Digital banking. ‘The pandemic has been both a catalyst as well as litmus test for our digital infrastructure’

The Covid-19 induced pandemic has acted both as a catalyst and a litmus test for digital adoption by banks.

While digital transformation has been put to test in terms of disaster recovery and business continuity, the crisis has served as a litmus test for banks’ digital infrastructure, C Sreenivasulu Setty, Managing Director – RDB, State Bank of India said.

“The pandemic has been both a catalyst as well as litmus test for our digital infrastructure. Even demonetisation could not achieve the level of digital adoption at least for financial sector...... Fortunately we have come out unscathed,” Setty said at the 14th Banking Colloquium organized by CII.

Challenges

However, one of the biggest challenges is that during this pandemic, customers have been largely exposed to non banking e-commerce sites, food delivery sites, and they have witnessed far superior levels of experience. “The benchmarking of customer services will not be with another bank but with what they have experienced in non-banking services. So we have to come up to that level of customer satisfaction and customer interface. Unless we work on this, the customer will be little dissatisfied in terms of customer service,” he pointed out.

According to Rajiv Anand, executive director (Wholesale Banking), Axis Bank, one of the big challenges that banks have going forward is technology as for them technology talent continues to be and will continue to be scarce. “I think there is certainly a dearth of talent, and especially given the vibrant start-up community that we have, you know, technology talent continues to be and will continue to be scarce,” he said.

Also read: As Indian banking digitises rapidly, is it spending enough on IT systems?

However, the good news for banks was that the technology talent was getting broader and wider and, therefore, the ability to get talent going forward is expected to improve. “But the bad news is that most of these technology guys do not want to work for banks and prefer working for entities like start-ups, Googles and Apples of the world. And, therefore banks will have to rethink their people strategy as well,” he added.

Account aggregators

According to C Sreenivasulu Setty, it is imperative for incumbent banks to manage the challenge of account aggregators who are likely to come.

An account aggregator (AA) is a type of RBI regulated entity (with an NBFC-AA license) that helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network.

RBI’s account aggregator framework went live in early September this year and as many as eight banks including State Bank of India, ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank, and Federal Bank have joined the AA network.

“While for several years western countries have talked about open banking the account aggregators are the first step the banking industry in India is going to grapple with. The large incumbent banks in India have to reinvent their products and process that make customers stay with them,” he said.

COMMENT NOW