A

MINI PROJECT REPORT

ON
“APPLICATION OF EMERGING TECHNOLOGY IN
BANKING INDUSTRY”

SUBMITTED
FOR PARTIAL FULFILLMENT OF
MASTER OF BUSINESS ADMINISTRATION
SESSION 2022-23
SUBMITTED TO :- SUBMITTED BY:-
MR. ALOK MISHRA SHIVAM DIXIT
ASSISTANT PROFESSOR M.B.A 2ND SEMESTER
M.B.A

INSTITUTE OF ENGINEERING & TECHNOLOGY(221)

SITAPUR
 ACKNOWLEDGEMENT

An exchange of ideas generates a new impetus to work in a

better way. Apart from the ability labour and time devotion,
guidance and wholehearted co-operation are the two pillars for
building the success of a project. Whenever a person is helped or
co-operated by others his heart is bound to pay gratitude to his
benefactors.
The pleasure that accompany the successful completion of task
would be incomplete without acknowledging the contribution of
the people who have made it possible and whose constant
guidance and encouragement served as a guiding light for the
completion of the study.
I take this opportunity to express my deep gratitude to Mr. Alok
Mishra Head of Department (HOD), Institute of Engineering and
Technology, Sitapur whose guidance and support helped
immensely in the successful completion of this project.
Last but not the least I would like to thank my parent and
friends for their support and suggestions.

SHIVAM DIXIT
M.B.A 2ND SEMESTER
 DECLARATION

This project titled “APPLICATION OF EMERGING

TECHNOLOGY IN BANKING INDUSTRY ” is submitted in
Partial fulfilment of the requirement for the degree of Master of
Business Administration (MBA) of Institute of Engineering and
Technology, Sitapur, Uttar Pradesh. The compilation of this
project is done by SHIVAM DIXIT and the assistance and helping
during the execution of this project has been fully acknowledged.
I
further declare that the information present in the project is true
and original to the base of my knowledge.

SHIVAM DIXIT
M.B.A 2ND SEMESTER
 TABLE OF CONTENT
CHAPTER PAGE.NO
1. INTRODUCTION 1

2. OBJECTIVE 4

3. FUNCTION 5

4. ORIGIN OF MODERN BANKING 9

5. BANKING REGULATION 11

6. ISSUE & CHALLENGES OF BANKING INDUSTRY 15

7. APPLICATION OF EMERGING TECHNOLOGY IN BANKING

INDUSTRY 23

8. SWOT ANALYSIS 31

9. CONCLUSION 35

10. BIBLIOGRAPHY1 36
 CHAPTER:-1 INTRODUCTION

The banking sector is the lifeline of any modern economy. It is one of

the important financial pillars of the financial sector, which plays a vital
role in the functioning of an economy.
It is very important for economic development of a country that its
financing requirements of trade, industry and agriculture are met with
higher degree of commitment and responsibility.
Thus, the development of a country is integrally linked with the
development of banking. In a modern economy, banks are to be
considered not as dealers in money but as the leaders of development.
They play an important role in the mobilization of deposits and
disbursement of credit to various sectors of the economy. The banking
system reflects the economic health of the country.
The strength of an economy depends on the strength and efficiency of
the financial system, which in turn depends on a sound and solvent
banking system. A sound banking system efficiently mobilized savings
in productive sectors and a solvent banking system ensures that the bank
is capable of meeting its obligation to the depositors.
In India, banks are playing a crucial role in socio-economic progress of
the country after independence.

The banking sector is dominant in India as it accounts for more than

half the assets of the financial sector. Indian banks have been going
through a fascinating phase through rapid changes brought about by
1
financial sector reforms, which are being implemented in a phased
manner.
The current process of transformation should be viewed as an
opportunity to convert Indian banking into a sound, strong and vibrant
system capable of playing its role efficiently and effectively on their
own without imposing any burden on government.
After the liberalization of the Indian economy, the Government has
announced a number of reform measures on the basis of the
recommendation of the Narasimhan Committee to make the banking
sector economically viable and competitively strong.
The current global crisis that hit every country raised various issue
regarding efficiency and solvency of banking system in front of policy
makers. Now, crisis has been almost over, Government of India (GOI)
and Reserve Bank of India (RBI) are trying to draw some lessons.
RBI is making necessary changes in his policy to ensure price stability
in the economy. The main objective of these changes is to increase the
efficiency of banking system as a whole as well as of individual
institutions. So, it is necessary to measure the efficiency of Indian
Banks so that corrective steps can be taken to improve the health of
banking system.

