Banks of the Future | What will the Bank of Future look like
#PanelDiscussion on Banks of the Future (What will the Bank of Future look like).
#Banks #IndianBanks #OutlookMoney #Money #OutlookMagazine #OutlookGroup
#Banks #IndianBanks #OutlookMoney #Money #OutlookMagazine #OutlookGroup
Transcript
00:00 Good afternoon. I trust everyone is caffeinated now, so we'll get started.
00:15 We have quite a varied panel here. We have a digital banker on the far end, a branch
00:23 banking specialist from a traditional bank, a payments bank, and a savings bank specialist.
00:32 So quite a varied set of individuals to get the juices flowing and thought flowing. But
00:38 let me kick it off. Let me kick it off with a little bit of a story. The story goes that
00:43 I was speaking to my daughter. She's only eight years old, and was telling her I'm going
00:49 to the bank. And she knew that I had come from a banking background and said, "Dad,
00:57 what's a bank?" Because what I realized during that conversation, unlike when I had gone
01:04 to a branch with my parents, she's never been to a branch with me. And I have never gone
01:09 to a bank with my children. So it's a very unique experience. Her view of the bank is
01:17 me transacting on the app on the phone, and has never seen me walk into a branch. So with
01:25 that story, I'm going to turn it over to each of you, maybe start with Deepak on the end.
01:30 The topic is Bank of the Future. What do you envision as that Bank of the Future? And I
01:36 give you a perspective of my child. And what is the future timeline? Is it a timeline?
01:42 How do you know when you've hit the future? I think you have started with a very tough
01:50 question. First is, how do you define future? I think anything which is not at this moment
01:56 is all future. What happens an hour from now is as much future as what may happen 10 years
02:02 from now. It's our ability to see how far in the time zone we can imagine, and we can
02:09 put some concrete thoughts. I would not hazard anything more than 24 months to 36 months
02:17 when I look at a future from a digital era, because everything changes every moment, and
02:22 at times a month looks like a year. But at the same time, mindful of the fact that we
02:28 underestimate a lot of things in the long term, but we overestimate it in the short
02:33 term. Between the two, I would say, I think the banks are moving from two different trajectories.
02:42 There's a run the bank, which is the model that has been in for many, many years, which
02:48 is your branches, ATM, call center, and obviously more of internet banking and mobile banking.
02:58 Internal products like your lending and deposits and investments. I think for a country like
03:04 India, and India is not one country, I think let's be mindful of the fact. When you look
03:09 at India, there are three Indias, at least the way we see it. There is a millennial or
03:16 those who are probably the metro male millennial India, which is a very, very different kind
03:23 of a mindset and a behavior, to probably a metro women and semi-urban India. So even
03:32 in Mumbai, you will see two Mumbai. It's not one Mumbai, it's one city, because there
03:37 are a lot of people who have moved into the city from other parts of the country. They
03:40 are migrants. They probably are staying in the neighborhoods of catchment, where a lot
03:45 of their habits are unlike probably someone who was born, brought up, and is a hardcore
03:49 metro. So as we look at different India in a country like us, I think the banking behavior
03:56 will be different for different set of customers. So traditional banking in my view will continue
04:00 to grow. It will become more efficient. It will become more like a bionic bank or what
04:05 we call digital. That means there will be human and there will be technology, which
04:11 is what we call tech and touch. There will be physical infrastructure in terms of branches
04:16 and ATMs, but increasingly they will connect more to the various devices like your mobile,
04:22 online, IoT. So it will have a tail where technology will play into the hardcore infrastructure.
04:29 It will continue to give loans. It will continue to issue credit cards. It will continue to
04:34 issue debit cards. But then each of those will become far more integrated again with
04:39 technology like we already saw today. I mean, with some of the banking apps, including us,
04:44 you can change your limit of a debit card or a credit card. You can decide when to activate
04:50 or deactivate, where to use it, use a tap or pay or probably use your phone to pay for
04:56 credit. So I think a lot of these technology embedding into the core banking will continue.
