Disruptions & Financial Opportunities: RBI
Recently Shaktikanta Das, Governor, Reserve Bank of India (RBI) delivered his speech at the BFSI Summit & said on the theme of my address, Disruptions & Opportunities in the Financial Sector, will resonate in the current context of technological innovations and fast evolving business models in the financial sector.
The impact of Covid-19 pandemic, the recent geo-political crisis and the all-pervasive technological innovations sweeping across economies are challenging the traditional financial intermediation processes. In my address today, I would like to focus more on the banking and the financial services space. I propose to share my thoughts on possible implications of technology on the financial services industry.
Focusing on the changing paradigm of banking, he said, the edifice of growth and development in modern economies is built on the foundation of a vibrant, resilient and well-functioning financial sector. The core functions of the financial sector in an economy, viz. intermediation, asset price discovery, risk transfer and payments are globally undergoing a process of transformation.
This is primarily driven by technological advancements. The Indian financial sector has also been a part of this churning and is adopting and propelling these transformations. He suggested various areas of improvements.
Shaktikanta Das considered technology as a disruptor as well as an opportunities with a challenges. With the advent of new technologies, we are witnessing a new era of disruption. Given the growing role of technology, data and network effects, there is a feeling among the banks that having an ethos of a technology company, while offering banking services, is the need of the hour.
This is an area of opportunity for the banks; but there are associated challenges which need to be mitigated. Greater attention needs to be given to building customers’ trust by (i) offering products and services appropriate and fit for customer’s needs and circumstances.
(ii) Ensuring robust security controls, reliable and efficient delivery of services, transparency of terms and conditions to customers; and
(iii) by handling customer grievances satisfactorily and building necessary awareness among customers. All of these aspects need to be factored in when financial institutions introduce or enhance technology driven products and services. He also highlighted about all those areas of an opportunities too.