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3
 CHAPTER:-2 OBJEVTIVE

1. To find the market share and nature of the competition of Indian

banking industry.

2. Determine the demographic of buyer and the market

segmentation of Indian banking sector.

3. Describe the policy framework (pest analysis) of Indian banking

industry.

4. What is the business diversification of Indian banking industry.

5. Identify the merger and acquisition in the banking industry,

6. To know the international exposure of Indian banking industry.

7. To know the marketing initiatives under Indian banking sector.

8. Elaborate the future outlook of Indian banking industry.

9. Bank deals with the foreign exchange as the authorized dealer.

They purchase and sell foreign currencies to the intending sellers
and the buyers at the market rates.
4
 CHAPTER:-3 FUNCTION

Primary Functions of Banks:-

 Acceptance of deposits from the public

 Provide demand withdrawal facility

 Lending facility

 Transfer of funds

 Issue of drafts

 Provide customers with locker facilities

 Dealing with foreign exchange

5
 Secondary Functions of Banks:-

 Transfer of Funds

 Periodic Collections

 Periodic Payments

 Collection of Cheques

 Portfolio Management

6
 List Of Different Types Of Banks:-

 Central Bank

 Cooperative Banks

 Commercial Banks

 Regional Rural Banks (RRB)

 Local Area Banks (LAB)

 Specialized Banks

 Small Finance Banks

 Payments Banks

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8
 CHAPTER:-4 ORIGIN OF MODERN
BANKING

The modern banking industry, offering a wide range of financial

services, has a relatively recent history; elements of banking have
been in existence for centuries, however The idea of offering safe
storage of wealth and extending credit to facilitate trade has its
roots in the early practices of receiving deposits of objects of
wealth (gold, cattle, and grain, for example), making loans,
changing money from one currency to another, and testing coins
for purity and weight.

The innovation of fractional reserve banking early in this history

permitted greater profitability (with funds used to acquire income
earning assets rather than held as idle cash reserves) but exposed
the deposit bank to a unique risk when later paired with the
requirement of converting deposits into currency on demand at par,
since the demand at an particular moment may exceed actual
reserves. Douglas Diamond and Philip Dybvig have, for example,
shown in their 1983 article “Bank Runs, Liquidity, and Deposit
Insurance” that in such an environment, a sufficiently large
withdrawal of bank deposits can threaten bank liquidity, spark a
fear of insolvency, and thus trigger a bank run.

Means of extending short-term credit to support trade and early

risk-sharing arrangements afforded by such devices as marine
insurance appear in medieval times. Italian moneychangers formed
9
early currency markets in the twelfth century CE at cloth fairs that
toured the Champagne
and Brie regions of France. The bill of exchange, as a means of
payment, was in use at this time as well.
Over the course of the seventeenth and eighteenth centuries, the
industry transformed from a system composed of individual
moneylenders financially supporting merchant trade and
commerce, as well as royalty acquiring personal debt to finance
colonial expansion, into a network of joint-stock banks with a
national debt under the control and management of the state.
The Bank of England, for example, as one of the oldest central
banks, was a joint-stock bank initially owned by London’s
commercial interests and had as its primary purpose the financing
of the state’s imperial activities by taxation and the implementing
of the permanent loan. This
period was also marked by several experiments with bank notes
(with John Law’s experiment in France in 1719–1720 among the
most infamous) and the emergence of the check as simplified
version of the bill of exchange.
Eighteenth-century British banking practices and structures were
transported to North America and formed an integral part of the
colonial economies from the outset.

