Disruptive Innovation Indian Banking Industry

Abstract

Banks are institutions which are engaged in the mobilization of savings in the economy and deploying the same by lending to the needy. There was a complete shift in the way we did Banking pre nationalization (1969), from 'Class Banking' we moved to 'Mass Banking' and 'Security Oriented Lending' to 'Purpose Oriented Lending'.There have been disruptive innovations in the Banking Industry in the new millennium. ( Since 2000). Core Banking Solutions, Internet Banking, ATMs, Mobile Banking, Micro Finance Lending, Speed Clearing, Cheque Truncation System, Debit and Credit Cards, etc. to name a few. This article captures major disruptive changes in the banking industry by classifying them into Changes in the Banking system, Changes in the Deposits and Advances area and the Payment and Settlement systems. Banks have now become 'One Stop Solutions for the Financial Services'. Under one roof, the customer can get Banking, Insurance, Mutual Fund services. Under Core Banking Solution (CBS), a customer is no more a 'Branch Customer' - HE is a 'Customer of the BANK'. He can operate his account from any Branch. From Customer of the Bank we are moving ahead to the 'Customer of the Banking System'. Banking in the future will have to rely more on the new generation technologies such as Social Media, Mobile, Analytics and Cloud (SMAC). (CII-KPMG Report 13 September 2013). This article details what could be the disruptions that Indian Banks could face in the next four years.