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Randhirdas3@gmail.com
MONIKA RANI
Monakhullar7@gmail.com
Abstract: Banking can be defined as the business activity of accepting and safeguarding money
owned by other individuals and entities, and then lending out this money in order to earn a
profit. However, with the passage of time, the activities covered by banking business have
widened and now various other services are also offered by banks. The banking services these
days include issuance of debit and credit cards, providing safe custody of valuable items, lockers,
ATM services and online transfer of funds across the country / world.
The Bank recognises that a new economy, a new world and new
demographics demand a new financial system. The new finance will develop for the new
economy, not in isolation from it. In this research we will study in detail what is Banking, How
banking helps in economic growth and what are the challenges faced by banking sector and
suggestion to outcomes from that problem.
The information required for study has been collected from only secondary sources has been
followed full paper. The banking sector have had greater impact on economies and social aspect
of Nation.
Keywords: Fintech, IT(Information Technology).
Objective:
RESEARCH METHODOLOGY:
The present paper is primarily based on secondary data. Present study focus on vision of the
banking in future. Secondary data are collected from various websites, government publications,
journals and other publications like research articles published in journal available. Research is
descriptive in nature.
ORIGIN OF BANKING: The word ‘bank’ is used in the sense of a commercial bank. It is of
Germanic origin though some persons trace its origin to the French word ‘Banqui’ and the Italian
word ‘Banca’. here was no such word as ‘banking’ before 1640, although the practice of safe-
keeping and savings flourished in the temple of Babylon as early as 2000 B.C. The first bank
called the ‘Bank of Venice’ was established in Venice, Italy in 1157 to finance the monarch in
his wars. The bankers of Lombardy were famous in England. But modern banking began with
the English goldsmiths only after 1640. The first bank in India was the ‘Bank of Hindustan’
started in 1770 by Alexander & Co., an English agency house in Calcutta which failed in 1782
with the closure of the agency house. But the first bank in the modern sense was established in
the Bengal Presidency as the Bank of Bengal in 1806.
1. In 1955, the Imperial Bank of India was nationalised and was given the name “State Bank
of India”. It was established under State Bank of India Act, 1955.
2. In 1960, RBI was empowered to force the compulsory merger of the weak banks with the
strong ones. This led to reduction in the number of banks from 566 in 1951 to about 89 in
1969.
3. On July 19, 1969, 14 major banks were nationalised.
4. In 1980, another six banks were nationalised, and thus raising the number of nationalized
banks to 20.
5. On the suggestions of Narsimham Committee, the Banking Regulation Act was amended
in 1993 and thus the gates for the new private sector banks were opened.
Future Vision of Banking:
What will the branch of the future look like? We live in a world enabled by technology like
never before. (By the time you get done reading this paragraph, Google will log approximately 1
million searches.) Life moves fast. And consumers’ expectations move even faster.
Today’s consumers seek the same speed, ease and convenience from financial services that they
do in every other aspect of their lives. No longer will they wait in long lines or take days to
receive a new debit card. They want immediate service and an intuitive process resembling how
they would order coffee or check the weather.
Although digitally savvy, many consumers still see the physical branch as highly relevant and a
vital component of their financial lives. They want a brick-and-mortar experience that merges
with technology—and fits effortlessly into how they live and manage their money. Fiserv’s
recent “Expectations & Experiences: Household Finances” survey explored the channels and
methods consumers prefer when they execute financial transactions today—and how these
behaviors set future expectations. The results indicate a need for a branch transformation strategy
that blends human interaction with a digital, interconnected environment.
While digital and self-service channels enjoy a greater frequency of use, physical braches will
not disappear anytime soon. More consumers (39 percent) prefer in-person interaction to online
contact (36 percent) as their primary avenue when they engage with a financial institution.
Regardless of age, channel or need, consumers expect speed, security and personalization. By
embracing new technologies without alienating loyal customers, financial institutions can create
a contemporary, welcoming environment. For instance, tellers can leave their desks and greet
customers or members as they enter the branch, with a tablet in hand to quickly and accurately
address their needs.
Features of Banking:
1. Dealing In Money
2. Acceptance Of Money Deposits
3. Payment And Withdraws Money
4. Individual Or Companies
5. Various Branches
6. Function Increasing Rapidly
7. Business In Banking Sector
8. Identification
9. Facilities Of Advance Money
Purpose of Banking:
Objectives of Bank:
2. Commercial Banks:
Commercial banks mobilise savings of general public and make them available to large
and small industrial and trading units mainly for working capital requirements.
Commercial banks in India are largely Indian-public sector and private sector with a
few foreign banks. The public sector banks account for more than 92 percent of the entire
banking business in India—occupying a dominant position in the commercial banking. The
State Bank of India and its 7 associate banks along with another 19 banks are the public
sector banks.
