Are the banks not lending because they have capital issues or because there aren’t many takers with the economy remaining lacklustre? Are banks doing enough in terms of technology innovation to transform banking and help customers? These issues were discussed at length at Mint’s second annual South India banking conclave by executives at public sector and private sector banks, a top telecom company and other companies. The discussion was moderated by Tamal Bandyopadhyay, adviser at Bandhan Financial Services Pvt. Ltd and consulting editor of Mint. Edited excerpts:

Tamal Bandyopadhyay: There has been a lot of noise around the use of technology in banking. But all this so called innovation seems incremental in nature. How much of the innovation is just noise and how much is actually changing customers’ lives?

Aniruddha Paul (chief information officer, ING Vysya Bank Ltd): Banking deals with data, it deals with information, which is very digital in nature and it’s very minute. Banking also deals with something physical, and that’s cash. So, in other words, you are dealing with a product which is partly informational in nature, and partly physical in nature. And if you look at the way technology has evolved and helped banking and made it easy, the biggest gains have been where it has been informational in nature. So, people like you and me in this room, we deal with banking as information; our money is electronic and advances mobile banking and tap banking have made is such that we don’t really have to go to banks anymore for our day-to-day needs. That’s where the maximum innovation in a retail sense has happened.

I would see that part of banking which deals with information which is more of a developed country characteristic, the innovation that we have had in India is no less than what we have had internationally and that part of banking which deals with the physical product—that’s where our biggest challenge is.

Atul Kumar (general manager, information technology, Syndicate Bank Ltd): As far as innovation is concerned, I think, we cannot expect innovation very quickly. What is happening (is) that every now and then, we are coming up with a new product and we think we have really innovated a new thing. Basically, it is the same product which has been improved. Certain features are added and then it is sold to the market.

So, what I am only trying to tell here is that innovation is not that simple. If you really see, we are talking about tap banking and so many other you know, including mobile banking, which is, I think, certainly going to change the way things are moving. And if we start seeing our history, this branch banking, till today, is probably getting the best quality services—of course, at the highest cost. (Now) mobile is going to change in a big way, the way banking is being offered. And, I think, because of the low cost, of course, it requires a lot of support from telcos to offer the kind of bandwidth which we require.

So, just to tell you a very surprising part of this entire 2G, 3G, 4G is that though I have a 4G connection, most of the time I don’t think even 3G works. It is mostly on 2G only. So, I think, that is one key impediment in terms of providing mobile technology. Smartphones are today becoming increasingly cheaper; so that should not be an issue. But we need to look at it from a bank’s perspective like a proper delivery channel, the way we have promoted a branch by putting manpower, investment—the same way we have promoted ATMs by putting new guards. Same way we have to promote mobile banking. So, we need to open mobile kiosks, we need to open mobile excellence centres where people can go and get their apps downloaded or they can experience the newest banking.

Tamal Bandyopadhyay: Let’s turn our attention to telcos. Anant, tell us your perspective—innovations, things that are happening and what kind of role do telcos play, or can play?

Anant Arora (chief executive officer, south, Bharti Airtel Ltd): So, in any low tech, fast consumer base, honestly in any field, it’s almost disruptive. Almost e-commerce disruptive. We find almost it’s just at the cusp of a revolution. How people in rural India are kind of banking up. We did a small thing, in terms of we had a semi-closed wallet, which we used to call it Airtel Money and we could see ...does in terms of inclusion and other things. Also, I think, mobility by itself changes the entire paradigm; I mean, it actually starts the way for innovation in hundreds of ways, in terms of, how do we go by it.

I mean, let’s look at what happened with the pet bottles through the soft drink industry changed the pace of consumption. It changed the timing of consumption. I mean, earlier in our times, people actually consume soft drink only at a paan shop or inside a restaurant... Also, I think simple things like digitization, which has happened with communication, it kind of opens up hundreds of opportunities. You don’t need a very fancy phone—a 1,000 phone is enough to deliver a very strong platform. So, I think, we rarely see this as an opportunity—connectivity is a core requirement. I think the next 6-8 quarters, you should see it all behind. We unfortunately for 3-4 years in this country did not have a standoff spectrum coming in. But you must have seen the last round of spectrum getting it all, I mean it’s flush now, 4G, 3G, just a question of three to four quarters; you should see these islets of coverage going live.

