The Boston Consulting Group (BCG), a leading management consulting firm, today unveiled the Annual FIBAC Productivity Report on Indian Banking Industry, 2018.
The theme of the report is ‘Providing Financial Services to SMEs in an Increasingly Digital Ecosystem’. With the advent of fintech companies, e-commerce, big data, and cloud, digital is transforming millions of lives.
According to them, in the given scheme of things, BCG’s report reflects where the Indian industry stands in the milieu. It catalogues how banks have performed in the recent past in the digital matrix.
The report reveals that banking revenue pool is growing at 8% which is driven by strong fee income growth of 14%. On deposit front, in overall banking industry, there will be slowdown in growth in FY18. Savings account balances will continue to outgrow current account balances.
The report reveals that banking revenue pool is growing at 8% which is driven by strong fee income growth of 14%. On the deposit front in the overall banking industry, there will be slowdown in growth in FY18. Savings account balances will continue to outgrow current account balances.
After recording 17% growth, post demonetisation, growth in balances slowed down to 7%. This is result of muted growth in all segments – individual, corporate and MSME. PSUs, new private and old private banks are showing different business models. With focus on masses, large PSU banks have the largest number of savings accounts driven by the larger branch network. The new private banks have been largely successful in capturing high-value savings accounts, on the other hand, old private banks are neither showing focus on premium segments nor on masses.
BCG’s report has identified that auto loans are witnessing strong revival post demonetisation. In FY17, due to demonetisation, financing of auto loans had seen a slowdown. This had resulted in a pent-up demand in FY18. Gradual return of the liquidity situation to normalcy has led to a release of a pent-up demand and a robust 24% growth in auto loans in FY18.
Saurabh Tripathi, Senior Partner & Director, APAC Regional Practice Leader, Financial Institutions, BCG, said, “It is a privilege to be associated with FIBAC for eight years. This year has been very interesting for us. With its own share of challenges to tackle on NPAs or the agility in adopting emerging technology to enhance access and create a digital banking ecosystem, the banking industry is overhauling for good.” He added that, “Digital enabler models boosting MSME lending and alternative credit scoring models have revolutionised the lending space in India.”
Trends in MSME lending
Imperatives for banks
Managing NPAs and Stressed Assets
With a representative sample size of more than 2600 respondents, BCG factored 34 banks across four segments – 15 medium PSU banks, six large PSU banks, and five new private banks.