1Industry and CompetitionDefiningBank:Bank is a financial institutionlicensed to receive deposits and make loans1.It can also provide other financial services like wealth management, currencyexchange and safe deposit boxes. Different categories of Banks in Indiaare:· Public Sector Banks· Private Sector Banks· Small Finance Banks· Local Area Banks· Payments Banks· Foreign Banks· Regional Rural Banks· Cooperative BanksBelow are the major types of bankingpresent and their functions:· RetailBanking which provides services to individualsand small businesses· BusinessBanking focuses on mid market Businesses· CorporateBanking concentrates on large organizations· PrivateBanking usually deals with High Net WorthIndividuals· InvestmentBanking focuses on activities of the financialmarketsEvolutionof Indian banking sector:Image Source: https://www.
ibef.org/download/Banking-February-2017.pdfMarket Size:Accordingto Euronomy Foreign Exchange Survey 2017 Results, below are the market sharesof top 10 banks globally.Image source: https://www.euromoney.com/article/b1348tjhnv7h99/euromoney-fx-survey-2017-results-released MarketTrends:NOTABLE TRENDS IN THE BANKING INDUSTRY SECTOR2:Technological innovations:· Indian banks, including public sectorbanks are aggressively improving their technology infrastructure to enhancecustomer experience and gain competitive advantage.· Internet and mobile banking is gainingrapid foothold.
· Customer Relationship Management (CRM)and data warehousing will drive the next wave of technology in banks.· Indian banks are rapidly focusing onSMAC (Social, Mobile, Analytics and Cloud) techniques to reach new customers.Wide usability of RTGS and NEFT:· Real Time Gross Settlement (RTGS) andNational Electronic Funds Transfer (NEFT) are being implemented by Indian banksfor fund transaction · Securities Exchange Board of India(SEBI) has included NEFT and RTGS payment system to the existing list ofmethods that a company can use for payment of dividend or other cash benefitsto their shareholders and investorsDemonetization:Positive Effects:· Free flow of Cash which was depositedby customers and can be used various investment options.· A very positive outcome is a drasticincrease in usage of Digital Interfaces because of demonetization.· And there is an absolute increase ofcustomers at each and every bank depositing their surplus money. So it resultedin a large increase of customer base.Negative Effects:· There was a 100% CRR on incrementaldeposits due to which there was no interest earned on Rs.
3Lakh crore for abouta fortnight.· Due to excessive demand, the waived ofATM charges resulted in huge losses.According to RBI:· RBI Deputy Governor said that sincedemonetization the Central Bank has collected over USD 185.81 billion indemonetized notes from various bank branches.· The effects of demonetization are alsovisible in the fact that bank credit plunged by 0.
8 per cent from November 8 toNovember 25, as USD 9.85 billion were paid by defaulters. As per RBI, a totalof USD 125.
53 billion was deposited in banks till November 27, 2016.Major advantage to Paytm:· With the stroke of Demonetization Paytmbecame one of the most influential fintech firms in the country.· Paytm has good presence in first tiercities, but in rural areas it was hardly used.
In two month span afterdemonetization the semi urban and rural areas share increased from 2% to 25%.MarketStructure:Thestructure of Indian Banking SectorImage Source: https://www.ibef.org/download/Banking-February-2017.pdfThe Indian banking system consists of27 public sector banks, 26 private sector banks, 46 foreign banks, 56 regionalrural banks, 1,574 urban cooperative banks and 93,913 rural cooperative banks,in addition to cooperative credit institutions. Public-sector banks controlmore than 70 per cent of the banking system assets, thereby leaving acomparatively smaller share for its private peers3.Characteristicsof Competitor:Global:According to Forbes Report on World’slargest Banks in 2017, the top 10 largest Banks globally are4:1.
Industrial and Commercial Bank of China2. China Construction Bank3. JP Morgan Chase4. Wells Fargo5. Agricultural Bank of China6. Bank of America7. Citigroup8. Goldman Sachs9.
Morgan Stanley10. IndustrialBankIn 2017, China Banks still being on topof the list, all 6 large Banks of USA made into the list. The major reason forthe performance of US Banks increasing, being President Donald Trump vowing toroll back regulations and increase lending.
India:Coming to India, the 10 banks in 2017are5:1. State Bank of India2. ICICI Bank3. Punjab National Bank4.
Bank of Baroda5. HDFC Bank6. Canara Bank7. Axis Bank8. Bank of India9. IDBI Bank10. KotakMahindra BankSBI comprising 20% share of totalmarket share in India and with an Asset management value of $420 Billion, itbecame the largest public sector bank in India.Bankof Baroda:Being formed way back in 1908 andhaving 5538 branches and 10441 ATMs all over India; it manages assets worth$3.
58 Trillion and made it to the 4th position in the list.Going by this list the majorcompetitors of Bank of Baroda to reach the target of attaining the first placeare State Bank of India, ICICI, Punjab National Bank. Analyzing the factorsthat contributed the competitors to be on the top:Characteristicsof competitors:State Bank of India (SBI):SBI being the largest bank in India has24,000 branches and 59,000 ATMs across the country. It has provided employmentfor about 2 lakh people. ICICI:With a network of 4850 branches and13,8882 ATMs all over the country ICICI is one the best banks in India as of2017. One of its major factors contributing to the success of ICICI is its widerange of services in the areas of Banking, venture capitals and many more.
Theacquisitions made by ICICI like Bank of Madurai, Shimla, and Anagram Financeetc6.Also contributed to increase its customer base.Above all these, the below initiativetaken by ICICI is the biggest contributor:· 100 Digital villages to promote digitalecosystem in rural areas· Go Green Initiative· Literary EndeavourThey are further planning to 500villages to follow the initiative of 100 Digital villages.With all these factors contributing,ICICI stood 2nd in the top banks of India and in fact the top bankwhen Private sector Banks are considered.Bank of Baroda:Bank of Baroda famously known as India’sInternational bank with 100+ branches in 24 countries.
It has branches in majorfinancial centers like New York, Dubai, Singapore etc7.Founded way back in 1908, Bank of Baroda has 5493 branches and 104411 ATMs inIndia.Bank of Baroda was ranked 21st amongstBest Indian Brands 2016 in Brand Equity – The Economic Times dated 31st Augustto 6th September, 2016.
1 https://www.investopedia.com/terms/b/bank.asp2 https://www.ibef.org/download/Banking-February-2017.pdf3 https://www.ibef.org/industry/banking-india.aspx4 https://www.forbes.com/sites/antoinegara/2017/05/24/the-worlds-largest-banks-in-2017-the-american-bull-market-returns/#14cab12047d05 https://www.worldblaze.in/top-10-best-banks-in-india/6 https://www.mbaskool.com/fun-corner/top-brand-lists/17198-top-10-banks-in-india-2017.html?start=77 https://www.mbaskool.com/fun-corner/top-brand-lists/17198-top-10-banks-in-india-2017.html?start=4