Page 160 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 10: Financial Services

companies that are parents of banking groups. On prudential considerations, it is Notes
necessary to adopt best practices in line with international standards, while duly
reflecting local conditions.
(b) Accordingly, banks may voluntarily build-in the risk weighted components of their
subsidiaries into their own balance sheet on notional basis, at par with the risk
weights applicable to the bank's own assets. Banks should earmark additional capital
in their books over a period of time so as to obviate the possibility of impairment to
their net worth when switchover to unified balance sheet for the group as a whole is
adopted after sometime. The additional capital required may be provided in the
bank's books in phases.

10.4 Emerging Trends in Financial Services

Every industry undergoes periodic changes and in that context the financial services industry is
certainly not an exception. The only exception is that changes in the financial services industry
have occurred more rapidly as compared to other industries, the most probable reason being its
dynamic nature. Emerging trends in the financial services industry provide a definitive clue to
the ongoing changes and here are some of those to help you get a better understanding:

Increased Automation

With rapid advancements in Information Technology and allied systems and processes, the
financial services industry has witnessed increased automation over the years. Financial projects
are still managed under the watchful eyes of highly qualified professionals, but the actual
processing and transacting is being done by automated software systems. It is certainly a positive
development because automated systems eliminate the chances of human errors and inaccuracies
and also allow firms to handle large financial projects with veritable ease.

Diminishing Size Limitations

At the beginning, financial services outsourcing was embraced mostly by business heavyweights
such as Goldman Sachs, Lehman Brothers, Morgan Stanley, Citi Group etc. Things however have
changed over the years as can be seen from the dramatic increase in the number of Small &
Medium Enterprises (SMEs) hiring financial outsourcing services. Business size is no longer a
criterion for choosing financial services outsourcing, something that is good news for both
SMEs and small outsourcing service providers that cater to niche market segments.

Rapidly Expanding Wider Presence

There was a time when financial services were limited to a few advantageous geographical
locations like Mumbai. However, due to rising demand for financial services, other locations
like countries such as Ahmedabad, New Delhi, Chandigarh, Kolkata, etc., have also started
offering financial services. It signifies that financial services industry now enjoys a wide presence
and is not limited to a few regional pockets. And that is good because businesses now have a lot
more options to choose from.

Introduction of Web Technology

Predicting the future is never easy, but in the use of web technology for the financial services
industry, there are a number of trends and technologies that are in their early stages and show
significant promise for the sector.

LOVELY PROFESSIONAL UNIVERSITY 155