Amidst the Budget push on digital banking, most traditional banks have also been upping their game in mobile and online banking and digital offerings to customers.

While the rise of fintechs and digital payment players have led to more customers switching to digital banking, bankers believe that the pandemic, too, has accelerated the trend. Many have already partnered with fintechs to come up with more innovative offerings from not just payments and transactions, but lending, account opening and trade finance.

“Today, customers are used to the ease provided by an Amazon, Flipkart, Uber and Ola. Why would they want their banking life to be different?” noted Shyam Srinivasan, Managing Director and CEO, Federal Bank, adding that today, going digital is no longer an option for banks but a survival story.

“Those who do it better will certainly benefit and gain share. Banks are now tying up with fintechs, who have the technology and the ability and nimbleness to produce quick solutions,” he told BusinessLine.

Federal Bank has tied up with over 50 fintech partners and has more than 300 APIs available in open banking.

Private sector lender YES Bank, too, is working on its digital capabilities and has partnered with Salesforce.

Prashant Kumar, MD and CEO, YES Bank, said the lender has been working on its payments and digital banking ventures.

“For the entire country, the push is today on digital. If you include UPI and AePS, on all digital transactions which are outside the bank, every third transaction is happening through YES Bank,” he said.

As on December 31, 2021, the bank had an 18.1 per cent market share in AePS and 42.4 per cent in UPI.

“Banks need to collaborate with fintechs in most areas, while in some they can compete. But neither can work alone to a large degree,” noted another banker.

SBI Chairman Dinesh Kumar Khara had also said the Budget proposal to set up 75 digital banking units in 75 districts is in line with the lender’s ongoing digital banking initiatives.

In their commentaries on the third-quarter results, a number of private sector lenders have highlighted their focus on digital banking and innovations in payments.

ICICI Bank, which had expanded its mobile banking app in December 2020 to offer payment and banking services to customers of any bank, has also seen strong traction. There have been 53 lakh activations from non-ICICI Bank account holders as of end-December 2021. It has also launched digital solutions for corporates and importers and exporters.

“We aim to steadily grow our business within our strategic framework and strengthen our franchise, delivery, and servicing capabilities, backed by a range of digital initiatives,” Sandeep Bakhshi, Managing Director and CEO, ICICI Bank, said in the investor call.

Kotak Mahindra Bank, too, has been investing in digital technologies across retail and corporate banking. Over 97 per cent of savings account transaction volumes were in the digital or non-branch modes in the third quarter, it said.

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