The Indian banking industry offered conventional banking products until the beginning of the 1990s. These included savings, current, term, and recurring deposits as part of the deposit portfolio, personal and vehicle loans for retail customers and working capital/term loans for Small Medium Enterprises/corporate customers. A few of the foreign exchange branches of these banks also provided trade finance instruments like issuance of documentary credit, bank guarantee and export/import bills discount/negotiation. However, because of tight regulations, the volume of foreign exchange transactions was minimal and was mostly restricted to large banks.

The art and science of product innovations in the Indian banking sector: Benefits and risk impacts

WHITE PAPER

2 | Infosys

Liberalization opened the doors for

effecting sweeping changes in the banking

economics of the country, thereby allowing

foreign banks to operate in India and

also providing licenses to a few corporate

houses to open new banks in the country.

To meet the increasing demands of the

consumers and to be competitive, Indian

banks shifted from offering plain vanilla

products that were available only through

the bank branches, to customized products

for different customer segments across

different banking channels such as the

Internet, mobile phones and ATMs.

The current paper analyses product

innovation by Indian banks, the

impediments to success and the lacunae in

innovation which can be filled by products

designed to compete in the global market.

Product innovation: Need

Indian banks have been positioned as

institutions that provide safety and security

of public deposits. Innovation in products

was minimal since banks mostly worked

on processes/guidelines with little or no

technological support. Maintenance of

ledgers with accounting and reconciliation

issues prevented banks from experimenting

in any new venture – be it a new product

launch or innovation. Product offerings

were few and service, rather than product

variation, was the differentiating factor.

The competition between the traditional

banks, with their conventional products

and the post liberalization new entrants

offering innovative products, increased.

This necessitated product innovation and

differentiation for many public sector banks

in order to be competitive and retain/increase

their market share. Product, service and

technological innovation became imperative

for Indian banks due to rising customer

demands, growing market awareness, shorter

product lifecycles, changing regulatory norms

and growing competition.

Product innovation: A few initial variantsProduct innovations in India comprised

home grown products necessitated by

local consumer demand, as also products

which were successfully implemented in

other countries, and were brought to India

by some foreign banks.

A few of the products, which were

introduced by foreign banks were:

Sr. No Product with features Market Impact Advantages

1 Suvidha – Zero Balance savings accounts for Good • Opened the market in metropolitan corporate employees with free ATM, Many private and foreign banks cities for salaried staff of large Internet banking etc. introduced this product to corporate houses. attract low cost deposits. • Low cost funds for banks.

2 Channel Finance – New finance scheme for Good • Risk free finance option. dealers of corporate entities dealing in Many private banks ventured • Increased liquidity for consumer goods. into this arena. corporate client.

3 Corporate Cash Management – Payable Good • Increases transaction efficiency. and receivable management. Many banks focusing on corporate • Increases working capital. banking introduced the same.

4 Structured Deposit – Deposits with returns linked to Moderate • More returns to the customer. underlying assets like commodity, equity, currency and Yet to be popular. their performances.

5 Reverse Mortgage – Mortgage of self-owned houses, Moderate • Targeted at retired enabling steady monthly installment payments. Yet to be popular. individuals, needing monthly returns.

6 Derivatives – Financial/trade finance/treasury Good • Hedging risk, price discovery instruments such as forward contracts, Used by Treasury division of and better profits. futures and options. major Banks.

7 Teaser Loans – Interest rates for home loans fixed for Moderate • Fixed interest rate in the beginning initial period and then tied to a prime lending rate of the Tight regulations for home loan borrowers. bank after the teaser period.

3 | Infosys

policy assignment as well as generating

commission income from the policies sold.

Card products and innovations

Foreign banks operating in India pioneered

card products. To match the competition,

the Indian banks stepped into the business

of debit and credit cards either exclusively

or by offering cards along with savings and

loan products. They offered savings/current

account products with a linked debit/credit

card that helped their customers to have

a wider access to their accounts through

merchant establishments and shopping

outlets.

Card products also evolved from a plain

ATM Card to Debit Card to Prepaid Card

to Travel Card and further to customized

cards which could be configured by

the customer with the required limit

assignment and preferred card design.

Product innovation: setting the stage for service and channel innovation

The need for providing better access to

customers to avail these products triggered

innovation in banking channels and

services.

