 "Hitendra Dave, HSBC; Ashu Khullar, Citibank India; Zarin Daruwala, Standard Chartered; Rakesh Sharma, IDBI Bank; V Vaidynathan, IDFC FIRST Bank; Amitabh Chaudhry, Axis Bank (Photo: Kamlesh Pednekar)")
Chief executive officers (CEOs) of private sector banks believe that technology can play an important role in banking, but not to the extent of transforming banks into technology companies.
The need for caution in managing other people’s money, differing approaches to risk management, and compliance requirements may determine the extent to which technology influences banking, according to the chiefs of some of India’s largest private sector banks at the Business Standard BFSI Insight Summit in Mumbai. They shared their insights during a panel discussion moderated by consulting editor Tamal Bandopadhyay on Tuesday.
“Technology companies believe that their motto is to scale fast, fail fast. We have to be careful from a risk management perspective. From a compliance perspective, maybe a technology company feels it can ask for forgiveness. We don’t get a chance for forgiveness,” said Amitabh Chaudhry, managing director (MD) and CEO of Axis Bank.
“It is a business of trust. In our quest for technology, we should not forget that part. Trust is the most important word associated with banks and banking. And wherever that trust has been broken, we have seen the consequences for that institution,” said Hitendra Dave, CEO of HSBC India.
The CEOs emphasised that banks have much to learn from technology companies in terms of improving the way business is conducted.
“Technology companies have taught us very well to take a single problem, go deep, and find a solution. I think as banks, we need to make sure we partner them and learn from them,” said Ashu Khullar, CEO of Citibank.
“All those banks that are not upgrading themselves in line with technological advancements will not be in a position to compete with their peers. In the past decade, digital transaction volumes have increased by more than tenfold. It has doubled in value. Regulation is so strong for banks; if we go for becoming a technology company, it will be difficult and risk-prone,” added Rakesh Sharma, MD and CEO of IDBI Bank.
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Zarin Daruwala, cluster CEO of India and South Asia, Standard Chartered (StanC), shared examples of foreign banks creating digital banks in other jurisdictions.
“If I look at StanC, we have two pure digital banks coexisting with our regular banks in Singapore and Hong Kong. We find that pure digital banks cater to a certain segment of the youth who are very comfortable and don’t need branch servicing. There are different models you can use. It’s all a function of what kind of customer segments you have and what kind of customer digital evolution you have,” she said.
“As far as a digital bank is concerned, it is pretty much a given. Whether it is a separate licence or it is part of the bank, it does not matter. Ultimately, there is a part of the bank that should be thinking digital,” said Chaudhry.
“I think the customer determines whether you serve them digitally or in the conventional sense. We can’t, sitting in our corporate offices, decide that,” said Dave.
Daruwala added that a banking leader needs to be someone who understands compliance and risk because that is their backbone. While the CEO needs to understand the technology and the trends therein, one can have a very high-quality technology team that builds that part.
V Vaidyanathan, MD and CEO of IDFC FIRST Bank, noted that at the end of the day, you are managing people. And people are implementing technologies. He believes that a CEO’s ability to manage the human resources that are managing technology becomes super important.
“You need to have leaders who understand technology. Otherwise, you will have leaders who are running technology for you. You will not know what language they are speaking. They will spin circles around you,” he said.
India’s technology talent is also being sought by other industries, according to Khullar. He shared that India as a talent source has been driving the growth of Indian global capability centres. A number of technology companies and automotive companies that he met recently were all trying to put their best product design and research and development capabilities in India.
He added that other global and institutional clients are also excited by India as a market and as a potential manufacturing hub.
Banks today have to upgrade because of numerous innovations that affect the way they do business, said Vaidyanathan.
In recent years, banks have had to be connected to Aadhaar, the Open Network for Digital Commerce, and other systems, in addition to upgrading their customer-facing and enterprise tools, he added.
ASHU KHULLAR
CEO, Citibank
“Technology companies believe that their motto is to scale fast, fail fast. We have to be careful from a risk management perspective. From a compliance perspective, maybe a technology company feels it can ask for forgiveness…”
AMITABH CHAUDHRY
MD & CEO, Axis Bank
“Regulation is so strong for banks; if we go for becoming a technology company, it will be difficult and risk-prone”
RAKESH SHARMA
MD & CEO, IDBI Bank
“A banking leader needs to be someone who understands compliance and risk because that is their backbone. While the CEO needs to understand the technology and the trends therein, one can have a very high-quality technology team that builds that part”
ZARIN DARUWALA
Cluster CEO of India & South Asia, StanC
“You need to have leaders who understand technology. Otherwise, you will have leaders who are running technology for you. You will not know what language they are speaking. They will spin circles around you”
V VAIDYANATHAN
MD and CEO, IDFC FIRST Bank
“I think the customer determines whether you serve them digitally or in the conventional sense. We can’t, sitting in our corporate offices, decide that”
HITENDRA DAVE
CEO, HSBC India