The first chartered bank was established in Philadelphia in 1781

and in Lower Canada in 1817.
Experiments with free banking—as a largely unregulated business
activity in which commercial banks could issue their own bank
notes and deposits, subject to a requirement that these be
convertible into gold—have periodically received political support
and have appeared briefly in modern Western financial history.
10
 CHAPTER:-5 BANKING REGULATION

The Bank of England, for example, as one of the oldest central banks,
was a joint-stock bank initially owned by London’s commercial
interests and had as its primary purpose the financing of the state’s
imperial activities by taxation and the implementing of the permanent
loan. This period was also marked by several experiments with bank
notes (with John Law’s experiment in France in 1719–1720 among the
most infamous) and the emergence of the check as simplified version of
the bill of exchange.
Eighteenth-century British banking practices and structures were
transported to North America and formed an integral part of the colonial
economies from the outset. The first chartered bank was established in
Philadelphia in 1781 and in Lower Canada in 1817.
Experiments with free banking—as a largely unregulated business
activity in which commercial banks could issue their own bank notes
and deposits, subject to a requirement that these be convertible into gold
—have periodically received political support and have appeared briefly
in modern Western financial history. Public interest in minimizing the
risk of financial panics and either limiting or channelling financial
power to some advantage has more often, however, dominated and
justified enhanced industry regulation.

Various forms of bank regulation include antitrust enforcement, asset

restrictions, capital standards, conflict rules, disclosure rules,
geographic and product line entry restrictions, interest rate ceilings, and
11
investing and reporting requirements. The dominant view holds that
enhanced regulation of this industry is necessary because there is clear
public sector advantage, or for protecting the consumer by controlling
abuses of financial power, or because there is a market failure in need of
correction.
Where public sector advantage justifies the need for regulation,
government intervention may appear in the form of reserve
requirements imposed on deposit-taking institutions for facilitating the
conduct of monetary policy or in the various ways in which
governments steer credit to those sectors deemed important for some
greater social purpose. Limiting concentration and controlling abuses of
power and thus protecting the consumer have motivated such legislation
as the American unit banking rules (whereby banks were limited
physically to a single center of operation) and interest rate ceilings
(ostensibly designed to prohibit excessive prices), as well as various
reporting and disclosure requirements.
The latent threat of a financial crisis is an example of a market failure
that regulation may correct. Here, the failure is in the market’s inability
to properly assess and price risk. The systemic risk inherent in a bank
collapse introduces social costs not accounted for in private sector
decisions.

The implication is that managers, when constructing their portfolios,

will assume more risk than is socially desirable; hence, there exists a
need for government-imposed constraint and control. State-sanctioned
measures designed to minimize the threat of bank runs include the need
for a lender of last resort function of the central bank to preserve system
liquidity and the creation of a government-administered system of retail
banking deposit insurance.
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Regulation explicitly limiting the risk assumed by managers of banks
includes restrictions that limit the types and amounts of assets an
institution can acquire. A stock market crash will threaten solvency of
all banks whose portfolios are linked to the declining equity values.
Investment bank portfolios will be, in such a circumstance, adversely
affected. The decline in the asset values of investment banks can spill
over to deposit banks causing a banking crisis when the assets of deposit
banks include marketable securities, as happened in the United States in
the early 1930s.
The Bank Act of 1933 (the Glass-Steagall Act) in the United States as
well as early versions of the Bank Act in Canada, for example, both
prohibited commercial banks from acquiring ownership in nonfinancial
companies, thus effectively excluding commercial banks from the
investment banking activities of underwriting and trading in securities.

This highly regulated and differentiated industry structure in twentieth-

century North America contrasts sharply with the contemporaneous
banking structures of Switzerland and Germany, for example, where the
institutions known as universal banks offer a greater array of both
commercial and investment banking services. The question for
policymakers then is which industry structure best minimizes the risk of
banking crises and better promotes macroeconomic stability.

