PSBs must marry innovation with trust, says SBI chairman CS Setty

SBI Chairman Challa Sreenivasulu Setty says PSBs must combine innovation, resilience and trust to stay competitive as digitalisation, fintech and cybersecurity reshape banking

Public sector banks (PSBs) must evolve rapidly to meet the fast-changing customer expectation, a challenge which is much bigger than the competition coming from fintechs, State Bank of India’s chairman Challa Sreenivasulu Setty said on Tuesday.

 

“The transition in customer expectations has been extraordinary, from simply being happy to get a bank account, to expecting account opening in three days, then four hours, and now within 20 minutes,” Setty noted.

 

“Banks, as complex organisations, must constantly evolve their service models to stay relevant,” he said at the AIMA’s (All India Management Association) 52nd National Management Convention in New Delhi.

 

 

But even amid accelerating digitalisation, he stressed, banking remains a people business.

 

“Algorithms cannot replace empathy, codes cannot replicate human understanding,” Setty said, adding, “The winning model will be high-tech with high-touch, where digital speed meets human values.”

 

Setty highlighted that PSBs have undergone a significant transformation in recent years, backed by government reforms and a sustained focus on digitalisation.

 

In the financial year 2025 (FY25), PSBs posted a record net profit of ₹1.78 trillion, a 26 per cent jump over the previous year, with gross NPAs falling to a historic low of 0.52 per cent. Credit growth, though moderated, remained strong at 12.2 per cent in FY25.

 

Setty cited State Bank of India’s (SBI’s) scale on UPI as an example of the technology demands PSBs now face.

 

“On the UPI platform alone, SBI handles 180 million transactions every day. During IPL season, volumes surge to 220 million transactions per day, a spike that must be managed within a two-hour window,” he said, adding that such surges require highly advanced, resilient technology stacks.

 

He credited the government’s Enhanced Access and Service Excellence (EASE) programme, now in its eighth iteration, with pushing PSBs to reorient operations, from customer service to risk management and workforce readiness. The reforms have driven adoption of AI, automation, advanced analytics, and customer-engagement tools, while fostering stronger data governance and even sandboxing of generative AI use cases.

 

Looking ahead, Setty outlined five major shifts shaping banking’s future: anticipating customer needs, building low-cost cross-border solutions, forging deeper fintech partnerships, enhancing compliance frameworks, and treating cybersecurity as a core differentiator.

 

“Customers don’t care who builds the technology, they care about seamless experiences,” he said. “Collaboration will be the way forward.”

 

Cybersecurity, he cautioned, is an area demanding constant vigilance. The Economic Survey 2024-25 highlighted that nearly one-fifth of all reported cyber incidents in India involve financial institutions.

 

Setty also underscored the need for greener, modular digital infrastructures to replace ageing mainframes, a move that could reduce both costs and the sector’s carbon footprint.

  

Setty expressed confidence in India emerging as the world’s largest digital banking market, with PSBs at the forefront.

 

“Technology may be integral, but trust will always be the true currency of banking,” he said. “The future will belong to those institutions that combine innovation with resilience, and digital capabilities with human touch.”