Banks should not ‘try to imitate’ fintech in process of re-imagination of biz models: Ex RBI deputy governor Mundra

According to Mundra, it is precise important for banks to person a ‘very hard look’ astatine the accepted models which banks person been pursuing.

While the process of re-imagination of concern models for banks has already started, the banks should not ‘try to imitate’ fintech companies successful totality arsenic it is not the close approach, erstwhile RBI lawman politician S S Mundra said connected Tuesday.

Growingly, it is looking similar banks are evolving arsenic the fintech companies, which besides bash the concern of accepting deposits and bash lending, Mundra said portion speaking astatine the 14th variation of the Banking Colloquium, organised by CII.

“Banks person to beryllium conscious that fintech companies are compact entities, they are nimble. So, banks trying to imitate a fintech institution successful its totality, to my caput is not a close attack and it is not a close concern model,” helium pointed out.

According to him, it would beryllium beneficial for some the banks and the fintech companies to person a meaningful cooperation, and successful this way, some tin leverage their respective strengths. “So it is that concern wherever determination is simply a competition, but determination is simply a cooperation.”

Mundra said fintech companies person the spot of being nimble and innovative, portion banks person the vantage of having bully assets bases, scope and spot of the customers. “So, these things tin beryllium complementary and to the vantage of both,” helium emphasized.

The erstwhile RBI lawman politician said some banks and fintech companies ‘should debar the temptation’ of introducing excessively galore products and excessively galore processes, whether it is by mode of collaboration oregon in-house, successful abbreviated intervals.
“My idiosyncratic reflection and experiences are it leaves some their important constituencies confused. And, the important constituencies are their ain staffs and their ain customers,” helium said.

According to Mundra, it is precise important for banks to person a ‘very hard look’ astatine the accepted models which banks person been pursuing.

“I americium not suggesting that branches should spell distant but determination is simply a request to reimagine the concern model. One has to spot which are the branches that are nonaccomplishment making and which are the branches that are contributing positively, which are the branches which tin beryllium downsized and which branches tin beryllium wholly done distant with and wherever you tin trust wholly connected exertion and wherever you tin trust connected bureau arrangement,” helium said, adding for each slope it was important to bash a implicit holistic appraisal of their subdivision networks and however to deduce maximum worth from this.

On firm lending, helium said banks should not merchantability lone products to a firm arsenic astir corporates are present expecting ‘solutions’ from the banking system. “So if you lone absorption connected products you volition lone extremity up making immoderate topline, but it volition not adhd to your bottomline. So you request to follow a solution-based attack if you privation to bash firm banking,” helium added.