BANKING INDUSTRY: INTRODUCTION

The banking industry in India has a huge canvas of history, which covers the traditional
banking practices from the time of Britishers to the reforms period, nationalization to
privatization of banks and now increasing numbers of foreign banks in India.. Banking in
India originated in the last decades of the 18th century. The first banks were The General Bank
of India, which started in 1786, and Bank of Hindustan, which started in 1770; both are now
defunct. The oldest bank in existence in India is the State Bank of India, which originated in
the Bank of Calcutta in June 1806. It was one of the three presidency banks, the other two being
the Bank of Bombay and the Bank of Madras. The three banks merged in 1921 to form the
Imperial Bank of India, which, upon India's independence, became the State Bank of India in
1955.

Structure Of Indian Banking Industry

Banking Industry in India functions under the sunshade of Reserve Bank of India - the
regulatory,central bank. Banking Industry mainly consists of:
Commercial Banks
Co-operative Banks
The commercial banking structure in India consists of:
Scheduled Commercial Banks
Unscheduled Bank.
Scheduled commercial Banks constitute those banks which have been included in the Second
Schedule of Reserve Bank of India (RBI) Act, 1934.
 Indian Banking Structure

Banking industry in India has also achieved a new height with the changing times. The use
According to a Mckinsey report, the Indian banking sector is heading towards being a high
performing sector.

According to an IBA-FICCI-BCG report titled ‘Being five star in productivity – road map
for excellence in Indian banking’, India’s gross domestic product (GDP) growth will make
the Indian banking industry the third largest in the world by 2025. According to the report, the
domestic banking industry is set for an exponential growth in coming years with its assets size
poised to touch USD 28,500 billion by the turn of the 2025.

Challenges Faced By Indian Banking Industry

Developing countries like India, still has a huge number of people who do not have access to
banking services due to scattered and fragmented locations. But if we talk about those people
who are availing banking services, their expectations are raising as the level of services are
increasing due to the emergence of Information Technology and competition. Since, foreign
banks are playing in Indian market, the number of services offered has increased and banks
have laid emphasis on meeting the customer expectations.
Technological Development in Banks:
Developments in the field of information technology (IT) strongly supports the growth and
inclusiveness of the banking sector by facilitating inclusive economic growth .IT improves the
front end operations with back end and helps in bringing down the transaction costs for the
customers.
Important events in India:
Arrival of card-based payments- Debit, Credit card late 1980s and 1990s
Introduction of Electronic Clearing Services (ECS) in late 1990s
Introduction of Electronic Fund Transfer (EFT) in early 2000s
Introduction of RTGS in March 2004
Introduction of National Electronic Fund
Transfer(NEFT) as a replacement to Electronic Fund
Transfer/Special Electronic Fund Transfer in 2005/2006
Cheque transaction System (CTS) in 2007

Major banking products and vendors

Innovation in In Banking Sector using IT

Information technology is one of the most important facilitators for the transformation of the
Indian banking industry in terms of its transactions processing as well as for various other
internal systems and processes. The various technological platforms used by banks for the
conduct of their day to day operations, their manner of reporting and the way in which interbank
transactions and clearing is affected has evolved substantially over the years
PUNJAB NATIONAL BANK: COMPANY PROFILE

Punjab National Bank (PNB) is an Indian financial services company based in New Delhi,
India. PNB is the third largest bank in India by assets. It was founded in 1894 and opened for
business on 12 April, 1895. It is currently the second largest state-owned commercial bank in
India ahead of Bank of Baroda with about 5000 branches across 764 cities. The bank has been
ranked 248th biggest bank in the world by the Bankers Almanac, London. The bank's total
assets for financial year 2007 were about US$60 billion. PNB has a banking subsidiary in the
UK, as well as branches in Hong Kong, Dubai and Kabul, and representative offices in Almaty,
Dubai, Oslo, and Shanghai. PNB has the distinction of being the first Indian bank to have been
started solely with Indian capital that has survived to the present.
With over 72 million satisfied customers and 5697 domestic branches, PNB has continued to
retain its leadership position amongst the nationalized banks. The Bank enjoys strong
fundamentals, large franchise value and good brand image. Over the years PNB has remained
fully committed to its guiding principles of sound and prudent banking irrespective of
conditions.
Bank has been earning many laurels and accolades in recognition to its service towards doing
good to society, technology usage and on its overall performance.

