1. 1 The Changing Face Of Banking - Future Of Bank Education 19 th January 2007 H. D. GAGNEJA Vice Principal Oriental Bank Of Commerce Staff Training College Noida

2. 2 Future Of Bank Education The enhanced role of the banking sector in the economy has led to a greater competition and consequently greater risks because of demand for newer products forcing the banks to diversify their product mix and also effect rapid changes in their procedures and operations to remain competitive.

3. 3 Future Of Bank Education The Indian Banking is likely to face challenges in implementation of Basel II, enhancing Corporate Governance, alignment of regulatory and accounting requirements, outsourcing risks and application of advanced technology.

4. 4 Future Of Bank Education In order to meet the future challenges, the banks need to focus on appropriate capacity building measures to equip their staff to handle advanced risk management systems and supervisors also need to equip themselves with appropriate skills including skill to check attrition by motivating staff and retaining them.

5. 5 Future Of Bank Education The primary purpose of the banking supervision is to protect the interest of the depositors in the banking system and empirical studies have established that the quality and the training of supervisory personnel is an important determinant of the overall process.

6. 6 Future Of Bank Education Identification Of Training Needs There is a lack of innovation. Research about the training needs is non- existent. The system of skill mapping of the employees to identify the gaps in the knowledge is not effectively implemented. The number of trainees is rising but the feedback from the field supervisors is that trained manpower is not available.

7. 7 Future Of Bank Education The banks should have a clearly defined goal of the training. For example : Marketing of Bank Services is the primary need of the Public Sector Banks but largely the Banks have refrained from outsourcing the Marketing Function. The existing staff is not trained in marketing skills. Consequently their business growth is far below than growth rates projected by new generation Private Sector Banks. The PSBs need to develop a Sales Culture.

8. 8 Future of Bank Education Training Methodology The existing methods of class room lectures with chalk & duster or power point presentations may have to yield place to Case Study Method or Role Play method. The theoretical / conceptual knowledge may have to be in-built in the case studies and the participants would be required to be conversant with the background material.

9. 9 Future Of Bank Education Subject Matters of Training The Routine / General training on matters like routine banking operations / credit appraisals / post-sanction follow-up may yield place to newer subjects like : Risk Management Systems / Advanced credit appraisal techniques Derivative Products / Risk Hedging instruments Advanced Technology-implementation strategy & fraud prevention

10. 10 Future Of Bank Education Marketing Of Bank Services, Product Design, Launch and selling of products Fund Management / Wealth Management/ Portfolio Management Customer Relationship Management Advanced ALM techniques Communication Skills / Negotiation Skills Outsourcing of non-core activities & inherent risks

11. 11 Future Of Bank Education Money Laundering / KYC Norms Capital Adequacy / Profitability Issues Motivational issues for employee retention/ checking attrition Stress Management Misc. Services offered by the banks like Insurance /Mutual Funds /Security Trading Dmat services. Performance Budgeting / Market Study

12. 12 Future Of Bank Education The Banks need to identify their priority areas and set goal posts and the training division should identify training needs to achieve the objectives set by the bank. There should be post training evaluation for impact study.

13. 13 Future Of Bank Education Future Banking Scenario With technology taking over most of the routine functions, the existing trained pool of line officers would become insignificant players. The computer shall perform the entire set of routine functions under the supervision of small time tellers / clerks.

14. 14 Future Of Bank Education The Cash Credit system may be replaced by Demand Loans / Overdrafts / Working Capital TERM Loans. The collection of Cheques / Bill Business may vanish with the introduction of Cheque truncation system. DD / MTs would get replaced by National Electronic Fund Transfer (NEFT)/ RTGS system for retail and high value transactions, respectively.

15. 15 Future Of Bank Education The Deposit Acceptance / disbursement of small / retail loans shall become just routine functions not requiring any special skill at the branch level. The Credit Function shall be performed by Central Processing Cells that may be set up for a cluster of branches. The banks shall have to train a new set of employees to undertake Derivatives business, portfolio management, non - banking services and other profitability activities / ventures etc..

16. 16 Future Of Bank Education How to meet the future challenges? The new generation employees shall be computer savvy. May be they are already specialised in their field. They shall need to be provided on the job training to hone their skills

17. 17 Future Of Bank Education They may move to more lucrative pastures if their job does not involve challenges or value addition to their CV. The training must inculcate a feeling of belongingness among the officers if you wish to retain them. The recent spurt of attrition in Specialist Cadres is a clear pointer to this situation.

18. 18 Future Of Bank Education ‘On the Job training’ can be effective provided a ‘Mentor’ is assigned to each newly recruited officer. The personal chemistry between the trainer and the trainee is very important. The HRD function includes learning ‘How the people learn, what is to be taught, by whom, and to what extent’.

19. 19 Future Of Bank Education The branches selected for on the job training should be identified very carefully as the whole career of the new recruits depends upon the initial response of the ‘Mentor’. Any reluctance on the part of the ‘Mentor’ to share knowledge or experience tells upon heavily on the minds of the new officers and they might get easily disillusioned.

20. 20 Future Of Bank Education The ‘trainers’ that is the ‘Mentors’ must be told about the goals of the training and the trainee’s feedback or performance should be the basis to evaluate the effectiveness of training. The middle officers / senior officers should be sent for refresher training at the apex level training institutions in India or abroad to keep them abreast with the latest developments in their chosen field of expertise. The Central Govt. has already decided to train IAS officers in the middle of their career at Mussoorie Academy in conjunction with foreign Universities.

21. 21 Future Of Bank Education E- Learning* E-learning involves LAN,WAN, or Internet for delivery interaction or facilitation. It includes distributed learning, distance learning, computer based training delivered over a network and web based training. In future people will telecommunicate to their jobs while their companies compete globally. (Indian Management July 2005 by Binod Kumar &Gunmala Suri)

22. 22 Future Of Bank Education Private Banks in India /abroad and Universities/ institution have successfully used this education medium but the PSBs are yet to take a plunge. The cost of e-learning would be a fraction of the class room teaching. The challenge would lie in the designing of modules, course contents, to invite employee’s interest and the effectiveness of the training to be judged by an on-line test at a given date under examination conditions.

23. 23 Future Of Bank Education Role of Training Institutions The role of training institutions shall enlarge in the coming future. The Faculty shall have to focus on research, conduct impact studies and develop and suggest newer products to the top management.

24. 24 Future Of Bank Education The lecture method would yield place to Case Study Method. The case studies to be drawn from real life situations with which trainees are familiar. The training programmes for routine banking / credit appraisal of smaller proposals may have to be done at district level on roving basis or outsourced completely or through e-learning. The Banks would no longer be in a position to invite individual officers to far off Training colleges as neither the staff position nor the cost of providing class room training would remain affordable.

25. 25 Future Of Bank Education Most of the bank employees recruited in early 1970s’ shall retire in the next 5-7 years creating huge opportunities for the future managements to recruit new generation computer savvy professionals ready to move with the markets and face the future challenges. Neither the Customers nor the future employees may remain bound to one bank. Loyalty factor may disappear in the next few years. The employees / customers shall stay if it suits them. Only those banks shall progress that offer the services of international standards. And that requires FULLY TRAINED MANPOWER.

26. 26 Future Of Bank Education The need of the hour is to redefine the role of Staff Training Colleges. Time is NOW. Today you can plan. Tomorrow the changes shall be thrust upon you by the Market forces.

27. 27 Future Of Bank Education THANK YOU