estimate of 40 mn middle & high income households by 2010
(

%

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