13
14
CHAPTER:-6 ISSUE & CHALLENGES OF
BANKING INDUSTRY

1. Increasing Competition:-
The threat posed by FinTechs, which typically target some of the
most profitable areas in financial services, is significant. Goldman
Sachs predicted that these startups would account for upwards of
$4.7 trillion in annual revenue being diverted from traditional
financial services companies.

These new industry entrants are forcing many financial institutions

to seek partnerships and/or acquisition opportunities as a stop-gap
measure; in fact, Goldman Sachs, themselves, recently made
headlines for heavily investing in FinTech. In order to maintain a
competitive edge, traditional banks and credit unions must learn
from FinTechs, which owe their success to providing a simplified
and intuitive customer experience.

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2. A Cultural Shift:-
From artificial intelligence (AI)-enabled wearables that monitor the
wearer’s health to smart thermostats that enable you to adjust
heating settings from internet-connected devices,
technology has become ingrained in our culture — and this extends
to the banking industry.

In the digital world, there’s no room for manual processes and

systems. Banks and credit unions need to think of technology-
based resolutions to banking industry challenges. Therefore, it’s
important that financial institutions promote a culture of
innovation, in which technology is leveraged to optimize existing
processes and procedures for maximum efficiency. This cultural
shift toward a technology-first attitude is reflective of the larger
industry-wide acceptance of digital transformation.

3. Regulatory Compliance:-
Regulatory compliance has become one of the most significant
banking industry challenges as a direct result of the dramatic
increase in regulatory fees relative to earnings and credit losses
since the 2008 financial crisis. From Basel’s risk-weighted capital
requirements to the Dodd- Frank Act, and from the Financial
Account Standards Board’s Current Expected Credit Loss (CECL)
to the Allowance for Loan and Lease Losses (ALLL), there are a
growing number of regulations that banks and credit unions must
comply with; compliance can significantly strain resources and is
often dependent on the ability to correlate data from disparate
sources.

16
 Technology is a critical component in creating this culture of
compliance.
Technology that collects and mines data, performs in-depth data
analysis, and provides insightful reporting is especially valuable for
identifying and minimizing compliance risk. In addition, technology can
help standardize processes, ensure procedures are followed correctly
and consistently, and
enables organizations to keep up with new regulatory/industry
policy changes.

4. Changing Business Models:-

The cost associated with compliance management is just one of
many banking industry challenges forcing financial institutions to
change the way they do business. The increasing cost of capital
combined with sustained low interest rates, decreasing return on
equity, and decreased
proprietary trading are all putting pressure on traditional sources of
banking profitability. In spite of this, shareholder expectations
remain unchanged.
This culmination of factors has led many institutions to create new
competitive service offerings, rationalize business lines, and seek
sustainable improvements in operational
efficiencies to maintain profitability. Failure to adapt to changing
demands is not an option; therefore, financial institutions must be
structured for agility and be prepared to pivot when necessary.

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5. Rising Expectations:-
Today’s consumer is smarter, savvier, and more informed than
ever before and expects a high degree of personalization and
convenience out of their banking experience. Changing customer
demographics play a major role in these heightened expectations:
With each new generation of banking customer comes a more
innate understanding of technology and, as a result, an increased
expectation of digitized experiences.
Millennials have led the charge to digitization, with five out of six
reporting that they prefer to interact with brands via social media;
when surveyed, millennials were also found to make up the largest
percentage of mobile banking users, at 47%. Based on this trend,
banks can expect future generations, starting with Gen Z, to be
even more invested in omnichannel banking and attuned to
technology. By comparison, Baby Boomers and older members of
Gen X typically value human interaction and prefer to visit
physical branch locations.
This presents banks and credit unions with a unique challenge:
How can they satisfy older generations and younger generations of
banking customers at the same time? The answer is a hybrid
banking model that integrates digital experiences into traditional
bank branches.
Imagine, if you will, a physical branch with a self-service station
that displays the most cutting-
edge smart devices, which customers can use to access their bank’s
knowledge base.