Product innovation, service innovation and

channel innovation worked in tandem,

increasing customer reach, satisfaction and

loyalty.

Service innovation

The concept of customer service in the

traditional Indian banking system was

restricted to a few interactions between the

bank staff and the customer, which delivered

a personal touch, established a comfort level

and created a satisfied customer. However,

in the current banking scenario, a direct face

to face relationship is rarely preferred by

customers due to lack of time.

Customer care through service innovation

enhances customer experience, addresses

grievances and facilitates customer

retention. Setting up of customer care

centers, an NRI cell for servicing Non

Resident customers, alerts/SMS on account

transactions or new products, relationship

managers for High Net worth Individual

( HNI ) clients, product packaging with

pricing benefits, doorstep banking,

personalized checkbooks to preferred

customer groups, cash management

services for corporate customers, electronic

funds transfer facility through payments

systems such as RTGS or NEFT are a few

examples where service innovation has

greatly helped in improving customer

satisfaction by providing prompt delivery

and resolving customer complaints.

Service innovation in banking facilitates

a point of contact to address customers’

banking needs and is a growth driver.

Channel innovation

The advent of technology has taken

banking products and services beyond the

traditional brick and mortar infrastructure.

These technological developments have

led to the evolution of multiple banking

channels from where the customers can

view and perform transactions in their

accounts and place service requests.

Internet Banking, Mobile Banking, Phone

Banking, Video Banking, Direct Sales Agents

(DSA), ATMs, as well as Credit/ Debit cards

have become prominent channels used by

customers across the country to procure

banking services and products and perform

financial transactions.

Straight through Processing through

channels for initiation and settlement of

payment products, fixed deposit account

opening, loan origination etc. has improved

process efficiency and turnaround time for

service delivery.

Offering products through channels has

become the most preferred option of banks

for reaching out to a wider customer base at

a lower cost.

A few of the homegrown products, which

made a real impact in the market are:

a) Deposit linked savings – Savings bank

is linked to a term deposit enabling

automatic creation of term deposit

beyond a threshold limit and providing

liquidity to the depositor by way of

withdrawal of amount depending on

need.

b) Flexible recurring deposit – Periodic

deposit by customers with varying

monthly/quarterly amounts fetching a

consolidated principal with interest at

the end of the tenor.

c) Top up deposits – Term deposits

enabling periodic installments on top

of the initial fixed deposit amount

invested.

Financial services/engineering

innovations

Indian banks spread their tentacles to

various allied lines of business such as

depository services, insurance, and mutual

funds in the financial services space

and provided augmented products by

combining core products, such as savings

or current accounts with demat accounts/

insurance etc. to become a one stop

financial services shop. Bankers looked

beyond the interest income to fee-based

income and tasted success.

With the enactment of The Depositories

Act, Indian banks started providing

depository services such as demat

accounts, dematerialization re-

materialization requests, transfer of

securities and pledge services along with

core products, such as savings and current

accounts.

Indian banks sold life and non-life

products of insurance companies as

corporate agents of insurance companies

and in turn received a commission

income in commensuration with the

business volumes. The banks had a dual

advantage of securing their loans through

4 | Infosys

Product and service innovation driven and initiated by consumer

The turn of the millennium saw India Inc.

emerge as an economic superpower with

strong growth in IT, telecommunication and

the retail segment and average growth in

other sectors. During this time, the middle

class Indian consumer travelled across

the globe and became aware of global

trends in the financial services space. Due

to change in norms and regulations, more

foreign companies/investors set up shop

in India, thereby contributing to retail

growth. Indian banks also recognized the

immense possibility for innovation, which

they eventually converted to products and

services by looking at the larger interests of

Indian society, while not compromising on

regulations.

Indian psychology for product innovation

Indians are by nature a conservative clan.

An average Indian customer is risk averse

and does not prefer to invest in unknown

products, irrespective of the potential

benefits. A comparison of the investments

in risk-prone instruments like equities in the

developed economies, such as the US or

Europe with that of emerging Asian markets

(comprising India, Indonesia, Philippines,

Malaysia and Thailand) (Exhibit 1) as well

as the statistics on investment by Indians

across diverse segments (Exhibit 2), is clear

evidence of the conservative investment

habits and the low risk appetite of Indians.

