 "Reserve Bank of India, RBI")
As digital transformation accelerates, the need for employees who can deliver consistent service levels and adapt to both expected and unexpected challenges is more critical than ever, Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao said.
He said that investing in employee development and continually upgrading their skills are no longer optional but essential for financial institutions to thrive in this dynamic environment.
Human capital, as the most significant factor of production in the service industry, plays a pivotal role in determining the growth trajectory of organisations, Rao said in a speech on Monday. The speech was uploaded on the RBI website on Thursday.
Not only does a skilled workforce enhance organisational structures and functioning, but it also fosters innovation and increases productivity, contributing significantly to both individual and institutional growth. This holds true for the banking industry, where human capital is instrumental in driving progress and staying ahead in a rapidly evolving landscape, he said.
“In any service industry, amongst the four factors of production, human capital is the most significant which fundamentally determines the growth trajectory of the institutions and organisations. Human capital is not just important in the areas of the organisational structures and functioning but is also critical in fostering innovation and increasing productivity which contributes substantially towards both individual and institutional growth. This is true in the case of the banking industry as well,” he said.
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Rao said the banking sector has undergone a profound transformation in recent years due to the digitalisation of financial services, the rise of fintech and advancements in technology.
This shift has seen banks expand their offerings beyond traditional services to include wealth management and other financial products. As a result, financial institutions must continuously adapt their business models and update their product offerings to remain competitive. A crucial aspect of this adaptation is ensuring that banks have a skilled and motivated workforce capable of navigating the rapid pace of change in the industry, he said.
As technology continues to facilitate the expansion of financial institutions, granting customers round-the-clock access to services, the deputy governor said, it also presents challenges, notably the rapid obsolescence rate.
This necessitates ongoing investments in technology. However, amidst this flux, one irreplaceable asset stands out: the human capital within these institutions. Therefore, the strategic training of employees, encompassing both business acumen and interpersonal skills, becomes paramount in determining competitive advantage, Rao said.
“Communication in a business setting has two important aspects – individual and institutional. Individual communication pertains to the front-line staff – how they communicate with the customer while institutional communication means how the policies and priorities are communicated by the institution to its external, as well as internal stakeholders. Effective communication by individual employees can win customers, and the appropriate corporate communication by the institution can enhance its public image and brand value,” he said.