05:02 However, what we will see as a new part of banking, and which is where I think a lot
05:07 of times we are all doing crystal ball gazing, is about how mainstream would AI let banking
05:14 experience be. Will you have a time, it may be three years or five years, but my prediction
05:19 is the mobile app, which is probably the mainstream of the way we engage with a product or a brand,
05:26 may not remain the way it is. You will have a bot that you will talk to and things will
05:32 get done. I think we all love speaking rather than typing. Human are not designed to type.
05:39 Having a voice interactive, assisted, bot-led banking is where I think the future is. You
05:48 will have a banking more like a Google search bar. You ask something and it gets done. You
05:52 don't have to browse, seek information, do things. So it's just a matter of time. I'm
05:59 not saying that three years or five years, but yes, whether it will happen, answer is
06:03 yes. How important data and AI will play a role in machine learning, I think it's going
06:09 to become extremely, extremely powerful, be it in terms of credit, underwriting, fraud,
06:16 security, ability to understand the intent of somebody committing a fraud. I think today
06:21 the intent part is not established unless you just go through a credit bureau reports
06:25 and some of the traditional ways. The lending cycles will become very, very short. So you
06:30 will not write a credit for two years or one year. You probably will look at your exposure
06:36 and your limit and credit in a much shorter cycle because data will provide that ability.
06:41 So I think banks will become efficient. It will continue to offer multichannel. Banks
06:47 will become like multiple layers, meaning different things to different customers. And
06:51 most importantly, banks will not do everything themselves. I think I see a very, very strong
06:58 drive already in that direction. Banks will figure out, and they have already started
07:03 to figure out, how to participate in a collaborative ecosystem. There's a value that an e-com company
07:09 or there is a value that probably a data company or there's a value that a FinTech or a technology
07:15 provider is bringing. And not necessarily all of them want to work as a vendor. They
07:20 all want to work as a partner. That means together as you create value, there is also
07:25 a revenue sharing model. Banks will have to leave some money on the table for the ecosystem
07:30 to come together and partner. And I think you will start seeing banks morphing more
07:35 into consumer companies as we look at the future. And they will play more and more role
07:41 of customer centricity. The question is, will all banks be able to do it? I really can't
07:47 say. But directionally successful banks, yes, that's how they will become more relevant
07:52 as we look to the future.
07:54 So Ravi, as you answer this question, you have been living the branch for most of your
08:01 career. Can you add the flavor to as you think about the future, the bank of the future,
08:08 what about the branch?
08:11 It's very interesting that the conversation moves from the provider to the user in terms
08:22 of what I would look at on a day to day basis is each one of you who is sitting here in
08:30 this forum. I think the way in which this entire development is going across is that
08:39 we are moving from a transaction to an engagement philosophy. Moving from a conversion led,
08:50 you know, dialogue with a customer to a conversation led dialogue. You know, and conversation and
08:58 dialogue are being used as two separate entities because the customer increasingly is wanting
09:08 to be in control and yet want to be connected. And being in control is in terms of his time,
09:19 his place, his methodology, but connected we must understand the context in which we
09:28 are with a customer. We are in India. You can call India, you can call it Bharat, but
09:35 at the end of the day, culturally, the customer of a branch of a bank continues to want to
09:43 have the touch and feel. And therefore, contextually speaking, he's considering all these elements
09:51 which are evolving on the digital platforms as conveniences. Conveniences lead to benefits
10:01 and the customer is taking over that element of benefit and yet wanting to say that, hey,
10:10 I do want to reach out to you when I want to and therefore, can you provide me that
10:16 kind of space? Can you provide me that kind of platform where I can come across and have
10:23 a conversation? The difference earlier was that the customer had to come to the branch,
10:33 had to come to the branch in a particular time frame because it was transaction led.
10:40 But today, he does his transactions but chooses to come and meet up with a branch manager
10:47 or a bank personnel at his choice. And therefore, if you see, today's branch is evolving from
10:59 being concentrated in delivering transactions to creating spaces of conversation and discussion.