Traditional investors Emerging investors

Other

100% = 42.0

5

28.3

5

4.3

6

3.6

0

2.7

3

3.5

8

6.5 1.8 5.9

10Cash and 18 15Deposits

3954

Fixed income 3029 65 54

81 77

Equities

23

47 52

34

13

14 24

3218 14

90

5 13

14 10

US house- Western Sovereign Developed MENA Latin Chinese Emerging Emerging

holds and

pensions

Europe

house-

holds and

pensions

wealth

funds

Asian

house-

holds1

house-

holds

American

house-

holds

house-

holds

Asian

house-

holds2

Market

central

banks

Today, most investors in emerging markets have very low

allocations to equities

Exhibit

Asset allocation by investors, 2010

%; $trillion

1 Includes Singapore, Hong Kong, Korea and Taiwan. Excludes Japan, where households allocate 10% of

their portfolio to Equities.

2 Includes India, Indonesia, Malaysia, Phillippines and Thailand

SOURCE: National sources; McKinsey Global Institute

*taken for a sample of population across rural, urban and metropolitan IndiaSource: PHD Research Bureau, a Survey of Investment Patterns in India, October 2012.

Real Estate Gold &Silver

Savings/CD s/FD s

Equitylinked

insurance

MutualFunds

Others Stocks

[VALUE]%

[VALUE]%[VALUE]%

[VALUE]% [VALUE]% [VALUE]% [VALUE]%

INVESTMENTS OF PEOPLE ACROSS DIVERSESEGMENTS IN INDIA (IN PERCENTAGE)

35

30

25

20

15

10

5

0

Exhibit 2

5 | Infosys

The limited levels of product innovation in

India as compared to global competitors

have been attributed to the several

challenges faced by the Indian banking

sector. Statistics show that only 40% of the

Indian population has access to banking

products and services. Targeting the rural

segment for sale of banking products and

services will in turn propel Indian banks to

use technology to innovate on products

catering to rural requirements. Besides

enlarging the scope of product innovation,

sale of banking products to the rural sector

will help tap the huge business potential in

the rural areas and widen the customer base

of banks, leading to sustained growth.

Another factor is the changing regulatory

landscape of the Indian banking system.

Banks need to earmark funds to comply

with various stipulations of the Reserve Bank

of India, such as maintaining a provision

coverage ratio of 70% to minimize NPAs, as

well as international guidelines like Basel

III. This has resulted in insufficient funds for

product and technological innovations in

the public sector. These banks are lagging

behind their private counterparts and the

foreign banks in the technology space and

hence are not able to offer state-of-the-art

products or render the expected levels of

customer support or service, thereby losing

out on market share.

Yet another factor is the low risk appetite of

Indians who prefer low-risk products and do

not generally invest in new products that

have not undergone the test of time. Going

by the low risk appetite of Indians and the

conservative policies of the Central Bank,

banks need to create differentiated products

targeting different customer groups

depending on their ability to take risk.

Changing mindset of generation Y

Gen Y or the Millennials who constitute that

From the data gathered by the McKinsey

Global Institute, it is evident that emerging

Asian markets such as India are risk averse

and prefer to keep their savings in cash and

Bank deposits which give them guaranteed

returns with safety of principal monies.

The survey conducted by PHD research

bureau further validates the low preference

for risk-laden investments such as stocks

or mutual funds among Indians. Indian

banking innovations have been tuned to

the Indian consumer mindset, reinforcing

the fact that traditional instruments that

offer guaranteed returns such as bank fixed

deposits or other products such as Kisan

Vikas Patra or National Savings Certificate

are still popular with the average Indian.

Survival of the global financial meltdown

by banks in India

Over the years, the banking system in

India could withstand multiple challenges

including the Great Depression, the 1997

Asian Financial crisis, and the 2008 sub-

prime meltdown. The Regulator (Reserve

Bank of India) never allowed banks in India

to take excessive risks and always remained

a watchdog of the banking system.

Owing to the conservative nature of Indians

coupled with tightly regulated Central Bank

norms, banks and investors in India did not

invest in risky derivative products (issued by

investment banking companies across the

globe) and hence suffered negligible losses

during the global recession in 2008.

