Inorganic growth to fuel banking sector growth: Survey

Mumbai, Feb 25 (UNI) Banks in India will go in for inorganic growth through merger and acquisitions route to be prepared to operate in a post deregulated market from 2009, according to a survey carried out by consultancy firm PricewaterhouseCooper.

The survey report released at the CII Banking Tech summit here, said the sector would see a lot of consolidation with the entry of more foreign players. In tems of threats, more than 60 per cent of the respondents said the foreign players had the ability to bring in better products and offerings and loss of skilled manpower.

The report said that nearly 40 per cent of the banks have prior eperience in mergers and acquisitions and hence stood better prepared than the remaining banks. The lessons gathered from the survey indicated that the key to a successful merger was to keep the customer experience and culture of employees intact.

''Business processes rather than technology would play a role in making mergers and acquisitions a success or failure.'' The survey also indicated that creation of a common platform for software as well as hardware in terms of network infrastructure was a must.

By way of organic growth, the banks felt that financial inclusion in terms of spreading across geographies and segments would be the way forward. Movement in IT backbone, response to customer needs and capability building around ebanking inititives were other findings that would help banks penetrate the corproate market space as well as mobile banking.

The banks felt that deregulation would lead to a fierce price battle, besides bringing in new products and services. Foreign banks would also bundle many products in tune to attract new customers.

Pricewaterhousecooper said banks were already aggressively introducing more products per customer and providing customised products and solutions and understanding cultural differences with the states. Communciation was an advantage for domestic players to leverage upon.

The report however said that there would be a manpower crunch in the sector as by 2010 more than 63,000 employees of the state run banks would retire. Collectively these banks employ 710,000 and need an additional 500,000 new staff in next five years to maintain growth.

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