A Study of the Readiness of Indian Banks to Absorb COVID-19`s Impact Through New Emerging Technologies and Strategies for Competitive Advantage

A Study of the Readiness of Indian Banks to Absorb COVID-19`s Impact Through New Emerging Technologies and Strategies for Competitive Advantage

Narinder Kumar Bhasin, Kamal Gulati
Copyright: © 2021 |Pages: 26
DOI: 10.4018/978-1-7998-7764-6.ch003
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Abstract

Digital disruptions and e-collaboration between banks, corporates, and fintech companies are increasing to meet the new challenges posed by COVID-19 across the globe. The Indian economy and the financial ecosystem is undergoing a transformation with the number of reforms introduced by the Government of India and Reserve Bank of India in the last few years. Emerging trends in the Indian economy with new business models being adopted by the banks and financial institutions leading the country to the international standards of the payment system. This chapter focus on the pre-COVID reforms and their impact on banking and finance sector post-COVID 19 in the Indian Economy. The author explains the readiness of Indian banks to meet the challenges and the new emerging technology-based business model being adopted by banks and financial institutions in re-strategizing their operations and have a competitive advantage in the market.
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Background

Various economic disruptions in Indian economy from 2016, have impacted the life of a common person to businesses. The economists and financial analysts have argued in the favour of such imitative in long run and as per the international standards. There are still challenges of financial inclusion and those people who are having access to the banking service industry in India, are becoming tach savvy and their expectations are increasing due to developments in Information technology in the banking sector (Kalyan, 2017). The four major disruptions which have impacted the Indian economy for the last five years are discussed below:

Impact of Demonetization in Indian Economy

In 2016, The Government of India and Reserve Bank of India introduced a Demonetization of Rs. 500 and Rs. 1000 currency notes to fight tax evasion, counterfeit currency, curb inflation, terror funding, eliminate black money and promote digital banking, promote Fintech and cashless economy. Since the Indian economy is a cash-driven economy and GDP growth rates were showing increasing trends to 8.01% in 2015-16, fall to 7% in 2016-17. Due to less availability of cash and money supply, it adversely affected the manufacturing and construction industry. Daily wage workers form a major part of the informal economy and small-scale industries had an adverse effect on revenue collection. The general economic situation was disbursed for more than six months as bank customers have to queue up and wait for hours to exchange their old currency notes with new currency However, the black money and inflation was reduced and the major blessing in disguise was move towards a digital economy and Fintech collaboration. Due to shortage of liquid cash, people start using their banks account with paper- based cheque system and digital wallets, Internet and mobile banking

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