Tamal Bandyopadhyay: Let’s hear somebody else in the industry. Arindam represents Cisco. So, what is your sense?

Arindam Mukherjee (vertical head, banking and financial services, Cisco): One profound piece is that data is becoming a commodity and it is a new currency for the banks to go on leverage. Coupled with that is evolution, which is something on your devices; I really do not need to emphasize the fact about the devices explosion we are seeing, okay? Today, I meet up so many start-ups because our platform goes as a backbone to them. I can talk about fraud solution which is so real time that if a credit card is swiped in Bangalore today at 5:20 and the same credit card gets swiped in at Sydney at 5:22, the fraud detection will be online and the credit card will be blocked. But the point that I am making is that data is getting generated—multiple points, multiple devices—and the intelligence of that is going to make the data as a currency. That is more like a technology perspective of disruption that I have seen.

The other disruption I am seeing is that a lot of regulatory activism around...the two new banks, at the end, they are going to roll out their services, then I can see that, you know, obviously, the payment banks and the small service banks which come. Today’s infrastructure, what Atul was mentioning, that you are actually coming out with incremental progress. You are not thinking out of the box. Because these new banks, the way they are thinking, the way the payment banks are thinking, the way all of these new entrants are thinking, they are going to be disrupting the banking traditional businesses. So, unless you start realizing that “my strength is to build a digital layer where this devices explosion and data as a commodity has to merge", things are going to be increasingly difficult for the banks.

Tamal Bandyopadhyay: The last round is yours; State Bank of India (SBI) is the country’s largest lender. Give us a sense of how tech-savvy you are. Do you also see the sort of disruptions in the technology space or you are cynical about the entire thing?

Deepankar Bose (general manager, IT, SBI): Banking has been different from the way we have seen banking 20 years back. I’m sure that many of the people in this room, many of them are not required to visit branch for their transactions. Yes, I do agree that that takes care of the transaction part of it; but if a person has to take loans and other products, then they have to visit the bank. So, what I can say is, from the liability management side, the banks have moved quite a lot with the technology, and with your Internet banking, your self-service kiosks, your ATMs...passbook printers, it is not really necessary that you have to visit a bank.

Secondly, saying that public sector banks are shy of technology, I do not agree, and if you see that when the private sector banks came in, when you see the whole evolvement of technology in banking sphere, then basically, it will be the globalization process. Core banking solutions, if you see, with the advent of private sector banks who came with the technology, it became necessary for the public sector banks to go in for technological innovations; and if you see the global innovations that has taken place in the banking space, basically what I say is that the innovations have not taken place in India. We are following the global innovations that are taking place. We are basically following the global innovations in technology, and that happened from the mid-90s when we took over the technology process.

And the problems that the public sector banks face is because of the legacy issue—the data quality, the data issue, conversion of the data quality, etc. So, that is the reason why the technology conversion, or the benefits of technology, that has taken a bit of time. But to say that customers are not getting the benefit out of the technology or that public sector banks are not doing enough, so that the benefits of technology do not reach them in public sector banks—that I don’t agree.

Tamal Bandyopadhyay: Five years down the line, how do you see banking happening?

Atul Kumar (Syndicate Bank): 2020, I don’t see that branch banking isn’t going to be here, but it would be supported by, I would say, digital channels and mobile phones.

Arindam Mukherjee (Cisco): I think penetration has a very compounding effect—decision-making completely changes you know. In terms of inclusion—I clearly see it happening. I mean, you will be surprised by, you know, 2020 we are there or 2018 we are there, how it is actually going to be almost everywhere.

Deepankar Bose (SBI): Mobile technology will play a major role and banking will be through the mobiles, whether it’s an urban area, metro area or rural area. Analytics will be playing the major role in deciding what products to sell, where to sell and whom to sell.

Aniruddha Paul (ING): We see transactions being done remotely and advice being given locally; so, in other words, you will go to a branch when you really need advice. The ability to mine through vast amount of data that we have as a bank within us and the vast amount of unstructured data that we have in our social world, combining it together and coming up with a right-in-time intervention to influence the customer to behave in a particular way.

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