Vision: "To be a Leading Global Bank with Pan India footprints and become a household brand
in the Indo-Gangetic Plains providing entire range of financial products and services under one
roof".

Mission:"Banking for the unbanked".

Awards: Some of the major awards won by the Bank are the Best Bank Award, Most Socially
Responsive Bank by Business World-PwC, Most Productive Public Sector Bank, Golden
Peacock Awards by Institute of Directors, etc.

Services Offered:
Savings Fund Account
Current Account
Fixed Deposit Schemes
AUTO RENEWAL
 Credit Schemes
Capital Gain Account Scheme-1988
Doorstep Banking Services
Cards
Nomination Facilities
Deceased claim cases
Centralised Banking Solution
View Your Loan Application Status
Growth:

Profit: The Q2 2017 net profit rose just 2% to Rs560.6 crore from a year ago as bad-loan
provision increased. The profit came on a 4% increase in interest and non-
interest income combined to Rs14,205 crore.

Delivery Channels:
Bank’s branch network stands at 5670 (including 6 extension counters).
Bank has 6009 ATMs and around 169 lakh card holders.
PNB Internet Banking Channels are witnessing a steady increase in usage with about 17 lakh
internet banking users.

PNB: THE BEGINNING OF INNOVATION THROUGH I.T. STRATEGY

Back in 2003, Punjab National Bank used a two-pronged strategy to IT-enable itself and
support present and future business needs. Earlier, Only 35 % of the bank's business was
computerized and a number of small software packages ran on standalone PCs. In March 2000,
the penetration and use of IT was not very high at PNB. The bank used seven different software
systems, which ran on 13 different flavors of UNIX, on standalone PCs. The 500-odd branches
were not networked and only 35 percent of the bank's business was computerized. The overall
expertise in IT among users was low.The Central Vigilance Commission (CVC) issued a
directive to the bank to computerize at least 70 percent of its business by December 2000. This
prompted the bank to work out a strategy to tackle the daunting task in the short period of time.

Latest happenings in PNB on Innovation Front

In the world of innovation and technological solutions, it is only imperative for banks to
provide easy to access digital accessories for the citizens to reap benefits of a holistic online
banking. And starting its bid, state-owned Punjab National Bank has launched host of digital
banking solutions including green PIN and enhancement of its mobile app, a senior official
informed.

“The Android app facilitates the customer to use GPS and reach the nearest PNB ATM, it also
assists customer to instantly lodge operational issues, reducing the resolution time
considerably,” said PNB MD Usha Ananthasubramanian.

The bank launched mobile apps enabling the customer to locate PNB ATM with PNB ATM
Assist, it said in a statement.

The bank also launched another Android app to undertake basic banking. The Green PIN
facility was also launched under which customer can obtain duplicate PIN for debit card
instantly through SMS request, it said.

Taking a step ahead being tech savvy, the bank has installed cash acceptor cum ATM at their
Sansad Marg branch where customers can deposit can deposit cash up to Rs 2 lakh per
transaction and can avail the ATM feature.

PNB moves mobile apps to hybrid platform to enhance customer experience

Customer engagement and meaningful experiences have become top priorities for banks
worldwide. Quick response, personalized services, and ease-of-use are the key factors to win
customer delight. The demand for banking services using digital channels has put a lot of
pressure on banks to rethink delivery channels. With smart phone penetration increasing in
India and the surge in electronic payments, mobile applications have become the preferred
channel for services between banks, wallet companies, financial institutions and customers.
Self-help and self-service are the norm and mobile apps are the enabling technology. A
Telmetrics report titled ‘Mobile Path to Purchase’ says 40% of online banking happens on
smart phones and tablets. The report states that banking and finance conversions are happening
on device; 54% of users who completed a transaction after their mobile activity did so on a
mobile device (62% for millennials).

