Recently a senior executive from a Fortune 500 bank was quoted saying that he heads a technology company with a banking licence. Do you agree with this unusual description of a bank?
This description of banks as technology companies must be music to technology companies like you. How do you see it?
A CEO of a prominent bank said that he wakes up every morning wondering if he will have a bank after 10 years. Obviously he was exaggerating to drive home a point, but do you share some of the concerns?
As a lot of customers in the hinterland directly leapfrog from the traditional interface to mobile, what kind of challenges have you seen and how is SBI meeting them?
Third, data is the new oil, so it is a data-driven economy. Today, the value proposition to the customer is driven by data and banks are sitting on a gold mine of data. So plain-vanilla technology is out, only data-driven technology will survive. Fourth, some of the so-called walls are collapsing. For instance, branches are called stores in the US. The difference between retail chains and bank branches, or telecom companies and banks are collapsing. So banks have to survive by using technology. And last, only technology can come to the rescue for large banks like SBI. Seventy per cent of the customers may be below the age of 35 but 70 per cent of the money resides with customers who are above the age of 40 and they want things to be delivered personally rather than digitally. We can marry these two worlds only by adopting technology and delivering appropriate products. Technology companies becoming banks may not happen because there are regulatory barriers but banks becoming technology companies has already happened.
Rishi, what is the future of payments banks?
Gupta: The market is very big and we believe that payments banks will have a complementary relationship with universal banks. We don't see competition between the two as such. There are deposits in the market which can be brought to the formal banking system and that is where the payments banks are going to play a role. Some of the banks have legacy issues which we won't have. But payments banks will try and go into places where there aren't branch networks. So it is the market that will ascertain how the payments banks and others evolve.
Banks are talking about innovation, but it is being said that this is only incremental and not holistic. What is your view?
Anand: Technology is being used across the entire gamut of banking, be it at the consumer level or operating level. We spend a lot of time and energy on design, to makes apps simple and intuitive, and improve consumer experience. We have done huge amount of work at the back-end to digitise processes. You cannot have a Ferrari in the front-end and a bullock cart at the back-end. Almost all our consumer lending business is being driven by data. We use data analytics and are now able to send pre-approved loan offers to our consumers and relationship managers. We are using tablets to open credit card, savings accounts instantly. We've already moved from having a digital banking silo to the bank going digital, and this shift will continue.
Kaushik: Every facet of the business model is changing. A third or more of our customers come to us digitally. Front to back innovation is also happening. We also talk about digital currency, such as bitcoins. There is innovation at every step, in the front end and the back end. While we may be at different cycles, our strength is the customer ownership and relationship that we have.
Mahapatra: Innovation has to co-exist with everyday operations. We have to do some things, not because they make money for us, but because they are cool. You'll have to be in media saying we have done this. Here, the cool part has to co-exist with hard core business value proposition of it. Out of the 50 products that I may offer, only two-three are best-sellers, and they consume 50-60 per cent of my bandwidth.
About 57 per cent of domestic migrants still use informal channels to remit money. Why does such a large segment avoid banking completely?
Mahapatra: Banking channel will require KYC (know your client) and due diligence before accepting your money. Transformation from cash economy to digital economy should be made in a phased manner. People will gradually come to the banking channel.
Kaushik: Digital is only a transmission channel today. If I move money electronically, I still don't have ways to utlilise it unless I convert it back to cash, so there is an arbitrage there. If I had the opportunity to move money, and today with the preponderance of mobile devices, to the retailer or utility, or whatever I do in the last mile ecosystem, my use cases would go up. We have to see if there is economics associated with that use case. I see evolution happening slowly, and new participants will bring innovation.
Payments banks will play a big role?
Gupta: Hopefully, we (payment banks) will play a big role in it.