Banks sidestep rate wars, leverage FinTech and superior service: SBI Chairman at GFF 2024

By Puja Sharma

At the Global FinTech Fest (GFF) 2024, the Chairman of the State Bank of India (SBI) C S Setty, addressed the evolving banking landscape, emphasising that most banks, including SBI, are steering clear of aggressive interest rate hikes, commonly referred to as “rate wars.” Instead, they are focusing on enhancing service quality and expanding their branch networks to attract and retain customers.

He explained that changes in customer asset allocation are leading to increased investments in other asset classes, which in turn is putting pressure on bank deposits. Despite this, banks are prioritising improved service quality over competing on interest rates. He noted that while there might be some adjustments in interest rates, particularly in the popular one-to-two-year bucket, competition for deposits is expected to continue.

The GFF 2024 was organised by the Ministry of Electronics and Information Technology (MeitY), Ministry of External Affairs, Department of Financial Services (DFS), Reserve Bank of India (RBI), and International Financial Services Centres Authority (IFSCA), in collaboration with the Payments Council of India (PCI), the National Payments Corporation of India (NPCI), and the FinTech Convergence Council (FCC).

Speaking about the FinTech sector, Setty said, “The good thing about the FinTech ecosystem is they are reshaping the way we do business. It is helping conventional players to re-imagine the customer journey. The agility to deliver is a good factor for FinTechs. One suggestion for FinTech is – that any solution that FinTechs bring in should be available to scale. The scalability has to be brought in.”

Sharing his views on AI and Gen AI, Setty said, “We are widely using AI for quite some time. We were the first to have AI/ML based lending models on personal loans. We use AI extensively for lending, fraud management, KYC, and proactive risk management, and our approach to AI is enterprise-wide adoption of AI. As far as Gen AI is concerned, it is too early to say what will be the commercial impact of Gen AI in the BFSI space; essentially, the first use case is to be knowledge-based – how easily internal knowledge is available to employees and efficient delivery of services.”

The Chairman highlighted SBI’s strong credit-deposit (CD) ratio and robust credit growth, projecting a 14-15% increase in credit growth and 8-10% deposit growth. He praised the FinTech ecosystem for reshaping business operations and urged FinTech companies to ensure their solutions are scalable.

Discussing AI and Gen AI, he shared that SBI has been using AI extensively for lending, fraud management, KYC, and risk management. He mentioned that while the commercial impact of Gen AI in the BFSI sector is still uncertain, its initial use case would likely be knowledge-based.

He also outlined SBI’s five-year digital transformation roadmap, focusing on technology resilience, data architecture, infrastructure, and network improvements. He emphasised the importance of providing an omni-channel experience for customers and enhancing cybersecurity. Additionally, he mentioned the upcoming launch of YONO 2.0 in November, which aims to offer a stable, scalable, and robust application for customers.

The Chairman elaborated on SBI’s digital transformation, noting that it is not just about front-end digital services but also about investing in technology resilience and infrastructure. This includes creating a seamless customer experience across channels, adopting marketing technology for hyper-personalisation, and focusing on new customer acquisition. He emphasised that SBI’s diverse customer base, which mirrors the diversity of India itself, requires a presence across multiple channels to meet varying needs.

He concluded by highlighting the importance of scalability, robustness, and resilience in SBI’s digital initiatives. The bank is investing heavily in data architecture, revisiting its infrastructure and network, and focusing on cybersecurity to ensure a secure and efficient banking experience. The large-scale adoption of marketing technology will enable SBI to offer hyper-personalised services to retail customers, promote financial inclusion, and support MSMEs.