Use of technology in banking, its obstacles explained by top Indian bank CEOs

Sanjiv Chadha, MD & CEO of Bank of Baroda, says the usual link between growing the business and growing the physical footprint has broken for all times to come. “The mobile channel is pretty much the bank for sourcing, distribution, and servicing,” says Chadha.

Chadha gave the example that the public sector bank has grown its business by 35-40 per cent in the last three years, but the number of branches has come down by 15 per cent and staff has not grown at all. “That means enormous operating leverage can be created through technology if you get your act together,” he adds.

V Vaidyanathan, CEO of IDFC First Bank, says growing credit is easy, but the role of technology is to enable a seamless experience, reach out to underserved people, and help build a quality portfolio.

Dinesh Khara, Chairman of SBI, says, ”what we see on the face is the customer’s convenience, but there are other elements like the risk and payback period.” Khara was amongst the panellist in an IBA seminar on banking technology here today.

AK Goel, MD & CEO of Punjab National Bank, touched upon the issue of technology creating ’affordability’ for the masses. IDFC First’s Vaidyanathan pointed out that one of the biggest paradoxes of banking is that the poorer you are, the higher the interest rate you end up paying. “The big role technology should and can play is by reducing the cost of operations at the bottom of the pyramid,” says Vaidyanathan.

PD Singh, CEO of JP Morgan Chase Bank, says that the foreign bank spent over US $12 billion last year, which is more than the size of many tech companies. “That’s how important it (technology) has become,” says Singh.

In terms of IT skills and talent, the largest bank has created a new cadre within the bank.

“We are also hiring IT talent from the market,” says Khara. In fact, the SBI made a senior lateral hire in Nitin Chugh, the deputy MD and Head of Digital Banking. Chugh previously served as the CEO of Ujjivan Small Finance Bank and as the digital head of the private-sector HDFC Bank.

Chadha says that the technology partner could help you bring a change to the organisation, but embedding the change doesn’t come easily. “That’s where bringing in lateral talent and allowing it to grow is fundamental to that change,” believes Chadha.