11:11 And increasingly, at least I can speak for our bank and I think I speak for many other
11:17 banks, that the physical premises is slowly evolving into discussion areas, into conversation
11:25 areas more so and reduction in the transaction spaces. And that I think is the way it will
11:34 go. Yes, there will be continuous evolving of the channels and methods in which you reach
11:42 out to a customer. There will be moderation in terms of such touch points on the physical
11:49 side but increasingly, given the context of the cultural milieu of this country, the customer,
11:58 she certainly wants to have a suggestive conversation. Yes, I saw these loan rates which were available
12:09 in let us say various websites and I want to make a decision, right. But still, if I
12:19 want to take an auto loan, remember, the customer of this country wants to have the choice of
12:26 colour, wants to have the choice of the day on which the car is delivered, wants to have
12:32 a touch and feel of the car, wants to get a test drive done with family, right. So,
12:39 the physicality of the availability of this interaction will continue to determine the
12:47 bank of the future, the branch of the future, the elements of interaction. Yes, we used
12:54 to call a banker personal banker but we must remember we will continue to call that banker
13:02 a personal banker because of digital data, computing speed, making it even more helpful
13:12 to make the choice of the customer personalised. And therefore, this combination and this coming
13:19 together or confluence is what is going to be the future. Future can change tomorrow.
13:25 Future can change two years from now but that eventually is the road map of the future that
13:31 we envisage. So, Rishi, your bank has come in at a much
13:36 different age with a very specialised product and are you already thinking about that future
13:43 and what does the future look like for you? I think we have come at a very opportune time
13:49 if you ask me because a lot of technology advancement has happened over the last few
13:53 years and Aadhaar has become the main frame on which the entire banking is now being developed
13:59 into the future. Just to add to what Ravi and Deepak has been saying, I think I agree
14:05 with most parts of it actually because where I look at as we know as our bank, we look
14:11 at the Bharat as the major business for us, then the India, even in Mumbai as I said there
14:16 is a Bombay and there is a Mumbai. So, we take cater to more Mumbai, then we take cater
14:20 to more Bombay. The way I look at the banking evolving for Bharat or for the mass market
14:27 segment, we largely talk about the top 300, 400 million people in the country but there
14:33 is a very big market around 400 to 500 million people who earn between 2 to 5 lakh rupees
14:38 of income and they are also seeing lot of these changes happen in the last few years
14:44 especially on the technology, the branches and everything else. We believe in the future
14:48 of digital kind of an approach, a physical and a digital approach will actually prevail.
14:55 Branches sizes will come down, we have already started seeing from 2000, 2500 square feet
15:00 branches to 500, we have set up 500 branches which are about 200 to 400 square feet. So,
15:08 people not necessarily come to do a transaction as Ravi is mentioning, they want to engage
15:12 and they want to find out more about the products and everything because 70% of our transactions
15:17 are also happening outside branches and lot of it is actually happening on digital platform.
15:22 So, people are moving away from coming to branches from a transaction point of view
15:27 but digital is something which will coexist along with physical and as we look at the
15:32 journey of the mass market, the Bharat journey, we feel there is a lot of hand holding which
15:37 will be required. So, it will move from an assisted model in the first couple of years
15:42 to a digital model. Personally, I believe that we have to give all the choices to the
15:48 customer, let the customer decide whether he wants to come through a distribution or
15:54 a physical network, whether he wants to come through a digital network.
15:57 Like we, in terms of the future when I look at, I see distribution going to become one
16:03 of the key things for the banks to deliver and distribution does not mean that you need
16:08 to set up branches per se. You need to set up maybe like we have a tie up with BPCL.
