New Kids on the Banking Block

bank branches and their extension counters, they could not keep up with the ever growing rural expanse.

The Topicality of Technology
While the banking world was trying to fi gure out what was the successful formula for reaching out to the farfl ung corners, technocrats seemed to have a solution. Based on technology platforms and telecommunication joining places with their small mobile towers, the financial inclusion module seemed a reality - hence, the emergence of payment banks. The license awardees are largely telecom companies, payment gateways or mobile wallet fi rms. The crux of their operation would lie in leveraging their existing distribution and technology set up to reach out to the unbanked - enabling deposit and withdrawal/transfer services without any physical presence. While traditional banks could also enable this but they have largely focused on branch-based service delivery model and platforms like NEFT and RTGS, which now would make way for IMPS and mobile cash kind of solutions. The key diff erentiator for the payment banks and their success mantra lies in the fact that they are not focused on multiple product lines like any conventional brick and mortar bank but largely leveraging technology to provide basic banking services of deposit, withdrawal and transfer to an individual who was never exposed to the banking system in the past.
While this took care of the basic banking needs of people in remote parts, the endeavor was to provide full banking service to the unbanked population. A large number of NBFCs and micro fi nance fi rms have been working with the rural poor helping them in their livelihood. RBI then opened the doors for accepting applications for a small lending bank. The idea behind this was that these fi rms were already working with the rural and unbanked sector and their models had inherent risk mitigation systems. With this they would facilitate the lending activity in the rural space which completes the picture of making a comprehensive banking spectrum available to them.

The Set Up Saga
Given this business is largely driven by people, it is paramount that there is a defi nite strategy aligned to the overall business objectives of the fi rm. The key to success here lies in designing the organization in a lean way and thus moving away from the conventional overtly layered structures found in large banks. Multi-hatting is the norm and specialization is only where necessary. With this mantra, these organizations are likely to see consolidations of many support functions which usually operate as COEs in large setups; leading to enhanced control and alignment to the overall direction. On the revenue front, the structure is expected to be largely two pronged - one responsible for the distribution and the second for tie-ups. With a limited product base, these banks are likely to see a central product vertical that would be responsible for both the regulatory aspect while ensuring marketability.
Treasury, usually typecast as one of the "glamorous" functions in a large conventional bank will be limited to playing a resourcing and money market management role in these new banks. Wholesale banking will also be missed as the target audience on a B2B front is likely to be micro to small enterprises. Payment banks however, would be tapping into the operational accounts of many internet-based service providers as they have the perfect marriage of the need and the solution. They will enable a different experience by bringing both the customer and service provider on the same platform.
Given the hiring in the small banks is likely to run in thousands, firms are likely to adopt highly effi cient screening mechanisms to manage this large scale talent acquisition. Competency-based algorithms will be the favorites for selectors to get the "right" talent in.

Another Melee in the Making?
Banking talent, which is limited in our country, was again back in demand after the fi nancial crisis especially for the control functions. The large established players started ring-fencing their key/critical talent by paying them fatter bonuses and higher annual hikes. Other sectors like telecom, pharma and IT also followed suit. The payment banks which are largely dependent on the technology platform have made some key hires from IT firms, banks and e-Commerce companies to shore up their shop. Cash management and compliance folks from banks have also been hired to fi ll the need of designing the product suite. The scenario is slightly diff erent for the small lending banks - they are largely focusing on hires in the retail, micro SME segments across both business and control roles. Their preferred talent catchment area is likely to be other banks or large established NBFCs to meet their talent requirements. Most of the new age banks are exploiting the entrepreneur in some employees while.

It is perhaps a case of divine justice that the sector is now being driven back into the throes of action and activity fueled by the new crop of banks that hope to correct what ails the banking system today – inequality, penetration and sustainability