Technology is changing bank- good or bad for India?

View Point: Conventional jobs like passbook updating, cash deposit, verification of know-your-customer details, salary uploads and even availing business and home loans are increasingly automated now. In such a scenario, Ravindra Sudhalkar, ED & CEO, Reliance Home Finance, evaluates the pros and cons of fintech system.

Fintech is transforming the conventional face of financial services in the country at a rapid pace. Indian customers are becoming more tech-savvy, aware and are accordingly seeking products and services which are up to date and are tailor made specific to their needs.  Compared to banks Fintech firms clearly have an edge in terms of product delivery and customization.

 Uses of e-payment system

Demonetization encouraged the need among cash-dependent masses to adopt e-payment modes such as e-wallets. E-payments allows for transparent and secure transaction in money, and one doesn’t need to carry the exact change. However, e-payments is attached to a bank account, credit card or debit card , posing a limitation as a majority of the people are outside the ambit of financial inclusion.

Fintech contribution to home loan services

An area where Fintech is making major breakthrough is accessing home loans. Applying for home loan through a brick and mortar branch is a tedious and time-consuming process. Sanctioning a home loan involves lot of paperwork. Fintech has made services related to home loans accessible and have made the processes more efficient, which has helped to reduce the cost of serving the customer.

Most banks generally entertain large ticket loans. Fintech firms offer small-ticket size personal loans starting at Rs 15,000 at competitive interest rates. As most transactions occur online and have simple steps which can be easily followed even if the customer is not tech savvy. The same also helps to make the loan approval process more transparent.

Flipside of fintech

Fintech has obvious repercussions on banks jobs. With technology such as artificial intelligence (AI), banks can now halve the number of employees particularly in back-office. According to some reports, nearly a third of the jobs in the banking industry could be lost by 2025 due to automation of financial services.

However, Fintech has its limitations. Firstly, there is need for constant innovation to make Fintech system more safe and trustworthy. Moreover, the country does not lack the ability to develop and offer qualitative technology driven financial products, it does have a very low-level of financial inclusion in small towns and villages across the country.

There is also a huge gender disparity in backward regions of the country where women are discouraged from using phones or internet.

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