Indian bank’s technological transformation path spans three decades, beginning in the mid-1990s with the adoption of core banking systems and continuing with the deployment of ATMs and expanding mobile app-based banking. Technology adoption in Indian banks has progressed significantly, with institutions becoming more fintech-oriented.
Even some non-banking financial institutions (NBFCs) are embarking on this fintech path, with the technological engine serving as the primary difference.
Techfins begins with technology and data and then expands into financial services. Many non-financial start-ups in India are getting on board with payments or wallets serving as a financial add-on to their business model.
Indian Banks and Fintech
Private banks aren’t the only ones seeking the help of cutting-edge financial technology businesses to develop next-generation banking services. Public banks are also gaining traction in the fintech industry.
Federal Bank Ltd. based in Kerala, has partnered with Epifi, a neo-bank, to offer banking services through the Fi app. While Federal Bank provides the core banking service, Epifi controls client acquisition and user experience through its technological service.
State Bank of India, the country’s largest lender, has invested in Cashfree, a third-party fintech service provider, to increase digital customer acquisition.
Large Indian banks have spent an average of 2% to 4% of their yearly revenue on technological enablement. In comparison, large global banks have spent between 7% and 10% of their profits. Considering the rise in the digital acquisition and services of clients, digital payments and cyber security have become highly important.
The RBI had prohibited HDFC Bank from launching new digital products or services or issuing new credit cards due to recurrent failures in the bank’s online systems.
Following an almost eight-month suspension, the RBI has now permitted HDFC Bank to issue new credit cards.
However, the prohibition on introducing new digital services will remain in effect for now.
The digital factory project of HDFC Bank is focused on small-ticket consumers, with products ranging from credit cards to personal loans. HDFC Bank will enhance its credit card offering, change credit card underwriting, and ensure that the full procedure may be completed on a user’s mobile phone. The bank has partnered with the fintech start-up Zeta to accomplish this.
HDFC Bank is also revamping its credit card underwriting procedures. The bank is collaborating with external partners to better read client’s data and speed up approvals.
The upgrade of existing IT systems is HDFC Bank’s second major initiative in the Fintech area. As part of this, the bank is also constructing a new data centre in the medium term. They are also migrating to cloud-based technologies.
SBI has introduced concessional interest rates, waived processing fees on loans, and increased deposit rates on specified tenures. SBI has also announced a special offer to taxpayers. This will enhance competition in the banking industry.
SBI announced a 55.24% year-on-year rise in standalone net profit for the April-June quarter, reaching Rs 6,504 crore. Home loans, which now account for 23% of SBI advances, increased 10.98% from last year. SBI‘s performance has been better compared to some private sector banks like RBL and IDFC.
SBI employs technology that is created in-house or in collaboration with other technology partners. The objective spans from increasing operational efficiency to monitoring and, eventually, data-driven decision-making.
SBI’s flagship YONO app has grabbed the market leader in terms of client interface. The app’s account opening capability has reached 91% migration, with about 22,000 accounts opened daily. The app’s influence is evident, with the branch’s proportion of digital transactions nearing 80%.
Efforts are being made in operations to shorten delivery times via the use of technology. They are digitizing the whole retail lending procedure. The Yono app includes a pre approved personal loan feature that generates over 4,500 loans each day.
ICICI Bank has had a bad fall due to the Videocon issue and other problems. However, it is trying to recover from the past issues with a strong comeback. It has started focusing on its fintech and management plans.
ICICI Bank had bought stakes in two fintech companies, CityCash and Thillais Analytical Solutions.
CityCash is a bus transit-focused payments technology business that offers state transportation corporations ticketing system technology.
Thillais Analytical Solutions operates the Vanghee, a neo-banking platform, which enables connected banking solutions for corporates and MSMEs while also assisting banks in strengthening their customer relationships.
It has also introduced its iMobile Pay app, which provides payments and banking services to any bank’s customers.
ICICI Bank is looking forward to bouncing back with huge fintech plans.
Kotak Mahindra Bank’s standalone net profit increased 32% to Rs. 1,642 crore in the first quarter of the current fiscal.
Kotak Capital division has been gaining a lot from the new IPOs. With IPOs like Zomato, Burger King, Nykaa, and many more it has been making huge profits.
Kotak Mahindra Bank also announced the launch of emergency personal loans exclusively for the treatment of Covid-19. The borrowers can avail loans of Rs 1 lakh to 5 lakh, at an interest rate starting at 10% per annum.
Digital efforts are closely aligned with Kotak’s fundamental strategy, with a focus on customer and revenue development, efficiency, customer experience, digital payments, risk management, and security innovation.
Their primary focus is to automate all operations and eliminate paper processing. Some of the efforts include API-based paperless service request processing, biometric account opening, and robotic process automation.
In addition, they have launched the Kotak Innovation Lab and Fintech partnership program to concentrate on future technology and value creation.
Fintech is changing people’s lives and habits by making financial services simple, transparent, cost-effective, and time-efficient. Fintech has prompted banks to rethink their service delivery and business models. Partnerships with the appropriate fintech organization will be beneficial to the banking sector.