18
 Should a customer require additional assistance, they can use one
of these devices to schedule an appointment with one of the
branch’s financial advisors; during the appointment, the advisor
will answer any of the customer’s questions, as well as set them up
with a mobile AI assistant that can provide them with additional
recommendations based on their behavior. It might sound too good
to be true, but the branch of the future already exists, and it’s
helping banks and credit
unions meet and exceed rising customer expectations.

Investor expectations must be accounted for, as well. Annual

profits are a major concern —
after all, stakeholders need to know that they’ll receive a return on
their investment or equity and, in order for that to happen, banks
need to actually turn a profit. This ties back into customer
expectations because, in an increasingly constituent-centric world,
satisfied customers
are the key to sustained business success — so, the happier your
customers are, the happier your investors will be.

6. Customer Retention:-
Financial services customers expect personalized and meaningful
experiences through simple
and intuitive interfaces on any device, anywhere, and at any time.
Although customer experience can be hard to quantify, customer
turnover is tangible and customer loyalty is
quickly becoming an endangered concept.

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Customer loyalty is a product of rich client relationships that begin
with knowing the customer and their expectations, as well as
implementing an ongoing client-centric approach.
In an Accenture Financial Services global study of nearly 33,000
banking customers spanning 18 markets, 49% of respondents
indicated that customer service drives loyalty. By knowing the
customer and engaging with them accordingly, financial
institutions can optimize interactions
that result in increased customer satisfaction and wallet share, and
a subsequent decrease in customer churn.
Bots are one new tool financial organizations can use to deliver
superior customer service. Bots are a helpful way to increase
customer engagement without incurring additional costs, and
studies show that the majority of consumers prefer virtual
assistance for timely issue resolution. As the first line of customer
interaction, bots can engage customers naturally,
conversationally, and contextually, thereby improving resolution
time and customer satisfaction. Using sentiment analysis, bots are
also able to gather information through dialogue, while
understanding context through the recognition of emotional cues.
With this information,
they can quickly evaluate, escalate, and route complex issues to
humans for resolution.

7. Outdated Mobile Experiences:-

These days, every bank or credit union has its own branded mobile
application — however, just because an organization has a mobile
banking strategy doesn’t mean that it’s being leveraged as

20
effectively as possible. A bank’s mobile experience needs to be
fast, easy to use, fully featured
(think live chat, voice-enabled digital assistance, and the like),
secure, and regularly updated in order to keep customers satisfied.
Some banks have even started to reimagine what a banking app
could be by introducing mobile payment functionality that enables
customers to treat their smart phones like secure digital wallets and
instantly transfer money to family and friends.

8. Security Breaches:-
With a series of high-profile breaches over the past few years,
security is one of the leading banking industry challenges, as well
as a major concern for bank and credit union customers.
Financial institutions must invest in the latest technology-driven
security measures to keep sensitive customer safe.

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22
 CHAPTER:- 7 APPLICATION OF
EMERGING TECHNOLOGY IN BANKING
INDUSTRY

1. Augmented Reality:-
Immersive technologies such as Augmented, virtual, and mixed reality
are enhancing customer experience across the board. So why can’t they
do the same for banking customers.
The possibilities of the implementation of augmented reality technology
in banking sector are only limited by imagination, though these are still
in a very early stage of development. The end state is to give customers
complete autonomy in actions and transactions they could perform at
home. Hybrid branches are envisioned by technology experts who
believe that bank branches as we know them today are a thing of past.
One of the implementations of augmented reality technology in banking
sector, that is already live, has been made by the Commonwealth Bank
of Australia. They have created a rich date augmented reality
application for their customers who were looking to buy or sell a home.
It provides them with information like current listings, recent sales, and
price tendencies to help the
customer make better decisions.

