» Press Release 2011

Technology Can Make Financial Inclusion Profitable For Banks:
Dr K C Chakrabarty, Deputy Governor, RBI

  • Adoption of technology has heralded a transformational development in the banking sector: CII – PWC Report
  • Rural India represents a large untapped market for the banking sector which can be reached through technology
  • Key challenge for banks is to acquire new customers, while satisfying and retaining the existing ones

“Technology can provide profitable business opportunity to banks by facilitating banking services to millions of Indians. There is a latent business opportunity here that Indian banking industry needs to leverage using affordable and appropriate technology,” said Dr K C Chakrabarty, Deputy Governor, Reserve Bank of India, at the 6th BANKing TECH Summit of Confederation of Indian Industry (CII). With technology reaching a crucial level of adoption in Indian banking industry, the Summit focused on how technology can be an efficient enabler to tap available opportunities and face the existing challenges

The CII and PwC exclusive report titled “Changing the Rules of the Game through Technology” was released by Dr. Chakrabarty. The report enumerates the key opportunities and challenges in the banking sector noting important findings that puts the adoption of technology in the Indian banking sector into perspective. It highlights the new bearings for the sector with technology and states that the adoption of technology has heralded a transformational development in the banking sector.

Dr. Chakrabarty gave an outline of how banking in India has evolved over the decades along with drivers of Indian banking industry and the recent technological initiatives taken by the RBI. He said that banking in India has been more challenging than the rest of the world. “More than 50% of our population does not have access to banking services. You have to bring them into the banking fold, while also living up to the expectations of your existing customers. It is a huge challenge that requires concentrated efforts and better utilization of technology.”

To meet this challenge, Dr. Chakrabarty said, “We have to adopt technology using ‘click and mouse’ together with ‘brick and mortar’ model, while providing an interface between multiple delivery models. Unless we do that, hundred percent financial inclusion will not be achieved.” He also stressed that the Business Correspondent (BC) model needs to be strengthened and BCs need to be compensated adequately.

Dr. Chakrabarty urged the banking industry to think big to change the rules of banking. He opined that the real challenge today is whether banking can be made paperless, cheque-less and cashless.

Rooting for execution, Dr. Chakrabarty observed that technological knowhow is not the problem in India; it is the last mile delivery which is the problem. He gave the example of mobile banking, which can help reach banking services to the grassroots, but whose potential has not been tapped adequately by the banking industry. Yet, he predicts that, “Banking technology to serve the masses will emerge from India and would later be adopted by the world.”

He informed the captains of the banking industry about the IT vision for RBI and banking system that has been put up for comment from the stakeholders. It intends to transform the banking industry into a knowledge intensive industry by using technology to achieve financial inclusion and stability.

Mr. N Chandrasekaran, Chairman – CII’s BANKing TECH Summit 2011 and Chief Executive Officer & Managing Director – Tata Consultancy Services said, “Banks and financial institutions are significant users of technology, leveraging it in four priority areas for their business, including optimizing cash and liquidity management, achieving operational excellence, strengthening compliance, and transforming or re-engineering their operations for future growth.” He added that technology provides great opportunities for accomplishing business growth and improving customer satisfaction.

Mr Praveen Toshniwal, Chairman – CII Western Region stated, “People are more comfortable with human interface and different people have different levels of comfort with technology. If technology is to enhance customer experience, financial products should be delivered with human touch,” thus indicating the need for simplification of processes.
28 June, 2011