BY
Dr. V. V. S. K. Prasad. M. Com, M. B. A., Ph. D.,
Professor and Head
E-Mail: vskprasad. Vempire @ gmail. com
ABSTRACT
The financial sector reforms is the most important component of the program in India toward economic liberalization. Recent economic liberalization has opened the door to foreign competitors enter our market. Deregulation in the form of removal of exchange controls and ceilings on interest rates have made the market more competitive. Innovation has become a necessity for survival.
Many of the capital providers and users have changed their role in the world. Financial intermediaries have emerged from its traditional approach and are willing to assume more credit risk. Consequently, many innovations have occurred in the global financial sector, which have an impact in the domestic sector also. Emergencies of various financial institutions and regulatory bodies have transformed the financial services industry to be a conservative to a very dynamic area. In this process, the sector faces several challenges.
In this new context, the financial services industry in India is set to play a very positive dynamic in the coming years, offering many innovative products to meet the diverse needs of millions of potential investors across the country.
Overview
The reforms of the financial sedctor is the most important component of the program in India toward economic liberalization. Recent economic liberalization has opened the door to foreign competitors enter our market. Deregulation in the form of removal of exchange controls and ceilings on interest rates have made the market more competitive. Innovation has become a necessity for survival.
Many of the capital providers and users have changed their role in the world. Financial intermediaries have emerged from its traditional approach and are willing to assume more credit risk. Consequently, many innovations have occurred in the global financial sector. That have an impact in the domestic sector also. The emergence of several financial institutions and regulatory bodies have transformed the financial services industry to be a conservative to a very dynamic area. In this process, the sector faces several challenges.
The growth of financial services (including banking, insurance, real estate and business services), after falling to 5. 6% in 2003-04 bounced back to 8. 7% in 2004-05 and 10. 9% in 2005-06. The trend continued with a growth of 11. 1% in 2006-07.
With major advances in information technology (IT) and IT services, both by road and rail, and speed, in addition to the existing shares of telephone connections, especially mobile phones, has played a key role in this growth.
Due to globalization, the financial services industry is in a transition period. Market changes, competition, and technological advances are making unprecedented changes worldwide in the financial services industry. The organizations in this highly competitive and increasingly regulated in particular, should focus on making themselves more:
Ø Adept to deal with growing volumes of transactions, regulation and integration of the different world markets earlier
Ø agile to identify and manage risk
O operationally effective
Or the customer – focused
O optimized both in Business and Technology
In this scenario, the vanguard of IT initiatives has become crucial.
Spending priorities important initiative tends to focus on automation to reduce costs and diminish risks, along with the use of outsourcing to increase their internal efficiency and enable IT organizations to focus on strategic initiatives. The delivery of these capabilities at a high level of efficiency but low cost is one of the key success factors for any financial services company.
OBJECTIVE:
The aim of this paper is to examine the status of the Financial Services Industry in India and explore the challenges that this sector due to globalization
To improve their competitive advantage in this changing environment, financial services institutions are increasingly using new technologies to offer more to customers and streamline internal processes. The demands of today's dynamic marketplace that financial service providers to emphasize advanced technology, features rich solution that can operate in real time with the highest degree of accuracy and reliability.
Information technology is increasingly recognized as essential for the strategic direction and daily operation of financial services companies.
Growth in the financial services sector has been strengthened by the possibility of demographics, emerging markets and most innovative products and services. However, organizations also face the challenge of increased competition, expectations of regulators and customers demanding ever more complex. Effective growth strategies are thus able to cross all operational processes and functional boundaries. The key priorities are to ensure that the business model takes full account of the needs of our customers, tax, financial considerations and regulatory environment, the ability of the organization to change how it operates. In turn, the objectives and success criteria must be clearly measured. A survey of over 250 financial services executives conducted by PricewaterhouseCoopers in 2006 found that respondents believe that existing customers will be their main source of organic growth. The creation of operations that can store and deliver customer benefits through their life will require a significant investment in data collection and management of relationships and therefore may require a change in the current cost model of income . This includes a review of training, reward and performance management strategies, including the change of volume based incentives for the awards focused on customer satisfaction and customer profitability for the duration of the relationship. Metrics will also require timely and insightful about the behavior of customers 'change' and preferences.
Financial services and banking industry is changing at a rapid pace. These changes are posing new challenges such as managing complex technology in a convergent market divergence. Banks seek to offer more and more to the existing customer base. To achieve this goal include more focused on technology investments and a high quality service. To remain competitive, financial institutions must renew their commitment to invest in new strategic technologies – to reduce costs, improve efficiency and increase revenue generating initiatives.
Full Noting these challenges, SFM combines its banking practice for financial institutions to help improve business performance, comply with legal requirements, increase operational efficiency and better serve their customers through the solutions of the SFO of the spectrum and services derived from proven domain experience.
Challenges
Among the major IT challenges facing the financial services industry today is:
Only a carefully designed long-term IT strategy to support implementation, implementation and support capabilities to meet these challenges successfully.
Today financial services companies face increasing pressure on all fronts:
If you're trying to maintain a competitive edge, looking for ways to position our car better for mergers or acquisitions or expansion into the global market, the challenges are complex and varied. And while we address these fundamental problems we face growing demand from investors, regulators and customers.
How can we succeed in this environment? The first step is to ensure we have the infrastructure and support solutions to our business strategy. With the right systems in place, our organization has more facilities for compliance, operational risk and security. You can also open new product offerings, reduce turnover of customers and reduce overall costs and maximize productivity. In addition, companies can take advantage of outsourcing opportunities to reduce overheads, while enjoying the scalability they need to support future growth or new initiatives.
The globalization process has opened the way for the entry of innovative and sophisticated financial products in our country. Since the government is keen to remove all obstacles that hinder the entry of foreign capital, potentiabilities for introducing innovative financial products in India are very big international. Moreover, India is able to penetrate the full convertibility was soon. So there is every possibility of introduction of financial services increasingly innovative and sophisticated in our country.
Making all these factors, the Indian government has launched several initiatives to reform the financial services sector.
Ø The government already changed to free pricing of issues, pricing issues by the head of capital issues.
Ø Interest rates were liberalized
Ø The private sector was allowed to join the banks and investment funds and public sector enterprises have been privatized.
Ø The Finance Act 1992 came into force large scale changes in the structure of taxation of capital income in the long term.
Ø The Finance Act 1994 gave new impetus to the reduction in the lock – in period of 3 years and 1 year in order to obtain the right as a good long – long-term capital.
Ø The SEBI has liberalized many strict conditions, to increase the financial services sector.
In this new context, the financial services industry in India is set to play a very positive dynamic in the coming years, offering many innovative products to meet the diverse needs of millions of potential investors across the country.
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