Product innovation in Indian banking: Challenges

The banking industry sustains on

innovation. A successful product innovation

can be gauged in terms of the indicators

such as fees/income earned, product

features, benefits/returns/accessibility to the

customer, and longevity in the market.

segment of the population born after the

1980s, look forward to ease and accessibility

in all their dealings, including financial

transactions. This segment constitutes

a major market for banks today. With

globalization, better information access and

growing customer demands posed by the

information-rich Gen Y, the Indian banking

industry needs to offer a better product

platter with a wider spread from which the

customers can easily pick and choose as per

their needs.

Gen Y that is tech savvy/net savvy and

possesses the latest devices such as

smartphones and tablets has aligned its

product requirements with the growing

digital innovation. Banking for this

generation is defined through mobility

and social media such as Facebook or

Twitter. With the growing focus on digital

banking and social media banking, Indian

banks should provide digital offerings and

upgrade their technology if they want to

improve their customer base and profit

margins.

Product innovation in Indian banking vs. global banking

Brand ‘India’ has made its way to the Brand

Finance Global Banking 500 (100) 2013 list.

Indian banks, namely SBI and ICICI, have

found a place in the list of global brands for

their brand value.

Though India has made its way to the list of

top 100 global bank brands, there is a wide

gap in Indian product innovation vis-à-vis

global innovations. The Boston Consulting

Group Consumer Survey shows that the

number of banking products used by a

customer from his regular bank in India is far

lower than the global benchmark values.

6 | Infosys

This is clearly substantiated in the case of

mortgage products. The mortgage products

available in the global market over the past

30-40 years included all-in-one loans/offset

mortgages, fixed/adjustable rate mortgages,

interest-only mortgages, jumbo mortgages,

reverse mortgages, split loans, securitized

loans etc. A customer could choose from

any of these products depending on his

requirements and the benefits accruing

from the differentiated mortgage product

features. In India, the mortgage industry is

referred to as the housing finance industry.

Though Indian banks provided home loans

to borrowers against an underlying security,

which was the asset being financed, the

product was a plain vanilla type with no

frills attached, except the flexibility of

fixed/floating interest rate options for the

borrower. The various flavors of mortgage

products, such as reverse mortgage were

introduced in India only in the past six years.

Though there is a conscious effort to scale

up the product/service spread of Indian

banks, banking products and services,

such as Retirement Savings Accounts,

Individual Savings Accounts (ISA Accounts),

Debt Consolidation, Securitized Loans,

Corporate Bonds etc. which are available

in the global banking arena are yet to be

introduced/gain traction in India.

Global banking innovation: A snapshot

The banking innovations and new business

models that have crept into the global

banking realm are depicted in Figure 1

below.

Banking product innovations related to

digital/ social media and gamification

have created a breakthrough in improving

customer experience and access to banking

services. Besides being cost effective and

improving the customer base, digital

banking also provides banking services to

unbanked and under banked locations,

thereby fulfilling social/regulatory

responsibilities.

The digital age has triggered disruptive

innovations in retail banking. Banks are

discovering new ways of conducting

business with simplified service offerings

using retailing principles, telecom services

and social media. Mobile phones and tablets

have turned into financial planning tools.

Many virtual banks have sprung up (e.g.

Innovators such as SmartyPig, Mint, Simple

and Moven) which are declaring to the

world that banking in the digital age can be

customer centric, simple and fun filled and

beyond the boundaries of place and time.

From Multi Channel Banking, the banks

are moving to ‘Omni Channel Banking’.

Multi-Channel Banking gave customers

touch points to avail banking services from

multiple channels, providing customers a

‘channel’ experience, whereas Omni Channel

Banking aims to integrate the disparate

digital and physical channels and provide

the customer a seamless ‘Brand Experience’.

Omni Channel Banking allows banks to

leverage customer data received from

various channels in understanding their

Digital Banking/ Mobility - O�ering banking and �nancial services by leveraging

mobile/ digital technology.

Video Banking - Enabling banking transactions and providing professional

services by connecting to customers through remote video connection

Gami�cation in Banking - Deploying game mechanics to engage customer and

educate them about the banking products and services.

Co-Creation in Retail Banking - a marketing concept where the bank and itscustomer involve in designing/ creating products that is best suited/ adds value tothe latter and enhances customer experience.

Social Media Banking - The strategy of using social media channels such as Facebook,

Twitter etc. to market banking products and services as well as to interact with customers.

Figure - 1

7 | Infosys

customers’ income, savings and spending

pattern and tailor financial product offerings

tuned to their priorities.