All commercial banks (Indian and foreign), regional rural banks, and state
cooperative banks are scheduled banks. Non- scheduled banks are those which are not
included in the second schedule of the RBI Act, 1934. At present these are only three such
banks in the country.
5. Cooperative Banks:
Cooperative banks are so-called because they are organised under the provisions of
the Cooperative Credit Societies Act of the states. The major beneficiary of the Cooperative
Banking is the agricultural sector in particular and the rural sector in general.
The cooperative credit institutions operating in the country are mainly of two kinds:
agricultural (dominant) and non-agricultural. There are two separate cooperative agencies for
the provision of agricultural credit: one for short and medium-term credit, and the other for
long-term credit. The former has three tier and federal structure.
At the apex is the State Co-operative Bank (SCB) (cooperation being a state subject
in India), at the intermediate (district) level are the Central Cooperative Banks (CCBs) and at
the village level are Primary Agricultural Credit Societies (PACs).
Long-term agriculture credit is provided by the Land Development Banks. The funds
of the RBI meant for the agriculture sector actually pass through SCBs and CCBs. Originally
based in rural sector, the cooperative credit movement has now spread to urban areas also
and there are many urban cooperative banks coming under SCBs.
1) Not making enough money: Despite all of the headlines about banking profitability,
banks and financial institutions still are not making enough return on investment, or the
return on equity, that shareholders require.
4) Crisis in Management: Public-sector banks are seeing more employees retire these days.
So, younger employees are replacing the elder, more-experienced employees. This,
however, happens at junior levels. As a result, there would be a virtual vacuum at the
middle and senior level. The absence of middle management could lead to adverse impact
on banks' decision making process.
Look beyond, this, though, to see the other changes playing out. These
are three key challenges banks will face in 2018. Whether or not your bank is
ready depends on your ability to innovate, customize, and integrate any of
these key areas of focus.
6 ) I mp rovi n g Con su mer Re ten ti on : One of the key concerns for any bank is
maintaining customers. One challenge that banks will need to overcome, then,
is remaining relevant as new challenger banks begin to rise. The best way to
be able to overcome this challenge is to provide the most innovative and
hands-on service to customers. Even the Millennial will remain with the bank
that meets their needs and is always available to them. This will include
creating that frictionless environment that consumers need.
1) Reduce the cost: The financial institution can reduce there cost by applying
different techniques of modern technology. So that financial institution can
get benefit on there investment, return on equity , etc.
2) Updating with Modern Technology: Banks can improve there performance
in future by updating regularly with the modern technology. As the world is
growing on the basis of technology it will be the better way to compete with
growing world.
5) Better control on Security: In future mostly all the works will get done
electronically, so there must be the powerful control on security. As in recent
days many frauds are happening can get control by better security system.
6) Staff Shrinks, and Shifts to IT: Some bankers predicted that the rise of
technology would led to less staff in finance — unless they happen to do a
particular job, like this one respondent who wrote, “Only 20% of current staff
levels [will remain], but [banks will employ] twice the number of IT staff.
Traditional banks will lose their direct channels to specialist channel
providers.”
7) Opening More branches at undeveloped area: Financial institution are
seeing to open more possible branches at undeveloped area in future, so that
the undeveloped area will also get developed.
8) Providing Sufficient loan: The study found that the loan requirement is much
more than the supply and the principles to provide loan should be fair and fast
so that needy person can perform there task.
9) Banks Absorb Fintech Startups: One respondent was skeptical that current
startup culture would still be around, noting that there will be “very few large
scale startups. Most will be acquired and assimilated into the larger
ecosystem.” He didn’t elaborate as to why, but we might suggest funding
drying up, regulations increasing, or greater synergies developing between
fintech companies and innovative banks.
10) Unless the Regulators Kill Small Banks: And some respondents thought
exactly the opposite, like this banker who noted the importance of regulation:
“Technology is moving exponentially at this point and not linear, so it’s hard
to predict. But community banking will drastically decline … unless the
government regulates fintech harsher.” Regulation (or lack thereof) was seen
here as protecting fintech startups and hurting community banks.
Conclusion:
For achieving complete mission and growth of future vision on banking Government, and
the implementing agencies will have to put their minds and hearts together so that the banking
institution can be taken forward. There should be updated technology to compete with banking
world, and also the banking existence should be according to modern days .Thus, banking is a
big road of existence with technology which needs to travel to make it completely successful.
Miles to go before we reach the set goals but the ball is set in motion!
Refrences:
A. Journals:
1) Journals on Banking
2) Magazines of Banking
B. Websites
1) www.google.com
2) www.wikipedia.com
C. https://www.researchgate.net/publication/5014436_Visions_about_the_Future_of_Banki
ng
D. https://www.bai.org/banking-strategies/article-detail/a-2020-vision-creating-the-bank-
branch-of-the-future-instantly
E. https://bankinnovation.net/2016/10/10-ways-banking-will-be-different-in-2020/