Big opportunity in small & payment banks for IT firms: Nasscom

Nasscom warned that IT firms face the challenge of delivering cost-effective innovative solutions to these lenders

Industry lobby Nasscom sees a "massive opportunity" for domestic technology companies in payments banks and small finance banks, but warned the industry that they need to find out innovative solutions to help these lenders ensure cost-effective delivery of services.

"It is a massive opportunity in a country like ours. Moreover, it has incredible scope for innovation and creation of new kinds of products which are relevant for our development," Nasscom president R Chandrashekhar told PTI.

He was quick to add that this is also a "big challenge" as technology companies have to come up with solutions which are relevant to a developing country like India and make "economic sense".

Reducing the cost of transaction to a level where people are able to make low value transactions on mobile with more convenience and security is one such challenge, he said.

In a first for the flourishing technology space, the country's fifth largest IT exporter Tech Mahindra has successfully bagged a payments bank licence, along with 10 others from a diverse set which includes telecom majors and large corporates.

After being given the in-principle nod by the Reserve Bank of India (RBI) last month, Tech Mahindra had said it would support similar efforts in other developing markets and would be creating a digital plus physical bank.

As many of the selected names include deep-pocket entities like Reliance Industries, Aditya Birla Group and Bharti Airtel, among others, analysts are of the view that this is a bonanza for tech vendors.

Companies like Infosys have already come out with dedicated offerings for the new lenders.

RBI Governor Raghuram Rajan has said it would come out with the list of selected applicants to start small finance banks by the end of this month.

The payments banks are intended to house transactional accounts for individuals, focusing on payments and remittances.

Having a strong network across the country is a primary necessity for the success of the idea.

The small finance banks will operate in local areas, with an intimate knowledge of the communities they serve, and will undertake both deposit taking and lending functions.

Both the new set of banks, with which the RBI is kick-starting the process of introducing differentiated banking, are intended to deepen financial inclusion.

"This is going to be the most important enabler for the goal of moving towards a cashless economy," Chandrashekhar said.