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2. Blockchain:-
Blockchain is a catchall phrase used to describe distributed ledger
technologies. You could think of it as a distributed database with no
DBA involved.
It allows multiple parties to access the same data simultaneously, and at
the same time ensures the integrity and immutability of the records
entered in the database. At present, leading banks around the world are
exploring proof of concept projects across various aspects of banking
and financial services.
The first major implementation that we are likely to see is in the areas
for clearing and settlement. Accenture estimates that investment banks
would be able to save $10 billion by deploying blockchain technology
to improve the efficiency of clearing and settlement systems. Another
major area in which banks will see a huge saving by using blockchain
technology is KYC (Know Your Customer) operations. Business
models being developed at the moment would turn KYC from a cost
centre into a profit centre for banks – as they would come to rely on a
shared blockchain for this activity. Syndicated loans, trade finance and
payments are other areas where the smart contracts on blockchain could
be highly effective.

3. Robotic Process Automation:-

The volume of unstructured data that the bank has to process is
increasing exponentially with the rise of the digital economy. This is not
just banking transaction data, but also other behavioural data that could

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potentially allow the banks to improve and innovate customer
experience.
This has made bankers realize that they need to find technologies that
can mimic human action and judgment but at a higher speed, scale, and
quality. The answer that has emerged is a combination of various
technologies that enable cognitive and robotic process automation in
banking.
These technologies consist of machine learning, natural language
processing, chatbots, robotic process automation, and intelligent
analytics in banking that allow the bots to learn and improve.
It is no surprise that Deloitte’s 2017 State of Cognitive survey found
that 88% of financial service professionals believe that such
technologies are a strategic priority. That said, the current state of the art
in robotic automation is still quite weak at the cognitive and analytical
aspects of the processes.
In the years to come, we would see the current cognitive capabilities
being bundled with the robotic process automation to achieve even
better results. This is already being implemented in point-of-sale
solutions that automatically suggest marketing promotions that would
be most effective for an individual customer.

4. Quantum Computing:-
Quantum computing is a way of using quantum mechanics to work out
complex data operations.
As is common knowledge today, computers use bits that can have two
values – 1 or 0. Quantum computing uses “quantum bits” that can
instead have three states – 1 or 0 or both. This unlocks exponential
25
computing power over traditional computing – when the right algorithm
is used.
This represents a huge leap in computing power, but any commercial
implementations are still decades away. Nevertheless, firms like
JPMorgan Chase and Barclays are investing in quantum
computing research in partnership with IBM.

5. Artificial Intelligence:-
The explosive growth that the last decade has seen in the amount of
structured and unstructured data available with the banks, combined
with the growth of cloud computing and machine learning technologies
has created a perfect storm for Artificial Intelligence to be used across
the spectrum of banking and financial services landscape.
Business needs and capabilities of AI implementations have grown
hand-in-hand and banks are looking at Artificial

Intelligence as a differentiator to beat down the emerging competition.

Artificial Intelligence allows banks to use the large histories of data that
they capture to make much better decisions across various functions
including back-office operations, customer experience, marketing,
product delivery risk management, and compliance.
Artificial intelligence would revolutionize banks by shifting the focus
from the scale of assets to scale of data. The banks would now aim to
deliver tailored experiences to their customers rather than build mass
products for large markets.
Instead of retaining customers through high switching costs, banks
would now be able to become more customer-focused and retain them
26
by providing high retention benefits. Most importantly, banks would no
more just depend on human ingenuity for improving their services.
Instead, performance would be a product of the interplay between
technology and talent.

6. API Platforms:-
The time when banks could control the whole customer experience
through a monolithic system that controlled everything from keeping
records to every customer interaction is long gone. Both the regulatory
requirements and the revolving customer needs have turned this
humongous system into dinosaurs.
Today banks need to instead build “banking stacks” that allow them to
be a platform to which

customers and third-party service providers can connect to deliver a

flexible and personalized experience to the end user. To do so, they can
use API platforms for banking.
API Banking Platform is designed to work through APIs that sit
between the banks' backend execution and front-end experiences
provided by either the bank itself or third party partners.
This allows the banks to adopt completely new business models and use
cases (for example, enabling salary advances) and experiment with new
technologies like blockchain at low cost.
APIs also help banks to future-proof their systems as the front-end is no
more tightly coupled with the backend.

