The global financial crisis

The 2008 Global Financial Crisis has been a landmark event, in all aspects, in the history of global finance. The scale of that crisis was unprecedented in the sense that it affected all economies of the world in some form or the other in varying magnitudes. A string of regulatory reforms were released globally to cushion the impact of the crisis and aimed at bringing stability in the financial arena. The first of these measures aimed at curbing high risk operations performed by investment banking divisions using structural control measures for systemic risks. 

The Global Financial crisis also highlighted the need for inclusive growth as a way to ensure financial stability. There has also been a massive fallout of the imprudent market practices and neglect of consumer protection by the banking system. This led to encouraging moves by regulators in from several jurisdictions to establish new regulations, and regulatory & supervisory authorities to specifically look at customer protection issues. 

Retail banking, once considered to be an unglamorous by prominent foreign and domestic banks, emerged to be a major source of sustainable profits. Competition, innovation and advancements in technology have completely changed the face of the banking industry. 

Retail banking is the segment of banks that offers products & services predominantly to individual customers, professionals, self-employed individuals and small businesses. Its focus is to create products & services to meet the needs and solve problems of the target customer groups, which makes this segment a huge profit centre for any bank.

The approach of retail banking products is mass production, wherein all risk & operations are based on and are geared to cater to a large mass of customers. It, therefore, is significantly different from investment or corporate or wholesale banking where the primary focus has always been on large-sized customer accounts.

‘Anytime banking’ that started with the introduction of ATMs became ‘anywhere banking’ too with customers being able to access their bank round the clock. This is now grown into ‘Anyhow banking’ – where customers can access banking services through multiple channels – branch, ATM, laptops, computers, and the ubiquitous smartphone. Banks today have to ensure seamless delivery of services across these three A’s.