In the coming millennium, banking services would increasingly rest on technology and communication systems. More recently, public sector banks have made concrete efforts to apply technology to improve their quality of service. Technology would be the key input both for internal efficiency as well as for improving the quality of customer service. In the management of banking operations, technology would facilitate speedy processing of data and building up decision support system.I feel the difference in the role of banks and financial institutions (FIs) would soon get diluted. So far, banks have been doing captive business involving international funds for short- and medium-term, whereas FIs are engaged in long-term funding. Indian financial market has witnessed the presence of different set of FIs for various needs of the customer. But of late, we have seen an overlapping of the role of different institutions. Financial institutions have been trying to do what banks are meant to do and vice versa.Withrise in the expectations and aspirations of customers, the scope of business in the future would rest on the ability of the bank to develop a close relationship with the customer. Transaction-based banking is coming to an end with new players offering home banking services and remote banking. The need for customers to call on branches for conducting transactions will gradually lose significance. Banks will have to productively move in the market and remain in touch with customers to remain competitive.Over a period of time, banks have developed purpose-specific products and services with little flexibility for spill over. More recently, banks have witnessed the entry of mixed products. But taking into account the speed of diversification and multiple needs of the customer, it is possible that banks will have to introduce universal products in deposits and advances to meet several needs with one facility A deposit account will have flexibility of current account with opportunity to earn termdeposits rates. Similarly on the credit side, a single line of credit will be able to match multiple needs of borrowers.In order to stimulate quality, banks should be able to set benchmarks to enable operating units to follow a corporate quality standards. Goiporia Committee began the process by setting time norms for standard services. But looking at the available technology and quality of products/services made available by competitors across the globe, it is essential that new benchmarks are prescribed keeping customer needs in mind. The next millennium would witness the emergence of new benchmarks as model for gaining competitive leverage.Though banks are operating in the post-reform period with an urge to attain global standards, the legal framework facilitating banking operations is old and some of them have become redundant. As more and more banks are required to access capital from the market, the number of shareholders and stockholders will tend to increase. Banks will have to adopt suitablecode of corporate governance to direct the operation to increase profits. It is the residual benefit of the profitability of banks which will go to shareholders in the form of dividend as well as better appreciation of share prices. With this view, banks will have to restructure the whole administrative hierarchy to speed up the decision-making process.In the long run, banks will have to strike the right balance between social needs and commercial compulsions. On the whole, banking will become a fascinating experience in the next millennium.The author is Chairman and Managing Director, Bank of Baroda