Punjab National Bank (PNB) was looking to further enhance customer experience and improve
customer satisfaction. Keeping current consumer trends in mind, it decided that a mobile app
was the right channel to achieve this objective. It already had some of its apps on a native
platform, but wanted to move these to a hybrid platform.

After scouting around for solutions, it finally choose IBM Worklight on MADP (Mobile
Application Development Platform). FSS was selected to develop the solution.

PARTNERING FOR INNOVATION

FSS is a global leader in payments technology and transaction processing, offering business
value in the areas of electronic payments and financial transaction processing solutions and
services. The company earned the status of being a payments systems leader through a
combination of established portfolio of technology solutions, state-of-the-art infrastructure and
25 years of experience in the payments domain. Headquartered in Chennai, India, FSS has
established a global footprint in Africa, Australia, Canada, Europe, Middle East, Singapore and
USA.
Rajeev Raizada, General Manager, PNB, Customer care Division said: “Innovation has always
been a team game. It has always been a case where you have a number of groups working
together to achieve a goal; we have done a partnership with FSS to build speedy mobile
solutions using IBM Worklight. Their domain knowledge provides an edge to deliver the
projects much before time.”
Before designing the application, FSS gathered the requirements by speaking to the bank’s
clients and end-consumers. FSS chose to use IBM Worklight with MADP installation to enable
faster delivery. Before starting the development phase, FSS showed prototypes of the
application to the bank. This was done to better understand the client requirement before
complete delivery. On confirmation from the bank, FSS did requirement gathering and
provided the Functional Specification Document (FSD) to the bank. Upon confirmation of FSD
the solution was developed using agile methodology.
Suresh Rajagopalan, President – Software Products, FSS said: “FSS is partnering with clients
to execute their digital strategies. We chose IBM MobileFirst to simplify and accelerate mobile
 application development. The combination of FSS domain skills and IBM mobile application
development platform yielded faster time to market and enhanced customer service for PNB.
We look forward to continuing to build, deploy and manage new applications to meet the needs
of our clients who are increasingly seeking innovative mobile solutions.”
HOLISTIC MOBILE SOLUTION
The following IBM offerings (products or services) are included in the IBM Worklight
solution:
 IBM IHS server
 IBM Worklight Environment
 IBM Worklight Database
 IBM Analytical Server
IBM Worklight provides an open, comprehensive and advanced mobile application platform
for smart phones and tablets. It helps organizations of all sizes to efficiently develop, connect,
run and manage HTML 5, hybrid and native applications. And it leverages standard-based
technologies and tools. The platform ships with a comprehensive development environment,
mobile-optimized middleware and an integrated management and analytics console —
supported by a variety of security mechanisms.
IBM Worklight is part of the IBM Mobile Foundation family of products that provide the
essential elements needed for complete mobile development, deployment and management
within a business.
IBM Worklight environment was interfaced with the bank’s complaint management system for
complaints logging, tracking etc. HTML <iframe> tags were used to call the bank website
pages from the PNB customer care app.