Movement of generation Y to digital/social

media banking

There is an increasing demand from Gen

Y for financial product offerings through

digital modes including social media.

However, banks in India have been

comparatively slow in their offerings due to

concerns on security and customer identity

management. Besides these regulatory

barriers, organization culture and silo-based

IT systems also contribute to the slack in

digital offerings. Due to lack of adequate

investments in technology, most Indian

banks are offering only the basic digital

services.

With the increased usage of electronic

devices such as mobiles and tablets and

other handheld devices, the banking system

India needs to adopt changes fast in order

to expand its customer base and generate

higher revenues.

Product innovation: The role of regulators and impacts

The Reserve Bank of India (RBI) has been

driving the Indian banking system through

its policies and guidelines and has been

working tirelessly to introduce best

practices of global banking innovations in

the Indian banking sector. Some of these are

outlined below.

Interest rate deregulation

Interest rate deregulation was a step

taken by the RBI in line with the prevailing

global practices with a goal of providing

Indian banks greater flexibility in launching

differentiated products and mobilizing

deposits.

Electronic payments

The RBI introduced electronic payments

in the country to be at par with global

payment standards. The regulator has taken

measures to encourage use of electronic

payment systems such as Real Time Gross

Settlement system (RTGS), Electronic

Clearing Service (ECS) and National

Electronic Fund Transfer (NEFT) for payment

and settlement. It has also promoted

other retail payment channels such as

Credit / Debit Cards, Prepaid Instruments,

Mobile Banking and the Interbank Mobile

Payment System (IMPS). The Reserve Bank

has further ventured to introduce the Next

Gen RTGS (NGRTGS), which adopts the

latest technology and business process and

messaging system conforming to ISO 20022

standards.

Securitization

While securitization of financial debts

was prevalent in global markets, this

was a relatively new concept in India. In

order to develop a healthy securitization

market in India, the Reserve Bank of India

floated revised guidelines on securitization

transactions in the year 2012. The revision

contains provisions related to securitization

of assets, treatment of direct assignment

of cash flows and details of securitization

transactions not permissible in India.

Structured products

Structured products, which help in risk

transfer, have found a place in the global

market in recent years. The Reserve Bank

of India has floated guidelines for banks

offering Structured Derivative Products

for hedging risk, subject to the structured

product not containing any derivative

instrument as underlying. This is in addition

to the generic derivative products such as

forward contracts and interest rate swaps

for risk management. The RBI has also

laid out guidelines that market makers of

structured products need to prudently

adopt while offering structured derivative

products to users.

Although the regulator has enabled the

introduction of financial offerings, which

are aligned to global market offerings, it

has done so by ensuring that the product

offerings are bound by suitable guidelines

and policies framed in the interests of banks

and customers, and without compromising

the financial stability of the nation.

Product innovation: Road ahead for India

Indian banks are investing in technology

for reducing costs and increasing revenues.

The availability of multiple channels such

as Internet, mobile and ATM has improved

the customer base of banks manifold. The

introduction of electronic payment systems,

such as RTGS and NEFT by the RBI, has

reduced the turnaround time for payment

and settlement of funds from days to a

few minutes. Urban India has embraced

technology-oriented banking and the

frequency of visiting branches for banking

transaction by customers has drastically

reduced.

However, the benefits of technology and

new banking products are enjoyed only by

a limited section of the Indian population.

In the race for innovation and to keep pace

with competitor products, Indian banks

have resorted to ‘class banking’ where

innovative products are introduced mostly

for the middle- to-high income classes.

For Indian banks, rural banking has never

been a choice, but rather, a regulatory

obligation. To comply with the regulatory

guidelines of financial inclusion, they have

8 | Infosys

begun to offer basic banking products and

services to the rural populace.

While retail innovation is here to stay

and needs focus as it is crucial for market

visibility, providing technology-based

products and increasing profit margins,

product innovation tailored to the needs

of rural India ensure a sustained growth

for banks and create a stable and well-

balanced economy. Product innovation in

agriculture lending and SME lending needs

to be a thrust area for Indian private banks

and foreign banks alike so that there is

competition and growth in the Indian rural

sector.

