Banking Colloquium Thought Paper: The Future of Indian Banking (Deloitte)

Summary

• Radically transformed bank models are expected to emerge leading up to 2020, with industry consolidation seen as inevitable.p.6
• New non-bank fintech players are vying for a larger share of the banking value chain, possibly leading to a realignment of players.p.5
• State Bank of India has approved the merger of all its subsidiary banks and Bharatiya Mahila Bank with itself.p.7
• Payments banks cannot extend loans, unlike Small Finance Banks, and must be technology-led and innovative to be viable.p.8
• Startups working on blockchain have attracted venture capital funding of over $1.4 Billion, and over 2500 patents have been filed.p.14
• Individual players such as ICICI, Axis Bank and Yes Bank have announced their intent to experiment with blockchain technology.p.15

Key insights

1. A Comprehensive Code on Resolution of Financial Firms is proposed to be introduced as a Bill in Parliament during 2016-17.p.7
2. Payments banks are expected to be positioned for three kinds of customers, including the tech-savvy young Indian and the lower income financially excluded Indian.p.8
3. Partnerships between banks and fintech players are on the rise, though nascent.p.10
4. Machine learning, artificial intelligence and natural language processing are no longer experimental concepts but potential business disrupters.p.12
5. Experimentation by many on blockchain has led to a scenario where there is no standard protocol yet.p.15
6. RPA is best suited for processes that are repetitive and deterministic, with minimum ambiguity and very few exceptions.p.17
7. Banks have started issuing EMV chip-based cards under guidelines issued by the Reserve Bank of India.p.18
8. SMS-based OTP is vulnerable to hijacking if the individual uses a VoIP service.p.19