– Manisha Sharma
A decade ago, visit to a bank would mean spending money on travel, waiting in long queues and missing a half day’s work. Now, with the growing usage of digital banking, the number of visits to bank branches have reduced. The latest innovation by HDFC Bank in the self-service channel is the humanoid robot, so you no longer need to wait in long queues. Banks are aggressively using digital marketing strategies to attract new customers and enhance the experiences of existing customers. However, much of the banking sector depends on investment cycle, working capital demand, monsoon, commodity prices and government spending in some sectors such as infrastructure sector.
An assessment of the current scenario indicates that the credit growth has declined to 4.4% in 2016-17 from 8% in 2015-16. The asset quality has deteriorated further in the current fiscal leading to a Gross NPA Ratio of 9.5% with Public Sector Banks contributing the most. The macroeconomic indicator – inflation has dipped to a record low in 2017 and RBI intends to keep it at ~4% by the end of 2017-2018. This, coupled with softer commodity prices induces difficulty in recovery of credit growth. Is this scenario going to change in future?
The future of the banking sector will revolve around evolving customer expectations, technological innovations, improved regulatory requirements, increased competition and change in demographics. Following is the detailed explanation of how these forces will shape the banking sector in future.
A shift from product-centric approach to customer-centric approach:
The demand from customers are evolving and banks are focusing on providing tailor-made products in order to satisfy their needs. Banks in India are also establishing their footprints in the hinterlands. With the advent of technology and deep branch penetration, agricultural loans will be delivered within 2-3 days in the future, a change from the current 3-4 days. The corporate loan portfolio’s growth rate is declining. This will lead to a shift in focus of the banks towards the retail lending. The banks will invent new loan products in the future to target the retail segment.
Evolving Technology: With the growing influence of fintech companies in India, banks will use new technologies like Artificial Intelligence, Machine Learning, Blockchain, Robotics, IOT, etc. not only to enhance customer experience but also to achieve operational efficiency.
Source: PWC Report
– By Phani Kumar
“One of the factors a country’s economy depends on is human capital. If you don’t provide citizens with adequate access to healthcare, education and employment, you lose at least half of your potential. So, gender equality, empowerment and healthcare bring huge economic benefits.” – Michelle Bachelet
Healthcare plays crucial role in every country’s economy. Developed countries like America and France lay high emphasis on healthcare spending. Global average of financial spending on healthcare is 6% of GDP, whereas government spending in Indian healthcare sector is 1.3% of GDP. China’s expenditure on healthcare is 3.1% and the United States spends 8.3% of GDP. This shows the importance needed to be given for healthcare by emerging economies.
Holistically, healthcare means hospitals, pharmaceutical, diagnostics, medical equipment & supplies, medical insurance and telemedicine. At present, India has 0.7 doctors and 1.1 beds for every 1000 citizens. It implies that there is a lot of under-development in the Indian hospitals. Recent incidents in Uttar Pradesh government hospital portray the alarming situation of government hospitals. This shows that there is an urgent need for increase in financial spending on healthcare.
Average hospitalization costs increased 11% CAGR in last ten years but mortality rate remains high. It shows the increasing difference in quality of treatment of patients between private and public hospitals. Thus, there is an immediate necessity for the government to increase spending on hospitals and healthcare. It must increase the budget allocation from $4.5 billion to $10 billion in the coming years keeping in view the population growth of the country.
Pharmaceuticals in India are facing headwinds because of strict US FDA norms. There should be stricter government regulations to deal with issues of generic products. It boosts exports and improves country’s GDP. Proper regulations on generic products improve quality and will help in achieving the target of $50 billion exports by 2020.
Recent IPOs from diagnostic and insurance companies will provide necessary capital for their capex plans. This would help them expand into tier 3 cities and towns. SEBI support is necessary for further listing of companies from these segments.
Telemedicine is the next big thing in healthcare sector. At present, telemedicine has a $15 million market. It is expected to grow at a CAGR of 20% during FY 16-20. Proper support from government in PPPs can help the sector reach $32 million market by 2020.
100% FDI, National Health Policy 2017, incentives in the medical travel industry, tax incentives and encouraging investments in rural areas are future growth drivers in Indian health care industry.
Implementation of social insurance policies for people below poverty line and increase in allocation of government budget will improve health conditions of citizens in emerging nations. This, in turn will improve productivity of the people and increase their contribution to the economy.
Proper attention by government (of countries like India) on Telemedicine and Pharma sector will increase their contribution to export % of the country’s GDP.
Meaning – A slang term that represents a stock or other security that is approaching $0 in price. Arriving in bagel land is usually the result of one or more major business problems that may not be resolvable. This term is typically used to describe an asset that has fallen from grace as opposed to a penny stock or other historically cheap security.
If a stock or other asset is headed toward bagel land or is approaching $0 (resembling the hole in the middle of a bagel), investors generally feel that the security is nearly worthless. In such cases, a company may be nearing bankruptcy or facing major solvency issues. While returning from bagel land is possible, the likelihood that equity investors will lose their entire stakes in the company becomes very high.
Author: Harish Sankar
In the present time, it would be hard to find a buzzword as trending as Blockchain. What is Blockchain? How does it provide disruptive solutions to transactional problems in finance industry? How can the same fin-tech solutions solve crucial problems in healthcare industry? These are the questions I intend to answer in this article.
What is Blockchain Technology?
When your cousin from USA transfers 500$ to you, the banks don’t literally put 500$ on a plane to deliver to you. What really happens is a movement of digital numbers from one account to another. Your money and identity is just data in the ledgers. The bank is an intermediary which completes this transaction. The problem is that, such a centralised system can be hacked.
Blockchain solves this by being a distributed system. Your ledger is shared in a distributed network. As the transaction is made, other miners in the network are notified. Each miner rushes to be the first to check whether the transaction is valid. The first to validate the transaction with their logic (Proof of Work) are paid salaries in Bitcoins. If other miners corroborate it, the ledger is updated. While all users can access, inspect or add to the data, they can’t change or delete it. This makes it tamper- proof, leaving a permanent and public information trail of transactions.
Figure 1: Types of Database Structures