Reserve Bank of India deputy governor M Rajeshwar Rao on Thursday stated the banks can have to transition from a sectoral strategy to an ecosystem strategy. The banking of future goes to be hyper-personalised, and banks might have to shift from isolated service provisions to hyper-personalised embedded banking, he stated.
He was talking at a convention organised by FICCI and IBA in Mumbai.
“The current form of business segmentation may give way to customer preferences-based verticals and the traditional break-up of assets and liabilities may likely undergo drastic changes,” he stated.
Mr. Rao additionally stated that over the course of time, it has been stated a number of occasions that we’d like banking, however not banks.
“Banks will continue to be the primary drivers of India’s growth story, but the trajectory that the banks would adopt during this transition will determine how the banking landscape will look in the next decade,” he emphasised.
Speaking on the way forward for banking, he stated the latest disaster episodes within the U.S. and Europe have introduced again the query of sturdy and sustainable enterprise fashions once more to the fore.
“The business models of the banks have evolved depending on the roles they have played throughout the history, with the current focus being on the intermediation paradigm i.e., acceptance of deposits and credit creation,” he stated.
“This approach needs to change with newer players entering the financial service space and disrupting the traditional rules of the game. In the newer paradigm, markets are likely to become the central point for intermediation where banks may become but one amongst the host of other entities interacting in the marketplace. The traditional banking business model needs to pivot to address this evolving paradigm,” he careworn.
