Banking is ever-changing. But, never in the past has changes been as rapid as it is in the recent years. Changes, in the recent years have been rapid on account of reforms in the financial sector coupled with IT and Telecom driven process changes in enhancing banking services and narrowing spreads.

Opening up of the banking sector on account of reforms being pursued in the financial sector over the last decade has also made indelible impact on the banking sector. Understanding, anticipating and managing risk and being viable have become important. Banks have become aware of each other and the possible impact their actions can have on the market. Need for taking well informed decisions on product pricing has never been as evident as it is today. IT has made the job of back office- which was otherwise a laborious routine - more accurate and easy. Speed of transaction has increased. Banks are able to centralize the documentation and processing of post sanction procedures in credit. Slowly and steadily branches have become more of delivery points and more customer oriented.

Till the eighties banking was nothing more than following RBI guidelines and implementing them scrupulously. The concept of product pricing was unknown then. Risks were not apparent. As against this, today, banking, like any other industry, is a business enterprise with all its splendor, attendant risks, and consequences.

Also Banks are in a sellers market. They can decide the interest rates and volumes of credit by themselves. Products are developed without much of a customer survey. Products and prices, despite being offered by different banks are almost similar. It should also be said that customer has not many choices. Avenues like Insurance can never be a savings or investment tool. Mutual funds have not really penetrated the market. Barring a few, most of them concentrate on urban markets. Investors do not have a full measure of these sectors. The leaning of customers towards banks can be inferred from the fact that, despite softening of interest rates, growth in deposits has outstripped growth in AUM of mutual funds. Apparently people continue to prefer bank deposits to other avenues of investment. Safety plays an important role in shaping investor perception in the country.

Though there are many types of banks, Public Sector Banks, Private Sector Banks, Foreign Banks, Rural Banks and Cooperative Banks, they appear similar in approach and content. All of them offer a variety of deposit products, loan products, ATMs, Cards, internet services etc. Barring Rural Banks and Cooperative Banks, all have a well established treasury, are part of the RTGS, SWIFT, etc. Yet a customer makes a choice of a particular bank. What are the considerations for the choice? Is it proximity or marketing efforts? What distinguishes one bank from the other? Is it the uniqueness of products on offer? Is it service? Or speed of delivery? Let us list some of the changes that are evident on the surface.

1.On account of implementation of core banking in their branches, banks are able to offer, in addition to branch banking, 'E-banking', 'Internet Banking', 'ATMs', 'Debit Cards, and 'Credit Cards including international cards'. Traveler's cheque has been, to a large extent replaced by cards. Banks facilitate buying/selling railway tickets, airways tickets, holiday packages and what not.

2. Portfolios like Home loans, Vehicle loans, Loans for Consumer Durables etc have exploded in volume. Retail banking is being driven with greater emphasis. It must be added here that, till recently, these were in the exclusive domain of NBFCs. Not long ago there were loan companies, housing finance companies and hire purchase companies. Though housing finance companies continue to serve the sector, their outreach is limited in comparison to the banks.

3. The delivery mode has changed. Led by private sector, more and more banks are using agents in selling. Out sourcing has become a buzz word. Bank products are sold in any which place possible. Air ports, malls and petrol pumps are inundated with sales force!

4. On a lighter vein, one finds that even jargons have changed. Deposits are called liabilities, Loans and Advances have become assets. Sanctions are called sign offs. Customer service has become relationship managing. Bad debts are called NPA and overdue accounts have become stressed assets.

5. Selling has- like any other business become an all important function. Banks sell insurance, mutual fund schemes, deposits, cards, home loans, consumer loans, the list is endless.

6. Risk is more openly talked about. Credit risk has been recognized. Interest rate risk and other market risks, which were not apparent, have come aboard. IT in its wake has brought about a greater awareness of operations risk. Slowly but steadily derivatives are making foray into the market. It is only a matter of time before financial statement risk becomes apparent.

How does the customer react to all this? ATM has made customer happy. He has many cards to choose from. Indian customer may not be far away from the customer in west, who has, on an average 4 cards. Since most needs of the customer are met outside the "Brick and Mortar Banking" system he/she is the customer of a bank and not a branch. Unlike the past the customer has faster and greater access to retail loans. Housing and consumer loans are popular. However, in the case of small loan borrowers, nothing has changed. Access to a loan continues to be plagued with difficulties.

An underlying premise in IT enabled banking is that the customers keep pace with changes. Does it happen? How many customers can operate internet? How many of them are aware of the intense scrutiny of KYC? How many of them can periodically update their software, internet browser to suit the changes made by banks? How many customers understand the importance of PIN? How many villagers will be able to use the browser ?

In the circumstances is there a need to educate customers? How do you educate customers? What do you tell them? Beware! These facilities are given at your own risk! Will a customary statement similar to "Cigarette smoking is injurious to health" or "Mutual fund investments are subject to market risk" read the old document carefully be enough? We feel that it is time that customer education is taken up on a systematic manner. There should be some definete attempts in customer education. There is a need for, every branch to spend time with the customers in explaining the changes, how to take advantage of new initiatives? What are the minimum precautions that the customers should practice in using the new process changes.

Indian Banking sector employs nearly a million people. There has not been, barring the last two or three years, much recruitment. It can, thus be safely said that the age profile will be that of middle age. However, the skill sets and specializations that are required today for managing a branch or managing the corporate office of a bank are vastly different from that of eighties.

A question was asked previously as to what makes a customer choose a bank? If a customer has to get the best from a bank, it is necessary that in each and every activity, and with every staff, a certain level of knowledge and competency is targeted. It is in the area of knowledge and skill set and consequent service levels that a bank can make a difference to a customer. Essentially it is competency, service and variety that will be crucial for a customer make a choice of which bank to bank with!

In the circumstances there is a simultaneous need that bankers should also take up learning more systematically. World over, professionals are going back to colleges as the need for 'knowledge update' and getting 'new skills' have become crucial. Often the process is made compulsory so that the customer can draw a comfort from that.

Banking in India is poised for major changes. If more and more of our banks have to be reckoned among worlds top banks, it is necessary that bankers also seek the latest in knowledge and education.