IBM Mobile Foundation provides simple, scalable, time-tested enterprise mobile middleware,
deployable on premises and on Cloud. This mobile infrastructure integrates with popular
development tools, connects to essential backend services and is built on top of hybrid cloud
technology. Accelerate delivery of mobile apps with rich support for front-end development
tools, comprehensive security, application lifecycle management and a complete, backend
server-side logic engine. With FSS’s deep expertise in offering innovative mobile application
solutions combined with IBM’s cutting edge technology, PNB is confident of delivering
superior solutions to their customers & helping them in achieving there mobile strategy at a
faster pace.
The customer care mobile app developed by FSS for PNB is called We Care and it can be
downloaded from the Google Play Store. The app makes it easy for customers to access
multiple services from one location. It also enables customers to raise any queries and track
them till closure. This has increased the percentage of offline support and reduced the load on
customer helpdesk.
PNB We Care App has been instrumental in improving customer satisfaction. This customer
care application has reduced the load on bank and facilitated quick resolution of customer’s
problems. The app has garnered 4.2 rating on Google Play store and has been well received.
The solution is scalable and repeatable.
HYBRID AHEAD OF NATIVE
While the app economy is thriving, there is one thing that can play spoilsport. A poorly
designed app might prompt users to stop using it or uninstall it. And that’s why mobile
application developers need to make the application interfaces elegant, and the experience of
using an app pleasant. Users expect apps to be updated every few months with new features
and enhanced navigation.
In a native environment, apps are developed using the programming language native to the
device –it is Objective C and Swift for Apple devices; Java for Android devices. That means
every time the app is changed or updated, developers will need to do this for both platforms.
In addition, the app must be tested on different Android and iOS versions and hundreds of
devices. That increases the development time.
Hybrid apps are developed once using web technologies such as HTML5, CSS and JavaScript,
and then put inside a native container such Adobe PhoneGap. These native containers run the
web application code and package it into an app, specific to a device. So the development time
is significantly reduced. That’s why PNB decided to port its existing apps to the hybrid
environment.
THE WAY AHEAD
FSS is now working on porting the other four apps from PNB to the hybrid environment. The
next app that will be released will be a financial app for UPI payments. This will also be
developed using IBM MADP. And since all PNB apps will eventually be on a hybrid platform,
it will be easier to roll out updates every few months. PNB will be able to introduce new
services and respond faster to customer requests and grievances. This will further enrich the
customer experience and win loyalty.

PNB MetLife launches first ever Virtual Reality Customer Service Platform - conVRse
PNB MetLife, one of India’s leading life insurance companies, announced the launch of
conVRse, a first-of-its-kind Virtual Reality (VR) based customer service platform.

conVRse is an experiential virtual reality platform built in collaboration between MetLife’s

innovation center - LumenLab in Singapore and PNB MetLife in India. This is the first time
that virtual reality is being used in the insurance industry to benefit the customers directly
through superior experience and availability of experts. It aims to provide a differentiated,
immersive and a personalized experience to the customer through the VR headset available in
15 PNB MetLife branches across 10 cities. When customers put on the VR headset they find
themselves in a 3D simulated virtual room, face to face with an avatar “ Khushi ”, our life
insurance expert. The customers simply need to walk into the select PNB MetLife branches,
wear the VR headset and get all their servicing requirements fulfilled by Khushi. The platform
will display policy related information and uniquely engage the customers through visual assist
elements like animations.

In the intial phase, the conVRse platform will be launched at 15 branches covering 10 cities
namely – Delhi, Mumbai, Hyderabad, Bengaluru, Kolkata, Jammu, Chandigarh, Lucknow,
Ahmedabad, Pune. In the next phase, PNB MetLife is working towards equipping the sales
team with VR devices and set up conVRse zones at bank partner ATMs. The company plans
to further develop the platform to spread insurance awareness, drive experiential learning, share
interactive product information and develop it into a sales platform.

(Skill – Training to the staffers )Culture and technology issues

PNB faced issues which were mostly cultural. Most staffers were used to working in a manual
environment, and some had worked in standalone environments. In the new networked
environment, personnel at the node/counter didn't actually 'see' the transactions updating in the
various account books.
This gave rise to a number of queries and suggestions from personnel. The bank consulted
IDRBT(Institute for Development & Research in Banking Technology) and RBI to verify the
implementation success and it was reported that the deployment was absolutely correct. Around
six months later, the personnel felt that the environment 'change' had done them good, and was
used to working on the systems.
There were a few integration issues when migrating to Finnacle, but the in-house IT team was
able to resolve them all. The pilot for the initial seven branches was a test-bed for PNB. The
knowledge we gained from the pilot deployments helped it overcome the future issues.

