Digitization and innovative technologies are driving unprecedented disruption in the banking sector, and lenders need to be agile to meet rising customer expectations, State Bank of India Chairman Dinesh Khara said on Friday.
Banks have embraced the digital revolution, which has reduced their costs and expanded the range of services they offer, he added.
“Digital innovation is redefining industries and changing the way businesses operate. Digitization and innovative technologies are driving unprecedented disruption in the banking sector and the pace of change is accelerating,” Mr Khara said at a Dun & Bradstreet event.
Today, digitization and digital innovations have become a strategic priority for the banking industry, he noted.
“Banks need to be agile and flexible as technology increases customer expectations and the regulatory landscape is also rapidly evolving to keep up with technological advances,” he said.
According to Mr. Khara, there is a recognition among banks that the scale and adoption of digital transformation must keep pace with the rapidly changing ecosystem.
To achieve the goal of digital transformation, banks and financial institutions need to have a clear vision of what they want to achieve with technology, he added.
The rapid uptake and adoption of new technologies and innovations, as well as the quality of the infrastructure, are critical elements that play an important role in building trust in the digital lending system, he said.
Going forward, banks of all sizes and geographies will make a big difference by enabling digital initiatives to maintain a competitive advantage and deliver maximum value to customers, he noted.
During a panel discussion at the event, Indian Banks’ Association (IBA) Chief Executive Sunil Mehta said that the payments space has been digitized and now is the time to digitize the lending space.
“The next phase of banking, where credit needs to go digital, is underway and banks are working on it,” added Mr. Mehta.
He said digitization of some lending products has already been started by banks, but there is a very small number of products available that are end-to-end digitized.
“There is a need to digitize the entire lending eco-space,” he noted.
Mr Mehta said technovation in the banking industry is gradual and the pace is now more driven by the pandemic.
During the pandemic, everyone has recognized the importance of alternative delivery channels for banking services, he said.
Speaking at the event, Wendy Werner, Country Head (India) of the International Finance Corporation (IFC), said India is rapidly evolving into a digital-enabled economy.
The country has the highest fintech adoption rate in the world, and much of that comes from Tier 2 and Tier 3 cities, she said.
“As such, we are very positive about the impact of fintech and fintech’s ability to expand access to finance, services and information for the population of India and expect it to grow,” she said.
Werner said that India is a huge market and there may be many startups trying to capitalize on this market. Approximately 2,100 fintech startups are eyeing the Indian market and the number is likely to increase every day.