Product innovation: Benefit and risk impact

Product innovation has redefined banking

for the common man. It has triggered the

thought process of bank managements

and driven them to higher levels of

creativity, which has paved the way for

healthy competition among banks. Indian

banks have become technology friendly

and experienced the business benefits

of deploying technology for conducting

banking operations. Product/Service/

Channel innovation has provided better

visibility to Indian banks across the globe and

removed the barriers of distance and time

for the common man for availing banking

products and services. Market intelligence

and competitive intelligence about new

banking products has become imperative for

banks for staying abreast of competition.

Banks are introducing tailored products

for different customer segments in order

to retain customers and increase loyalty.

While product innovation provides great

opportunities for Indian banks to increase

customer base, reach, profit margins and

growth, it carries inherent risks too.

Indian banks have been evolving in

response to the growing customer

demands and are moving from product

centricity to customer centricity. Products

are launched for specific customer

segments with differentiated features with

a view to increase the customer base. With

growing customer demands, fast changing

markets and business models, banks need

to revisit their innovation strategies and

allocate funds depending on the phase of

their product lifecycle, else they run the

risk of incurring loss and accumulating an

outdated product portfolio.

Innovation failures can even lead to

financial crisis and bankruptcy and severe

loss to the public who entrust their monies

with the bank. Failed product innovations

could be attributed to various factors such

as complex product features, inadequate/

no guarantee of returns, excess risk,

inadequate service levels and lack of

market visibility of the product.

Globalization, liberalization of the

Indian economy, advanced technology,

product and channel innovations, new

banking business models in line with

global markets – these have unfolded

new ways and means of conducting

financial transactions and at the same time

increased the risk levels in transactional

banking. Tight security measures need to

be adopted by banks/regulators to counter

fraudsters who are constantly devising

new ways to crack passwords, PINs or other

security information to access customer

accounts, resulting in loss to customers and

reputation risk for banks.

Banks need to have risk management

strategies that help identify and mitigate

risks while designing/launching new

products and making them available

through various channels. There has to be

an efficient risk management mechanism

that strikes a balance between risk and

return.

� Increased market presence

� Multiple product options for diverse

customer needs

� Better revenue for banks

� Customer addition

� Relationship building/customer

retention through customer

centric product models

� Better leverage of technology

Bene�ts

� Huge investment in innovations

without guaranteed returns

� Short product lifecycles, fast changing

market-risk of outdated products

� Security risk in transactional banking

Risks

© 2014 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.

About Infosys FinacleInfosys Finacle partners with banks to ‘simplify’ banking and arms them with accelerated innovation to build tomorrow’s bank, today.

For more information, contact �nacleweb@infosys.com www.infosys.com/�nacle

Reghunathan Sukumara Pillai Industry Principal, Infosys Finacle

Srividya P N Senior Consultant, Infosys Finacle

Conclusion

Indian banks need to better leverage

technology to innovate on products tuned

to customer demands in order to sustain in

the market. They should nurture a culture

of innovation woven with discipline.

Designing banking products that create

a win-win situation for the bank and the

end customer in a market monopolized by

customer demands is indeed an art and a

science.

Banks should formulate a balanced mix

of innovation plans within the regulatory

framework, that cater to different customer

segments across urban and rural India,

taking into cognizance their corporate

objectives and ability to take risk. Products

should be test marketed, as this would help

the bank assess the customer pulse and

enable it to fine tune the product before

the formal launch.

Product innovation is an inherent part of

banking which will provide new revenue

opportunities, increase the customer

base and improve retention. Products

should be differentiated from those of the

competition and offered at an affordable

price without compromising on the profit

margin. At the same time, they should be

able to meet customer expectations in

terms of returns, liquidity, transparency,

product features and customer service

and made available through customer

preferred channels without adding to the

cost and complexity.

Product innovations and channel

innovations have converted banks into

retail shops for financial products. With

increasing competition, the frontiers of

product innovation are diminishing. Banks

need to innovate with speed, through

transformation and product improvisation.

Product innovation is essential to capture

new markets and banks have to prudently

invest in launching new products which

are customer centric, and time them to

market in order to accelerate their levers of

performance and stay in the race.

Banks should offer a wide array of products

that cater to a global clientele. The Central

Bank should frame policies that allow more

foreign investment to boost the country’s

economy and yet not compromise the

interests of the nation/society at large.

References

1. www.rankingthebrands.com

2. Boston Consulting Group – Consumer

Survey; BCG Experience

3. Reserve Bank of India - www.rbi.org.in

4. McKinsey Global Institute

5. PHD Research Bureau