Lenders work on digital banking amid fintech rise

Amid the budget push on digital banking, most traditional banks have also upped their game in mobile and online banking and digital offerings to customers.

While the rise of fintechs and digital payment players has led more customers to turn to digital banking, bankers believe the pandemic has also accelerated the trend. Many have already partnered with fintechs to deliver more innovative offerings not only for payments and transactions, but also for lending, account opening and trade finance.

“Customers today are used to the ease offered by Amazon, Flipkart, Uber and Ola. Why would they want their banking life to be any different?” noted Shyam Srinivasan, Managing Director and CEO of Federal Bank, adding that today, going digital is no longer an option for banks but a matter of survival.

“Those who do it better will definitely benefit and earn a share. Banks are now partnering with fintechs, which have the technology, capacity and agility to produce quick fixes,” he said. Activity area.

Federal Bank has partnered with over 50 fintech partners and has over 300 APIs available in open banking.

Private sector lender YES Bank is also working on its digital capabilities and has partnered with Salesforce.

Prashant Kumar, MD and CEO of YES Bank, said the lender was working on its payments and digital banking business.

“For the whole country, the push today is on digital. If you include UPI and AePS, out of all digital transactions that are outside of the bank, one in three transactions go through YES Bank,” he said.

As of December 31, 2021, the bank had a market share of 18.1% in AePS and 42.4% in UPI.

“Banks need to collaborate with fintechs in most areas, while in some they can compete. But neither can work alone to any great extent,” another banker noted.

SBI Chairman Dinesh Kumar Khara also said the budget proposal to establish 75 digital banking units in 75 districts is in line with the lender’s ongoing digital banking initiatives.

In their comments on the third quarter results, a number of private sector lenders highlighted their focus on digital banking and innovations in payments.

ICICI Bank, which had expanded its mobile banking app in December 2020 to offer payment and banking services to customers of any bank, also saw strong traction. There were 53 lakh activations from non-ICICI Bank account holders as of the end of December 2021. It has also launched digital solutions for businesses and importers and exporters.

“We aim to steadily grow our business within our strategic framework and strengthen our franchise, delivery and service capabilities, supported by a range of digital initiatives,” said Sandeep Bakhshi, Managing Director and CEO of ICICI Bank, when calling investors.

Kotak Mahindra Bank has also invested in digital technologies in retail and corporate banking. More than 97% of savings account transaction volumes happened digitally or off-branch in the third quarter, he said.

Published on

February 02, 2022

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