In terms of technology and automated systems, public sector banks (PSBs) have traditionally lagged behind their private counterparts. As a pandemic that refuses to die, that could be changing, forcing every financier to rethink their business practices.
For PSBs, the need to change has become even more relevant as the mergers have expanded their scale and competition from tech-oriented players has only intensified.
Several major PSBs have begun the process of digitising different functions in recent months. The majority of these initiatives aim to redeploy employees from more mundane, workflow-driven processes to sales and other productive areas.
State Bank of India (SBI) issued a request for proposal (RFP) in March for redesigning its operating model and introducing new strategies in its micro, small, and medium enterprises (MSME) segment using digital tools.
The Punjab National Bank (PNB) wants to establish an end-to-end mechanism for ATM reconciliation and customer complaint resolution.
Union Bank of India (UBI) aims to streamline the entire recovery process with a software-based solution that will simplify the recovery process, including those involving tribunals. Last year, Bob was one of the first PSBs to envision a completely redesigned and digitally-driven operating model.
McKinsey has been tasked with developing the model, which involves a permanent work-from-home (WFH) modification. According to Sameer Narang, banks at Bank of Baroda have a large customer base and can create sophisticated models based on demographic and transactional data.
The analytical model-driven approach usually provides a better deal to the consumer than would otherwise be possible. One more way to look at it is as a consumer retention tactic where banks offer pre-approved caps on specific financial products or services, such as personal loans or vehicle loans, that would otherwise be sold by competition,” he said.
The proper application of data and digitisation improves borrowers’ access to funds and lenders’ lending decisions and profitability. Since MSME lending is a priority market, Vidisha Krishan, partner at MV Kini Law Firm, believes that digitising systems and processes would promote efficient lending in the long run.