The mantra is digital

If there is one word that keeps bankers motivated and worried at the same time, it is technology. With the proliferation of smart phones, increasing internet penetration and changing consumer preferences, the banking industry is facing a major threat of disruption. While banks had barely settled down with their internet banking offerings, mobile banking has already emerged as a new channel and consumers are lapping up e-wallets. Data analytics at the back end are playing an important role in customer acquisition and retention, and in cross-selling of products.

There's more. New competition is coming for banks in the form of digital cash and niche banks. Paytm, the largest digital cash player, acquired 100 million wallet users in August 2015. In 2015, the Reserve Bank of India allowed two new types of banks - payments banks and small finance banks - to open for business to further financial inclusion.

For conventional banking also, technology is changing rapidly. Banks are no doubt trying their best to keep pace and are positioning themselves to face the onslaught that digital has unleashed. They have launched wallets, have tied up or are in the process of tying up with payments banks, and are souping up their tablet and mobile apps.

The cover story of this edition of the Banking Annual, therefore, looks at the digital transformation and how niche players are making significant inroads. At the same time, the banking sector is also suffering from rising stressed assets. In a separate article, the magazine looks at the problem and the solutions available to banks.

Five leading bankers came together at the Business Standard Banking Round Table to discuss the challenges before them. Find out how banks are waiting for big-ticket investments. Don't miss the report on another round-table discussion on technology where executives who run their banks' technology initiatives shared their experiences.

The Banking Annual is also about celebrating success. A five-member distinguished Jury headed by former RBI Deputy Governor Rakesh Mohan selected Shikha Sharma, MD and CEO of Axis Bank, as the Business Standard Banker of the Year. Happy reading!