16:13 So, we are setting up branches in various BPCL outlets. So, it could be a distribution
16:18 network which could be outside the branch, doorstep banking is another concept which
16:22 we are seeing, lot of it is coming in the Bharat context. We see lot of that thing moving
16:29 from pure branches to a large distribution network. We also see Shachay products becoming
16:35 more and more prevalent. People will move from buying maybe a one year insurance, they
16:42 might just buy a one month insurance. There is an event which is happening, so they might
16:46 buy a one month insurance. We already see that when we go abroad, we buy a travel insurance
16:51 for those 15 days, 20 days. So, those kind of products will come which will mean that
16:55 the cost of the product will come down. You will probably cover a particular event in
16:59 your life which is going to happen. So, lot of those things will come up.
17:04 In terms of collaboration, something to what Deepak was also mentioning, I think there
17:09 is lot of debate which has happened around whether FinTechs are competition or FinTechs
17:14 are collaborating with the banks. I see in the future FinTechs and banks will collaborate
17:19 more. Just to put some things in context, there is world one which was pure banking
17:25 as such. There was no FinTech companies say 3 years back and everything used to be done
17:30 through the banks and the banks used to engage with the customer. Then we had a world two
17:35 where we saw lot of closed loop systems like wallets and other companies coming up and
17:41 somewhere the payment business or the P2P business of the banks actually to some extent
17:47 moving away from the banks to those closed loop wallet systems.
17:52 And then now we are seeing world three where the banks are working actually with the open
17:57 loop systems like UPI and others. So, the money is in the bank, the customer, the bank
18:02 is aware where the money is getting consumed, what the consumer is trying to do, money is
18:07 not moving out of the bank. So, for a bank, the world one is a perfect bank in terms of
18:11 they have a full control over the customer. But I think those days are gone now. What
18:16 is going to happen in the world three in which we are currently? We will see a more collaborative
18:21 approach with the banks. The banks will open up, especially the new age banks like we have
18:25 lot of tie ups. In fact, internally we say that for the success of a payments bank and
18:31 specially for us DTP as we call it distribution technology and partnerships will play a very
18:37 very important role. So, I see that emerging in the future. So, it is going to be end of
18:43 the day, it is going to be consumer, the customer will decide and bank will have to provide
18:47 all kind of services. I also think it will become like a FMCG kind of a consumer driven
18:53 behavior where banks will be manufacturers of lot of products, but the distribution or
19:01 the sale will happen through lot of fintech companies and the primary and the secondary
19:05 roles will be played separately as such. So, from a consumer point of view, I think
19:09 more and more convenience, simplicity, one thing which we need to work upon is security
19:15 which will become more and more important because as the power moves from a bank to
19:20 the consumer, you need to make the security more and more relevant.
19:23 So, I am picking up on the point Rishi made, Bhaskar, as you talk about other people coming
19:30 into the banking product, sharing that revenue. As you think about the bank of the future,
19:36 talk a little bit about also how you see the community lending playing out, the crowdfunding
19:44 or for that matter if you are talking about friends and family or small loans being dispersed
19:51 with an aggregate view from different individuals. How does that play into the future that you
19:56 are thinking about?
19:57 See, this used to be the past when it used to be community lending and all of that. The
20:02 way things are really happening in my view operate in a segment which earlier used to
20:05 be called the niche segment. But that I think is becoming a large main segment. So, the
20:10 real banks are technically now playing the niche and we are playing the large ones which
20:13 were unbankable sometime back. So, what we saw happening or seen to happen is that it
20:18 was happening gradually and suddenly we are seeing it happening suddenly. So, this is
20:22 where I think the ability to understand what is really happening becomes extremely important.
20:27 For lack of any other analogy, I would say that what is happening was a BlackBerry platform,
20:31 BlackBerry Messenger. We were all comfortable, we liked it, but we needed to own a BlackBerry
20:35 to use the BlackBerry Messenger. And then come the WhatsApp and everything changes.
