Not so long ago, a customer in India would walk into a bank and wait in a queue for a mere thirty minutes if he or she were extraordinarily lucky! Customer account and transaction details were maintained in huge paper-based ledger books. To top it all, the customer had to get to the bank within the specified 10 a.m. to 1p.m. window.

Bank will look at transforming themselves into a one-stop-shop

Foreign banks in India started changing the rules of the game first. They tried to lure customers away by good service and by giving him or her the ability to choose between more flexible products. These banks were more automated; they provided information faster; they kept flexible working hours; they introduced 24x7 ATMs. Nationalised banks thought that they were protected as foreign banks were subject to branch restrictions.

Foreign banks started to extend their franchise focusing on corporate customers and on the growing middle class consumers. They leveraged phone banking and call centres to counter their lower branch presence; they used outsourced agents to contact customers directly. As they watched the cream of their customers being lured away, the nationalised banks realised that they had to do 'something'. The advent of finance companies, added to the competition in the field.

Today, the private Indian banks have brought a fresh perspective to bear on the situation. They already overshadow foreign banks in terms of brand recognition. The banking service offerings have expanded to include capital market products. Channels through which the customers can retrieve information or request services/transactions include internet, Interactive Voice Response (IVR), call centres, cell phones and ATMs. Technology has enabled the channels to provide a consistent view to the customers using integrated systems. A customer-centric view has replaced the earlier product-centric view.

Nationalised banks are also attempting to get on to the path of comprehensive automation. Their service offerings and quality have improved considerably. Their current major issues revolve around the will to change their business models and the millstone of their historic NPAs.

The Swadhan network, allowing usage of ATM cards across banks is a good effort at shared services in order to gain economies of scale. The banking revolution in the metros is slowly but steadily moving to second tier cities and towns.

The banking industry in India can set a very aggressive pace for itself in the near term. Banks will look at transforming themselves into a one-stop shop for all financial services. Using new customer-centric technologies quite a few private Indian banks and some foreign banks are well on their way to raise the performance bar for all. Already, new buzzwords are making the rounds. Seamless connectivity for corporate customers, device-neutral connectivity for retail consumers, cross-selling and up-selling using CRM technologies, evaluating and enhancing the lifetime value of customers and so on.

Nationalised banks will undergo a drastic change either through privatisation or through consolidation. If they wish to survive and succeed, they need to learn to leap-frog. It would be an irony if a country that claims to being an it super power has a state-owned banking sector trapped in a time warp.