7. Prescriptive Security:-

27
The nature of cyber risk changes at a great speed. This makes the
traditional approaches to risk management obsolete. It is now clear that
it is impossible for organizations to eliminate all possible sources of
cyber threats and limiting the attack footprint at the earliest is the best
way to deal with these. The banks will have to be nimble in the way
they approach cyber security.
Increasingly banks are deploying advanced analytic, real-time
monitoring and AI to detect threats and stop them from disrupting the
systems. The use of big data analysis techniques to get an earlier
visibility of threats and acting to stop them before they happen is called
prescriptive security.
While the disruption brought by implementing the new technique may
lead to an increase in vulnerability at the start, this is the way forward to
stop the ever increasing data breaches that various organizations are
reporting.

8. Hybrid Cloud:-
One of the biggest challenges that the digital age has brought to banking
is the need to respond
quickly. The constantly evolving market that banks operate in requires
them to be as agile as possible. They need to be able to provide
resources across the enterprise in a timely manner to address business
problems faster.
High performing banks have discovered that the most cost-effective
way of achieving this is through an enterprise-wide hybrid cloud. This
allows them to pick benefits of both public and private while addressing
issues like data security, governance, and compliance along with the
ability to mobilize large resources in a matter of minutes.

28
Hybrid cloud also allows banks to offer innovative new offerings to its
customers. For example, ICICI Bank has partnered with Zoho to allow
businesses to automate the basic reconciliation process through Zoho
Books, a cloud accounting software. The partnership does away with the
need for data entry and also makes it easier to offer multiple payment
options to the customers.

9. Instant Payments:-
As the world moves towards a less-cash economy, the customer
expectations around payments have changed dramatically. Both
customers and business expect payments to happen instantaneously, and
this is where instant payment systems step in.
Instantaneous payment is a must if online payments need to replace cash
transactions. Therefore, banks around the world are finding ways of
providing their customers options for instant payment, even when the
infrastructure required for the service is lacking.
For example, banks in Kenya are partnering together to provide P2P
payment experience to their customer base. You would soon see banks
combining their instant payment capabilities with third-party e- and m-
commerce solutions to develop a new portfolio of services.

10.Smart Machines:-
You must have already seen assistants like Amazon’s Alexa and Google
Home in action. Can you imagine the impact these could have on
banking applications.
In fact, Bank of America has already developed Erica as a virtual
assistant specifically for banking operations. These smart machines are

29
beginning to act as digital concierges for the customer in interacting
with banks as well.

30
 CHAPTER:-8 SWOT ANALYSIS

Strength:-
• Banking Industry is the Oldest Industry: Due to Technological
advancement Industriesare changing their structure. Banking has also
changed its structure and system. BankingIndustry has proved to be one
of the wide spread and widely acknowledged industry. Ithas also
supported the human race. Banking has adapted and updated itself to
suit thenew needs. Banks today play a critical and indispensable role in
society, from inculcatingthe habit of savings to helping people with
financial instruments.

31
• Financial Stability of Nation: In ensuring a nation’s economic
growth and financial stability, the banking industry plays a vital role. By
fostering prosperity, banks contribute to the economy. They assist the
masses to maintain their resources and become important contributors to
both the national and international economy.
• Supplier of Financial Instruments: Banks have a wide range of
financial instruments for their customers. Fixed Deposits, Stocks, bonds,
insurance and savings accounts are some of the varied products sold by
banks. Furthermore, to provide online banking solutions, banks have
also embraced and incorporated digital technologies.
• Good Employment Source and Helps in GDP growth: There is a
widespread consensus that perhaps the improvement of the financial
system leads to economic growth. Financial development establishes
encouraging conditions for growth by either supply-led (financial
development stimulates growth) or demand-driven growth. It is this
industry that works constantly to ensure financial stability, encourage
foreign trade , promote jobs and reduce poverty around the world.
• Financial Assistance: whether natural calamity or man-made
calamity banks alleviate the after-effects of disaster by offering financial
assistance to victims to rise up and lead a peaceful life again.