20:38 We all dumped our loyalty without even us realizing that we are dumping it. So, the
20:43 banking as such is becoming from product, closed loop, I hold, sorry to kind of not
20:48 meaning any offense to the established incumbent banks. It is just that substantial amount
20:51 of banking was happening by lethargy banking. I did not like my bank, but I did not want
20:56 to move because I was reasonably sure the other banks experience itself is not going
20:59 to be good. So, I have in a bank, a large private sector bank, my salary account for
21:03 the last 20 years with I think a reasonable balance year after year growing. But if I
21:08 want a loan from the bank, you say that no digital, you apply, then comes a call from
21:13 the call center, "Aap Baskar hai kya? Aap personal loan chahiye hai kya?" I mean the
21:17 experience itself is completely a drop down from saying it is digital to again starting
21:21 all over in terms of last three months salary slips. What it is going to become for sure,
21:25 at least in a customer segment, I am sure for everybody, is that it is going to become
21:29 now an experience from a product sale. So, you want the bank, many times you ask that
21:34 what does the customer want? Probably many of our customers do not actually know what
21:38 they want. It is the responsibility of the bankers also to be responsible decision makers
21:43 for our customers. As long as I do not, even today we all talk about cross-sell. We talk
21:48 about from the point of view of a provider. What is really required, will happen in the
21:52 banking is that we will start buying products for the customers. So, that itself will be
21:56 an experience. That is what the bank of the future, whenever it happens, in two years,
21:59 three years it will happen. What is also not going to be acceptable is that people would
22:03 expect lot more transparency or rather complete transparency from the banking provider. So,
22:08 you will get, go to any website of a bank, you will get to know what are the deposit
22:12 rates. Go to any website of a bank, do you get as transparently what are the charges
22:16 and what are the lending rates? Usually we do not. So, that would change dramatically
22:20 probably as a bank of the future. It is going to be transparency, it is going to be as Rishi
22:23 said, complete simplicity and in my view it is also going to be wanting to be or displaying
22:29 a sense of ownership for decision making on behalf of the customers. At least the customers
22:33 are going to be operated.
22:34 So, I am going to come back to you Rishi on the notion of the Bass Market customer. Is
22:43 there a sense of responsibility to the country to say, okay, inclusion is extremely important
22:47 so we need to revolutionize the way we bring people into the banking sector and banking
22:57 and savings overall. So, how are you thinking about product and how do we leapfrog to get
23:05 to a point where we bring a lot more people into the banking sphere?
23:10 Actually, if you ask me in terms of, there is lot of things which have happened in the
23:15 last few years, especially with Jandhan, the Aadhaar and the mobile trinity as we, Jam
23:22 as we normally call it. What has happened if I, and I have been travelling a lot in
23:26 the rural areas, I think one big thing which has happened is because of demonetization
23:31 and now with GST coming in, people have become more aware of the banking ecosystem and the
23:36 need for banking. We are also seeing with GST now coming in, initially there is some
23:40 resistance but over a period of time, we feel lot of those customers will actually and especially
23:45 for the MSME market, we feel a lot of them will come into the banking ecosystem.
23:50 When I look specifically from a product perspective, see that comes from the DNA of a bank. See
23:58 like we are focused on a mass market segmentation. We believe our products will be only devised,
24:05 designed for that purpose of the mass market segments and our compliances, our risk, our
24:10 technology, our cost, everything has to be seen when we look at the product per se. So,
24:15 everything will be taken into account so that the cost of delivery, the cost of transaction
24:20 is very low. The moment you come to a full fledged bank,
24:24 they cater to everybody in the industry and largely the upper middle class and above or
24:30 the middle class and above and they will devise products which will be used for a particular
24:35 class of people, may not be relevant for this class of people. So, the products development
24:39 will have to happen in that category of customer which is there. One big thing which is there
24:45 and lot of times we actually miss that is we keep on talking about digital, but India
24:50 is a cash economy. There is and we have seen the latest reports that the money is in circulation
24:56 has again become 17 lakh crores or whatever it was. So, that money is again come back,
25:02 but when I go to the rural India, I hardly see money in ATMs, the ATMs are not working.
