Dear Readers,

Finally, after four years, the US Federal Reserve slashed its policy rate by half a percent and there is a big hope that India will also follow the same path. But I feel it's not going to be so soon. I wrote about it in detail last week. Deposit is also one aspect which is giving bankers jitters and those who have hiked rates on deposits will face a tough time reducing it on lending.



But I would like to talk about digital today. This week we held the 6th edition of our ETBFSI CXO Conclave in Mumbai, where more than 30 BFSI leaders spoke on Encashing Digital. The reason we decided on this theme is that banks and the whole BFSI world have been investing significantly in technology. About 10 percent of the operations cost of banks is only for digital. Tech Service Providers (TSPs) and FinTechs have redefined the whole BFSI sector, but are the companies encashing it? Prominent industry leaders including the Managing Director of State Bank of India, and top honchos from Tata Capital, Karnataka Bank, IPPB, Aditya Birla Finance, LIC, Kotak Mahindra Bank, IndusInd Bank, Yes Bank, Federal Bank and other top financial institutions joined us to share their experiences.


Digital Innovation or Business

Broadly, everyone agreed that innovation and investment in technology have helped them scale up and cater to a new set of customers. Banks are underwriting loans quite seamlessly and five-page documents have converted into a few clicks on a smartphone. This means the cost of deployment and delivery has come down significantly due to digital. Lenders are also tapping a new set of customers, who they couldn't reach earlier due to traditional models.

Let me quickly share a few thoughts expressed by the industry captains at ETBFSI CXO Conclave.

Ashwini Kumar Tewari, MD of SBI, said as the business grows, the need for constant innovation becomes inevitable, especially in overcoming such operational hurdles. "It is not growth or business, it is both." He remarked, “If you want to build something that others can't easily take — you have to continuously innovate, there should be a broader search. Innovation resides every single way but we have to just see what works and what doesn't and take off accor dingly.” Tewari also highlighted the potential of women customers and Jan Dhan accounts, which can be tapped digitally.

Srikrishnan H, MD & CEO of Karnataka Bank stressed that innovation extends beyond technology, affecting the overall business model. "Innovation is not always related to technology; it is related to overall business,” he said.

Rajiv Sabharwal, MD & CEO of Tata Capital, said risk management is the primary concern in today's financial landscape while emphasising the importance of partnerships with fintechs. However, these collaborations come with their challenges, particularly in tech integration and data management. Sabharwal also noted, “90 percent of data being collected is noise,” reinforcing the importance of filtering data to build effective lending models.

Rakesh Singh, MD & CEO of Aditya Birla Finance Ltd highlighted how customer expectations and behaviour are driving innovation. He said advancements in technology, such as video KYC and account aggregators allow for deeper insights into customer personas and enable the creation of more efficient scorecards. This, in turn, lowers the cost of delivering financial products.

"Cost is ahead of income now in many areas. If income doesn't catch up, India won't be able to become a developed nation, because the BFSI sector must contribute about 20 percent to the $30 trillion economy that India has projected by 2047," said Shaji Varghese, CEO of Muthoot Fincorp Ltd.


R Viswesvaran, MD & CEO of India Post Payments Bank, said that IPPB was formed to take full advantage of the postal network, which reaches the remotest parts of India. "We open over 1 lakh accounts every single day. We crossed 10 crore accounts in 6 years and carry out 3 crore digital transactions daily. We are spread across multiple states, with a presence even in pockets within states, so we are present throughout India," he said.

Ashish Mehrotra, MD & CEO of Northern Arc Capital, said, “To win big you have to collaborate with fintechs, small players, you need to have the reach and the tech stack to enable. The biggest part of the transformation happened because we followed a little bit of multichannels.”

Of course, covering everything in the note is impossible but you can click here and we will also share the videos very soon.

The idea that ‘BFSI must grow 20X for India to achieve developed nation status by 2047’ was the main takeaway at the ETBFSI CXO Conclave. It is heartening to see that CEOs are thinking about digital to achieve the next level of growth.

If you liked it, don't forget to share it.

As usual, I am adding here the top 5 stories of the week, trust you will find them meaningful.

1) What happened with Paytm was 'absolutely unfair': Ashneer Grover
2) Aims to scale up DPI, take India stack global, says Suresh Sethi of Protean
3) Private banks to be hit harder if RBI cuts repo rate next month
4) How PhonePe topped global payments league, ahead of PayPal, Stripe
5) Explained: How the RBI is internationalising the rupee?

Happy Reading.
Amol Dethe,
Editor,
ETBFSI.

(Editor's note is a column written by Amol Dethe, Editor, ETBFSI. Click here to read more of his articles exploring several buzzing topics)

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