Annexure-V- Cover Page for Academic Tasks

Course Code: MGN303 Course Title: Business Enviroment

Course Instructor: Jivanjot Singh

Academic Task No.: 1 Academic Task Title:

Date of Allotment:29.08.2020 Date of submission: 16/10/2019

Student’s Name: Minhajul Islam Student’s Reg. no:12000151

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 Summary
To some, the terms “Social Impact” and “Investment Banking” may appear to conflict with one
another. After all, aren’t investment bankers supposed to be “win-at-all-costs” dealmakers?
Well, like most things in life, it isn’t quite so black and white. The job of an investment banker is
to facilitate transactions that achieve clients’ goals. In the past, that often meant focusing largely
on one thing: maximizing value. Today, however, financial results are not the only measure of a
successful business. To a growing cohort of entrepreneurs, business owners, and investors,
companies that value the social impact of their operations are growing in influence and
importance. As a result, partnering with an investment banker that can elevate the social or
environmental impact of clients, while at the same time optimizing financial outcomes, is critical
for a company vested in the impact of its business.
Given our expertise and deep experience with socially invested companies and “ESG”
(environmental, social, and governance) investing, MHT Partners has launched a focused
initiative to advise social impact and double bottom-line companies and investors as part of a
Social Impact M&A Advisory program.
In recent years, impact and ESG investing has grown significantly, driving demand as investors
look to partner with high-performing, impact-driven companies. The Global Impact Investing
Network estimates that impact-specific assets under management (“AUM”) grew at an annual
rate of 17% between 2014 and 2018. In the U.S., MHT Partners estimates that private equity
impact investment AUM exceeds $30 billion. Many of the largest and longest-standing financial
sponsors are deploying impact funds, including KKR, which in February closed its $1.3 billion
Global Impact Fund, and Bain Capital, which is currently raising its second fund under Bain
Capital Double Impact. The growing community of impact investors and companies is creating a
dynamic new market.
The growth in impact investing is not surprising, as there is ample evidence to suggest that
companies that value social impact experience outsized returns and rates of growth. For years
many marquee investors, often spurred on by powerful limited partners, have divested of
interests in the munitions and fossil fuel industries. Now, real-world evidence from the Carlyle
Group supports the case that socially conscious practices, such as increased board diversity and
the incorporation of renewables into energy portfolios, yield more favorable economic outcomes
for companies. Through the first four months of 2020 and the COVID-19 crisis, ESG funds have
drawn more than $12.2 billion of capital and outperformed the market according to the Wall
Street Journal. Impact investing is here to stay.
As investment bankers in the middle market, we seek to align ourselves with clients who share
our values. The history of our firm reveals a long track record of advising high-performing
companies in the consumer, healthcare, technology, and education segments that value social or
ESG, as well as financial, outcomes. Our frequent dialogue with the most active and experienced
funds that have an expressed mandate to invest in companies with a positive social impact gives
us unique insight into the differentiating factors that are coveted by impact investors. We believe
that companies that value social impact are poised to experience.

The Changes going to Impact

Banking has witnessed a significant change in recent times. Owing to the increasing consumer
expectancies, regulations, economic changes and constant competition, modern banking has
embraced technology. Digital platforms, mobile, internet banking, and payments bank have
revolutionized the sector in a substantial way. “The Digital India Moment” has also given the
much-needed impetus to the digitization efforts in the banking sector.
Deloitte, a multinational professional service and one of the Big fours, studied these fluctuations
in financial structure and banking landscape and recently released a report “Banking on the
Future: Vision 2020” along with the Confederation of Indian Industry. The report highlights the
role of technology in banking and how technology-oriented innovation will disrupt the market.
Here are the five crucial changes that will disrupt the Indian banking sector in 2020, according to
Deloitte