25:08 People are starved for cash as far as rural economy is concerned. So, lot of this new
25:12 products like micro ATMs or Aadhaar enabled payment systems are actually taking out cash
25:19 from people who have cash to people who don't have cash. So, lot of this transformation,
25:24 silent transformations which are happening which we are not really aware of in urban
25:28 areas is happening in the country. Like the tie ups with petrol pumps, they have so much
25:35 of cash. We are able to tie up with them, the person actually does come to a petrol
25:41 pump, withdraws the money from an ATM and micro ATM and goes away. It removes the problem
25:46 or the cash management problem of the petrol pump also and gives the money to the customer.
25:51 So, those kind of new things which are coming up in the mass market segment. So, if we are
25:56 able to remove the problem of cash, we will be able to solve lot of those problems.
26:00 So, we will open it up for questions. If there are any questions, please do raise your hand.
26:05 There are mics that are moving around in the front.
26:12 Hi, this is Malini. I have a couple of questions for all of you. One is for Deepak. Is use
26:31 of AI, I think a lot of information about customers is being used at this point of time
26:39 to assess credit quality using various other parameters compared to the credit score alone.
26:45 So, whether it is social profiling or it is AI. So, Deepak, what I would like to know
26:49 is that where does this information come from that banks are using which is not necessarily
26:55 from credit bureaus and are there privacy issues that over a period of time customers
27:00 will want addressed? That's one for Deepak. For Rishi, I have a question. Rishi, I am
27:07 aware that you are doing some very interesting work with Mother Dairy, you know, dairy farmers,
27:12 it's a pilot that's going on. Over a period of time, do you expect banks to sort of cater
27:17 to various, you know, identify their niches and segments because the behemoths are not,
27:24 you know, this whole thing about everything for everybody may or may not necessarily,
27:29 you know, be the cookie cutter rule may not work. So, is the future going to be that,
27:34 you know, if I am in a particular, this whole community banking, regional banking, is that,
27:39 you know, which has been very successful in economies like the US, do you see that coming
27:44 to India as well? And the question for Ravi I have is, sorry, I am asking, I am just greedy.
27:51 For Ravi, I have is that, you know, many years ago when the dot-com boom happened, Egg Bank
27:56 was launched, by Prudential if I am not wrong, it was to be an all, you know, online bank,
28:01 no physical branches. Do you at all see that happening or bank branches will become like
28:06 showrooms where people can experience, you know, technology, people can sort of engage
28:12 at a different level and it's not necessarily transactional. So, what is a branch of the
28:17 future going to look like, you know, will there be, you know, robots, whether they be
28:20 human beings or it will just be like a showroom where I can just go and, you know, shop for
28:25 different financial products, etc. So, these are three questions, I am done.
28:29 Maybe start with Deepak on the end first.
28:32 Okay, so I think AI itself is not a new concept or a phenomenon. This has been around for
28:38 decades. I think what has made AI more relevant, exciting and immediate in terms of benefit
28:47 of all the other tech stack is a large availability of data pool. I think if you look at it today,
28:55 90% of the data that we are talking about is generated in last two years and the amount
29:01 of data that is getting generated every single day is more than the amount of data that got
29:07 generated in years together. So, I think that's the first reason why AI has become so much
29:15 talked about and near real term kind of a benefit.
29:20 The second is with data, the ability to store this data, make sense of this data. Outside
29:28 few large platform companies was probably missing. In last decade or so and more so
29:34 in last two to three years, a lot of banks including us and other enterprises have started
29:40 to invest massive amount in building the data warehouse and data lake capability. So, ability
29:46 to bring in data and ability to have make sure that all available data is first ingested
29:53 is there. Now comes the question, once you have data, what do you do with this data?
