India’s banking industry is the pillar of the country’s economy, contributing 7.7% to the Gross Domestic Product (GDP). With increased emphasis on banking penetration into remote locations through flagship schemes such as Jan Dhan Yojana, the industry has progressed significantly over the years. However, the industry players continue to witness challenges that do not allow them to unleash their true potential. Something the government and policymakers will have to consider and make things seamless for the banking system that is a source of livelihood for millions of Indians.
Here’s a List of Challenges India’s Banking Industry Faces
The banking industry faces challenges such as regulatory changes, cybersecurity risks, fast-widening customer expectations, economic uncertainty, etc. We will explain each of these. Let’s read on!
Regulatory Changes
The banking industry faces the challenge of regulatory changes that the Reserve Bank of India (RBI) brings in seeing the market trends. However, such regulations are in place to protect the interests of banks and the general public. Banks need to comply with various regulations ranging from Anti-money Laundering (AML) to data protection. Aligning with these changes can consume your time and become a costly affair at the same time. This can impact banks’ profitability. Banks are investing heavily in technologies to automate regulatory compliance. These technologies play a critical role in banks staying updated with regulatory changes.
Cybersecurity Risks
Banks are increasingly getting digital across their processes. But in a bid to do so, they are becoming more susceptible to cyber threats, which can affect the banking industry. Customer data protection and fraud prevention remain the priority of banks, which are collaborating with cybersecurity firms to create more powerful security measures. Banks are continuously training their employees to spot and prevent cyber attacks.
Fast Widening Customer Expectations
Customer is king - a phrase that also applies to the banking industry. In today’s era of smartphones and iPhones, consumers are becoming more digital-friendly. All they want is seamless banking services that offer personalised experiences. However, in this rush of making apps, things become complicated too. Many apps don’t offer the convenience that customers seek these days. At the same time, there’s a need to adopt new technologies such as machine learning and artificial intelligence to understand customers’ needs. This helps create more custom solutions. However, many banks don’t seem to be leveraging the same.
Intense Competition
Banks are witnessing massive competition from fintech startups who have created a massive market for themselves. These startups come up with innovative products and services that most banks are not able to. Particularly small banks with limited infrastructure are not able to match the products and services offered by fintech startups.
Talent Management
Banks find it hard to attract and retain top talent as people constantly switch to lucrative job opportunities. At the same time, banks need to impart skill training to their employees. Employees need to be updated with the latest technology, compliance matters and customer service skills.
Wrapping Up
India’s banking industry will have to find solutions to these challenges as the country marches towards the ambitious $35 trillion economy by 2047. Banks must innovate in their processes and talent acquisition strategies to blossom. reBLISS, a platform where businesses and skilled individuals meet together to build the country’s economy, can play an active part in this. Visit our website to learn we can help you better.
Comentários