Innovation will be the mantra for banks, if they have to make their presence felt in a highly competitive environment. This was the message on the inauguration day of the two-day annual bankers conference held in the city on Friday.
The Indian Banks’ Association’s conference ‘BANCON’ will highlight how business model innovation in financial services will spur industry’s growth momentum in the coming decade. McKinsey & Company has conducted a survey for BANCON, the findings of which have been incorporated in their report, ‘Innovate to unlock the next decade.’
“This next decade will prove definitive for individual players in Indian banking as it will present opportunities for growth as well as challenges of improving risk management and enhancing operational excellence,” said Jatin Pant, Partner, McKinsey & Company. “Indian banks will have to innovate to succeed. They must focus on not just identifying suitable innovations, but also in implementing them in a sustainable manner for long-term success.” he said.
According to McKinsey findings, the Indian banking industry enjoyed an unprecedented success in the last decade as industry assets grew four fold from $290 billion in 2001 to over $1,600 billion in 2011. Indian banks did better than their emerging Asia counterparts, with ten of them among Asia’s top 30 value creators in the last decade. In the coming decade, revenues in India is likely to climb further from $56 billion in 2010 to $250 billion by 2020 — contributing to more than 12 per cent of Asia’s total banking revenue growth. Consequently, four to five Indian banks could potentially enter the global top 20 in terms of market capitalisation by 2020.
Commenting on the McKinsey findings, Narendra Singh, Bank of Maharashtra CMD said, “This report is significant as it speaks of the exploding opportunities for the Indian banking sector. The government-professed inclusive growth and financial inclusion also provides us with opportunities for growth.”
Some other findings of McKinsey report were that by 2020, digital savvy, high-value consumers will drive the digital financial services opportunity from $60 billion to $70 billion.
Although banks have launched measures to respond to regulatory changes, the report said that to ensure success, they must lay the groundwork before embarking on the capital transformation journey.
P Chidambaram and Chief Minister Prithiviraj Chavan will attend the conference tomorrow.