1. Payment banks to pave the way

The report highlights the growing importance of payment banks in the ecosystem. In India’s cash
based economy, digital payment instruments will drive growth in non-cash payments. PBs will
have long term implications on the syntax of large financial institutions as they disintermediate
the value chain, by leveraging innovations in “Financial Technology”, investing in innovations,
and lowering transaction costs—the report highlights. The reports also states that “Digital
footprint” will be the way forward for all PBs. How well PBs engage in coopetition with Fintech
startups playing in emerging technologies will determine how they can differentiate in an
increasingly crowded market.
2. Role of Artificial Intelligence
Artificial intelligence will be an integral part of smart banking. Banks can expand their consumer
base by learning what clicks with their users. Cognitive technology with AI can offer features
like cognitive engagement, cognitive automation, cognitive perceptions, and cognitive strategy
formation. Through AI, a support system can be developed that targets the user’s personal
preferences, reduces human intervention, catches data patterns and devises strategies based on
market subtilities.
One such example is Bank of America that has introduced the chatbot ‘Erica’ for customer
assistance.
3. Blockchain & Distributed Ledger Technology
The concept of the banking system with Distributed Ledgers supported by Blockchain will no
longer be far-fetched. This step can initiate an uninterrupted and fairly tamperproof information
inter-changes between the involved parties in real-time. Through a distributed network of
computers, a common pool of information is maintained. However, transactions are unassailable
and inviolable due to cryptographic algorithms. The financial services industry may be one of the
firsts to be impacted by wider adoption of Blockchain and its associated DLT, the report says.
4. Cyber Security: Upping the ante
Proliferation of internet and mobile banking is posing new security challenges to financial
services firms across the globe. Security measures are present in the form of KYC, 2 step
authentication and EMV chip cards. However, the game needs to be upped with looming threats
like phishing fraud, app misuse, cyber intrusion, magnetic strip duplicating of cards and so on.
The report underscores the need for enhanced cyber risk assessment framework and testing
methodology to continuously detect and protect against evolving cyber threats.
5. Increasing use-cases of RPA:
Robotic process automation will see more use cases in 2020 due to its benefits as compared to
the traditional automation technologies. The Deloitte reports lists down a number of use cases
that are already prevalent in the financial services sector, including global investment banks and
insurance firms. The challenges in adoption are primarily around change in mind-sets, and
building the right business use case and operating model for RPA, the report adds.
 How They can overcome from those Impacts
1. Tough competition
The competition within the banking industry has significantly increased,
primarily thanks to the appearance of online banking services. As
customers get used to digital channels to manage their finance, a retail
bank's geography no longer defines its target audience and competitive
market. Given that numerous fintech companies are also trying to win
the same customers, retail banks are facing a much stronger competition
than ever.    
How banking software helps: Retail banks should analyze customer
experience carefully to find new growth opportunities and adopt them
quickly. Using data analytics, banks can customize their financial
products and services and adjust them to customers' current needs and
preferences.
2. Fragmented view of customers
The majority of retail banks have a complex IT architecture that includes
numerous banking software solutions, such as mortgage lending
software, loan origination and servicing solutions, software for customer
account management, mobile banking, etc. As a rule, each piece of
software has its own database with particular kind of customer
information. If a retail bank doesn't merge and compare data from these
databases, it will have a fragmented view of their customers.
How banking software helps: As long as banks keep customer
information scattered across isolated systems, they won't be able to
understand the entire customer lifecycle across channels and products.
To make it happen, banks should build a customer-centric IT
architecture model based on a single view of the customer.
3. Decreased customer experience and loyalty
As banks stepped into the Age of the Customer, the quality of
personalized customer experience and 'exceptional' customer service
have become their primary concern. After the appearance of customer-
oriented companies, such as Amazon, Google, Starbucks and Walmart,
top-notch in-person and digital experiences have become the norm.
Customers don't want to know about the hardships of building these
experiences: they want immediate value and will go elsewhere if your
bank can't provide it.
How banking software helps: To increase customer experience and
loyalty, banks should first learn what is more important for customers
and how they make their choices. Using emotion recognition software,
banks can carry out an in-depth analysis of customers' sentiments and
find out whether the quality of banking products and services satisfies
them. In case a bank discovers customer discontent, it can use numerous
IT advantages to solve this challenge. For example, a banking
chatbot or mobile wallet can help to increase customer experience and
loyalty whereas gamification can strengthen customer communications
and build brand loyalty.
4. Low profit
Though much time has already passed since the last financial crisis,
banks still strive hard to achieve a higher ROE. Facing greater capital
requirements, low interest rates, slow income growth and greater
regulatory pressure on sales incentives, banks ramp up cost reduction
initiatives. To achieve that, some banks cut down on risky and less
profitable business lines. Others, for example, Bank of America or JP
Morgan Chase, shorten their branch networks in rural and low-profit
areas. Yet, apart from these primary measures, banks can reach their
projected cost-reduction goals with technology.
How banking software helps: To mount the challenge, banks can
invest in mobile banking development. This measure can not only take
up a bank's strategy to reduce branch costs, but also provide accessible,
simple, easy-to-use and personalized banking services to customers. Of
course, there is a risk that mobile banking may alienate less tech-savvy
customers who prefer going to a physical branch. However, if you see a
shift in customer behavior towards self-service (e.g., a wider use of
ATMs and online banking), a mobile banking app can hit the big time.
 5. Weak cross-selling
Though banks have always been laser-focused on effective cross-selling,
getting sizable results is not an easy task. In particular, A.T.
Kearney underlines that customers on average buy only 2-3 financial
products from the same bank. One of the reasons that banks fail to cross-
sell effectively is that they cannot keep a balance between pushing to
sell more and making relevant offers to customers. A customer is more
likely to purchase a product from those sales representatives that already
understand customers' requirements and know their needs before they
meet. For efficient cross-selling, banks should suggest only those
services that will help customers manage their financial affairs.
How banking software helps: A banking CRM system will bring
structure and purpose into cross-selling activities. Using this software,
sales representatives can focus on delivering personalized financial
advice instead of cross-selling products and services that a customer
doesn't need or already has. In addition, banking CRM allows detecting
the most value-generating customers to give them special attention as
well as identify customers that are most likely to buy a particular
banking product. If a bank wants to boost cross-selling, CRM software
can become a wise assistant that guides sales representatives through all
cross-selling workflows.
6. Identity theft
No doubt, security must play a central role in any banking IT initiative,
because any data breach has a great impact on a bank's revenue, brand
value and consumer trust. That is why financial institutions must
carefully evaluate security threats and implement software solutions that
add to fraud protection.
How banking software helps: As the number of mobile devices with
biometric capabilities constantly grows, banks can implement biometric
authentication to verify a customer's identity. Given the uniqueness of
biometrics, it is currently much more secure than any conventional
security system.