FUTURE SCOPE

There are many factors which will continue to influence and shape of the banking industry,
These include data quality, rising storage and network requirements, IT capabilities and
business requirements. Keeping these factors in mind, we suggest use of upcoming trends in
business intelligence which if adopted can bring about a radical change in information
management.
1) BI in the Cloud
The data can be transferred to the cloud and once data has been transferred to the Cloud,
there are numerous cost-effective BI and big data tools available for organisations to take
advantage of, along with the obtaining the desired reach.
2) Mobile BI
Mobile business intelligence offers huge advantages for banking organisations, particularly
those with increasingly mobile and remote workforces. It means that staff and management are
never disconnected from the tools that help them make business decisions.
3) Analytics
It uses algorithms to search for patterns and explanations. It looks at historical data to predict
future activity for better business decision making. Analytics will help companies differentiate
themselves, it will allow them to run more efficiently, make the most of their customers and
increase profitability. Analytics provides organisations with actionable intelligence. While BI
has traditionally been hard to create a business case for, analytics has a direct correlation to an
organisation’s top or bottom line. The three biggest trends surrounding analytics the industry
are: Optimisation—the combination of business rules for optimised decision management;
consumable analytics—the visual presentation of increasingly complex data; and new data
analytics—the analysis of new types of data, such as social media, location information, etc.
4) In-memory analytics
In-memory analytics tools—such as Qlikview, Spofire and Tableau—allow for the querying
and analysing of data from a computer’s RAM, resulting in quick and simple data exploration
for BI and analytic applications. Rather than relying on centrally controlled, monolithic data
warehouses, users are able to download large amounts (up to 1 terabyte) of data onto their own
computer and explore that information for proving theories and making business decisions
throughout an organisation. Given the speed, ease and affordability with which these tools can
put power back into the hands of the users.
5) The Agile approach to BI
An Agile approach can be used to incrementally remove operational costs and if deployed, can
return great benefits to any organisation. Agile provides a streamlined framework for building
business intelligence/data warehousing (BIDW) applications that regularly delivers faster
results using just a quarter of the developer hours of a traditional waterfall approach.
6) Anti-Money Laundering Software linked with Data Warehouse
Transaction monitoring systems help fight money laundering by identifying uncharacteristic
deposits or withdrawals, identification of suspicious transactions can help businesses file
Suspicious Activity Reports, or SARs.

Also in Skills:

The blend of management skills with employee orientation and employee skills with
organizational loyalty is unique to PNB. Having introduced successfully the Core Banking
Solution (CBS) with an entire in house team of I.T. and Non –I.T. officers itself is a proof and
track record for the skills of the prudent banker with the focus of migration of another 6937
branches to the CBS is a big leap in this direction.

Training policies and programmes are suitably designed, modified and updated on a continuous
basis to upgrade the knowledge levels and skills of its Executives, Officers, and Workmen on
par with the best in the industry. While several new programmes are introduced in tune with
the Corporate Goals, the existing programmes are made more interactive and learner –friendly.
Risk Management and Basel II are the focal areas of their training programmes to ensure
Bank’s readliness to move over to the new Basel II regime and extra care is taken to sensitize
the workforce to these issues.

The bank has taken its first step in e –learning initiative with the uploading of reading materials
on Export Finance, Agricultural Lending and Financing SSI on its Intranet.

During the year, emphasis was given to train executives / officers in the areas of Risk
Management, Risk Based Supervision, Basel II, Agricultural Lending, Credit Management,
Corporate & Retail Credit, Recovery Management, Marketing & Relationship Banking,
Foreign Exchange business and CBS.

Staff:

The staff composition is so mixed and having experience and loyalty to the institution as the
core credentials reflecting the customer’s loyalty and ethics. The bank has ventured into a
recruitment drive at all levels to ensure the mix of experience and youth at appropriate level
and also to ensure the age profiles of the cadres match with technological advancement. An
ongoing annual promotional process to ensure blending of experience and expertise to be
brought to the fore. A balanced team of executives guide the operations.

The bank had a total staff strength of 70801 as on 31 -03 -2016. And per employee productivity
on that date is 4.98crores. The SC /ST Employees constituted 26.23% of the total staff strength.

The HR Policy has been geared to meet the Corporate objective of accelerated and profitable
growth. This includes Campus and Direct Recruitments for replenishing skilled Man Power in
Agricultural Finance, IT, Accounts and Financial Management, International Business, Credit,
Marketing, Risk Management etc. The Promotion Policy has also been fine tuned to reward
Outstanding Performance and also to facilitate Succession Planning.

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