29:58 And that's where areas like quantum computing and AI and machine learning becomes extremely
30:03 relevant because now your normal computing in the way you used to run your algos in form
30:09 of tables and columns is just not going to work. So, because you are also bringing in
30:14 so much of real time data. Now, what has also happened is while banks
30:18 were data rich, more on the transaction data side, today the data ecosystem is not just
30:24 what banks have access to, but around this entire consent based architecture that's
30:29 going live, the DEPA which is a digital empowerment and protection architecture which will enable
30:35 that your data remains yours, it's anonymized, it's encrypted. However, you can share the
30:41 data with the provider based on consent. It's similar to what in European Union now they
30:45 have got the new data protection guideline. So, I think availability, awareness, intent
30:51 and the platform is making sure that first you can make real sense of a lot of data,
30:56 either yours or a third party. For example, a social data, a telco data, a shopping data,
31:03 a GST data, your tax filing data and all this data today is sitting at different places.
31:09 All this data will be available very soon at a place and obviously as an owner of data,
31:14 you as a consumer will decide what data you want to share or not. People cannot make,
31:19 take unauthorized this data and do something around it. So, privacy will get taken care
31:23 of. Now, building an AI layer on top of it, the
31:27 use cases are manifold. So, as a customer when we talk about, and I said banks will
31:32 become consumer companies, that means it's not people like you that some of us used to
31:38 talk that recommend. You are individual in yourself. There's nobody like you and I
31:43 think that is what the power of AI and data does. That how do you micro segment which
31:48 is n is equal to 1 and say that around you what can I do and building those personas,
31:55 building those kind of intelligence, be it at the point of conversation, be it at the
32:00 point of empowering somebody who's having conversation with you, be it at the time of
32:05 loan or a credit or underwriting or making a next best offer to you or even in terms
32:11 of what is the likelihood of somebody defaulting on a loan or a credit or what, which customer
32:18 is probably has a higher propensity of a risk because maybe the device through which you
32:23 are accessing banking app itself is compromised or there is a malware or you are using an
32:28 IP which I do not recognize or a transaction behavior which is unlike your normal transaction
32:34 pattern. Now moment you bring all this data in, then you use AI to take a decision and
32:39 say how am I going to find use cases and I think today already we are seeing 8 to 10
32:44 such use case, both customer facing and at the back end where AI gets used.
32:50 So, the mother dairy, the dairy example we have been actually we were part of the NDTV
32:57 project about 5-6 years back and we saw that there is a big problem around the fact that
33:03 lot of these porers who come actually, they are paid in cash and there is lot of leakage
33:08 which is there in the system. The dairy companies also had that leakage ecosystem which they
33:12 wanted to plug. Plus they wanted that the money whenever the dairy companies give the
33:16 money to the porers, they should get it immediately. So, that is a big problem and that is a similar
33:22 problem with NREGA payments and lot of government payments and we have seen with Aadhaar actually
33:26 plugging up that gap as per the government estimate about 50-60,000 crore rupees, they
33:31 have actually saved by plugging that gap. So, when we started this mother dairy project
33:36 and I think this kind of regional, I think your question was more in terms of do we see
33:41 specific regional players, cooperatives, a neighborhood bank, a community banking kind
33:46 of concept coming up very similar to what is there in US. In US, there are thousands
33:50 of banks compared to limited banks which we have in the country. I see this kind of products
33:55 actually being taken up by some of those community banking approach which is there. In fact,
33:59 the cooperative banks and RRBs were formed with that particular objective of service
34:04 that particular community in that particular region. But to some extent, they have not
34:08 been able to meet that entire purpose for which it was set up. So, the RBI document
34:14 also of the futures talks about niche banking, differentiated banking. The licenses which
34:19 have been issued to small finance bank also is in particular regions if you see some is
34:24 north, some is in south, some in particular state. So, the idea of RBI and the way the
34:30 direction is that we need to focus on differentiated banks in a particular area, in a particular
34:34 community so that banking can be made available to them at first according to their own convenience.
34:40 So, I think the way the ecosystem is evolving, you will see such kind of products coming
34:45 up from some of the banks plus the banks will also become very very regional focused and
34:49 you will see lot of migration happening from the cooperatives and RRB customers to such
34:55 kind of differentiated banks because they will be bringing technology, digital plus
35:00 the convenience of any other big bank. So, I think the ecosystem will evolve in that
35:04 manner.
