The threat to banks from big technology platforms like Google, which are looking to offer services and products like deposits, is not close, but banks will still have to rise to the challenge and transform themselves to stay relevant by offering more digital products, said panellists at the State Bank of India’s Banking and Economics Conclave in Mumbai on Wednesday.
V Vaidyanathan, managing director and chief executive officer of IDFC First Bank, said the banking system in India has significant advantages like in the case of SBI with 200 years of existence and access across the length and breadth of the country. And now the digital features are helping to expand credit coverage further.
Google has a customer interface feature and the Unified Payments Interface (UPI) is a feature for mobile to mobile payment. This capability (combination) opens many more opportunities like selling insurance and mutual funds, he said, while participating in the session on challenges and opportunities for commercial banks.
Swaminathan Janakiraman, managing director, SBI, said when you are in business, you face many challenges. There are two options: Either one keeps wondering about how that is going to be handled or finds ways to manage it. Banks have not exploited customer data for various reasons. Today, players like Google are in a position to provide a front-end and capture the imagination of digital natives.
The SBI has established digital capability of retail lending completely in the hand of consumers with just three clicks. The same is possible in the case of other financial services like investments. The bank has managed to stay relevant only because it has been able to innovate and join the bandwagon rather than be afraid of doing that, the SBI MD said.
Janmejaya Kumar Sinha, the chairman of Boston Consulting Group India, said the form of distribution of banks will have to evolve. They will have to be present in those marketplaces where the activity is. The biggest battle that is going on is the compression of time. Banks have to be nimble, he said.
The panellists grappled with whether big tech firms like Google could take away business from banks. On the lending and deposit rates likely to be set on these platforms, former Reserve Bank of India deputy governor N S Vishwanathan said such platforms can’t take deposits. They provide information about products like loans or insurance policies and their prices at one place and facilitate access. Hence, he doubted if these platforms were indeed taking business away from banks. In fact, he said, they are making competition much more open, which is good for customers.