Weakness:-
• Global Economics Susceptibility: Due to Exchange Rate changes
and changes in world economy banking Industry is effected. It is also
seen that slight shifts in the exchange rates of currencies or the spending
and saving patterns of the citizens of one major nation can directly
impact the entire banking industry.

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• Non Performing Assets: The major weakness of the banking sector
is NPAs (Non- Performing Assets). Typically, NPAs denote loans that
are not recoverable. This leads to financial losses for the bank,
inevitably. For the banking sector and the economy as a whole, NPAs
can have a debilitating impact. Developing countries like India face
instances of high NPAs that have dealt a significant blow to the nation’s
banking industry.

• Lack of coverage in rural areas: It has been observed that the

banking industry focuses more on urban areas in most countries, while
rural regions are ignored. In the banking sector, this is a considerable
weakness. Villages are now home to a significant majority of the
world’s population. In developed countries, this is more. Banks are
working in main stream don’t want to concentrate on mainstreams.
Banks must try to capture Rural Markets.

Opportunities:-
• Advancements in Technology: The banking industry has always
based on technology. This is evident that digital services provided by
banks today are totally based on technology. However, banks should
continue to adopt the latest technological advances. To draw future
generations, they should focus on putting out newer goods and services.
• Opportunities for rural growth: One of the banking industry’s weak
points is its limited presence in rural areas. But this vulnerability can
actually be turned into an opportunity. Banks will increase their
customer base considerably by expanding into villages and providing
their services to the rural population.

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• Societal Evolution: Both economically and culturally, human
society is changing. The needs and demands of customers with
increasing income levels are bound to change in this complex
landscape. It is necessary for banks to adapt to this changing society.
The sector will solidify its position in the future by offering better
services.
• Rising in the private banking sector: the banking industry around
the world is highly regulated by Public sector banks and their respective
central banks. With the emergence of private sector banks, this sector is
experiencing structural and functional shifts, primarily due to the
adaptation of new technology and intensified competition, thereby
benefiting end-customers.

Threats:-
• Lack of Cyber Defence Proper: The current banking industry relies
entirely on the cyber-world. Whether it is data storage, monetary
transactions or personal information, everything is stored digitally. This
makes the banking sector a primary target for hackers who are seeking
to benefit financially by leveraging flaws in the banks digital
infrastructure. Unless banks take effective cybersecurity steps to
safeguard their records, they will face a significant cyberspace threat.
• Competition Stiff: Worldwide, banks face stiff competition. Not
only from other banks, but also from institutions like Non-Banking
Financial Companies that sell a range of financial products that are not
available to all banks. This has contributed to a change of the consumer
base from banks to NBFCs, which are more embraced by the new
skilled breed.
• Global Uncertainty in Economics: The world is going through
difficult economic times at present. The international banking sector has
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all been affected by trade wars, protectionist policies, and economic
downturns. If the world’s economic conditions do not change, banks
will face a bleak future.
• Recession: This is one of the biggest challenges to the nation’s
financial system. The traumatic shock of economic crises and the
collapse of a number of companies will impact the banks and vice versa.

CHAPTER:-9 CONCLUSION

Banking Industry is one of the fastest changing and growing industry in

the world. Banks are adopting new technologies to increase their
business. They have also contributed in general to the world’s economic
growth.
But their own shortcomings, such as NPAs and a lack of adequate rural
presence, must be tackled. The good news is that by providing quality
service and growing into untapped regions, they will work towards
turning these weakness into opportunities. This would allow them to
counter the global challenges of recessions and intense competition
more effectively. Another factor that banks have to take care of is
ensuring that their digital infrastructure is up-to-date and running
correctly. The banking industry will therefore ensure that it continues its
successful march. Banking is changing due to UPI payments and
Payment Wallets like PhonePe,Amazon Pay, PayTM, etc.

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 CHAPTER:-10 BIBLIOGRAPHY

WWW.GOOGLE.COM

WWW.WIKIPEDIA.COM

WWW.PIB.GOV.IN

THE HINDU

NITI AYOG

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