35:05 Yeah, in terms of looking at the kind of branch, so let me try and give you a perspective of
35:13 what this country is. So, we had a multinational company do a survey, country specific survey
35:21 and let's bifurcate it into the individual banking, the commercial or the companies which
35:28 bank and of course the cash segment which is the MSME and all that. Now, interestingly
35:35 the question that was asked is that what would be the element which will determine the bank
35:42 or the branch that you would bank with and one of the critical elements was the proximity
35:49 of a branch. So, today we are sitting in a country which purportedly has a huge adoption
35:58 possibility and degree for digital and yet if 70% of that survey sample was individuals
36:09 who were asked this question, they continue to peg a critical element of their choice
36:14 of banking to be the proximity of a branch. So, what does that tell us? It tells us that
36:24 yes, the customer she will adopt a means to do her banking at her choice of time but at
36:33 the same time she wants to be in a physical space which gives her comfort as well as the
36:46 convenience of having a conversation. And therefore there are multiple things that we
36:52 are trying out. We had the watch banking, we had missed call banking, we are now trying
37:02 out gesture banking. All of these are elements that will be part of the journey and the road
37:09 map that all our banks will lay out for the customer. But at the end of the day the branch
37:15 of the future will not be too different from the branch that we see today. For example,
37:22 we tried out what we call as milk to money as part of community banking. You must know
37:27 that about 58 or 56% of our banks is in the semi-urban rural areas and therefore something
37:34 like a community banking works. We had branches which were catering to geographies which had
37:41 milk farmers and in terms of the complete straight through processing the branch was
37:48 able to create that connect between the hub where the dairy had its pouring capability
37:55 and the farmer could take out money at the other end of the line. So these are elements
38:02 which determine what individuals want. After all these are journeys that each individual
38:09 is doing and as Deepak was talking about personalization, yes, data, computing and media will ensure
38:19 that this hyper personalization also determines how they interact with a service provider.
38:25 But at the end of the day, given as I said the cultural ethos that this country has,
38:31 whether you call it Bombay, Mumbai, Chennai, Madras, Kolkata, Calcutta, Gurugram or Gurgaon,
38:41 at the end of the day the customer wants to have a touch and feel and I don't see that
38:46 going away. So rest assured the branches of the banks are there. There will be moderation.
38:54 There will be elements of community. There will be elements of regional flavors which
38:59 will come in. Maybe the branch of tomorrow will welcome you with banana leaves, arches,
39:05 catering to a geography or a culture but that physical branch will still be there. They
39:11 will give experiences. So you walk into a branch and they will provide you means, platforms,
39:19 methodology to engage with the service provider in a non-physical way. So again assisted digital.
39:30 Please understand that our rural folk adopt digital banking as we all call it in a much
39:38 higher degree than the urban folk. And the digital banking is in terms of how you reach
39:45 out to them. Our missed call banking which allows you to do 7, 8, 10 transactions which
39:50 are routine transactions without coming into a branch. And that missed call banking is
39:56 something people adopt. E-commerce, I mean we all know e-commerce across the country
40:02 has picked up and a bulk of that business happens in the upcountry geographies. So the
40:09 branch is going to be there. The branch will have methodologies which will change. Maybe
40:16 the people in the branch will be skilled differently to interact with this customer of today or
40:22 tomorrow and therefore ensure that the entire ecosystem creates more value additions rather
40:32 than value attrition in terms of a physical branch.
40:36 I think we will sum it up by saying customer in control. So the bank of the future is really
40:43 about the customer at the choice and they are in the control seat.
40:48 So I want to thank the panellists. We have, as I said, a very varied group. Everyone from
40:55 digital traditional branch to specialised payments and savings banks. So thank you all.
41:03 A round of applause for all our panellists.
41:05 (applause)
41:07 [BLANK_AUDIO]