December 08, 2021
GURUGRAM: Though digitisation of banking services in India started as a push from the government side, it later got converted into a pull factor because of consumer demand, according to former Chairman of the State Bank of India (SBI) Rajnish Kumar.
“Initially I would say it was a push. But it changed into the pull factor. A lot of consumers, they wanted it. It accelerated the demand. So, initially the push was from the government side. Now, it is the pull factor,” Kumar said while speaking at a discussion on the theme “Indian banking at the cusp of transformation” organised by the Management Development Institute (MDI), Gurgaon.
The event was held in the context of Kumar’s recently released book, The Custodian of Trust: A Banker’s Memoir.
Kumar said that though the core banking system in India is not designed for mobile banking, the customer-centric decisions taken and services offered changed the public’s perception of SBI.
“Digitisation has changed the perception of SBI,” he said while referring to the popularity of the bank’s YONO app.
Speaking about the advantages of fintech, he said: “First they design the front end and then the back end. For us (traditional banking), it is the reverse. But still, the landscape changed very fast.”
Madnesh Kumar Mishra, Joint Secretary in the Ministry of Culture and former Joint Secretary in the Department of Financial Services, Ministry of Finance, said that the demonetisation in 2016 accelerated the digitisation of banking services in India.
Mishra said that the government’s demonetisation move siphoned off seven lakh crore rupees from the market leading to an increased demand for point of sale (POS) machines in the country. While there were only 10 lakh POS machines in the country at the time of demonetisation, the number increased to 30 lakh by March 2017.
“And that is also the time when the concept of UPI (Unified Payments Interface) came in,” Mishra added.
Shailesh Pathak, former CEO of L&T Infrastructure Development Projects, described the transformation of the banking ecosystem in India as “amazing”.
“The next 10 years in India will be far more amazing,” Pathak said. “Our number of digital payments today is double that of China.”
Subhomoy Bhattacharjee, Consulting Editor, Business Standard, said that the Industrial Revolution was based on banks as the basic intermediary.
“We have moved into Industrial Revolution 4.0,” Bhattacharjee said. “In that I am not very sure what is the role of a bank.”
Stating that digital banking is one of the biggest things that is happening in behavioural economics in India, he said: “Banks will not be there as functional entities in the future.”