Rai said digital lending is dramatically changing the banking landscape due to the availability of data and many ecosystem partners collaborating with banks.
“I think at least 50% of loans in the retail and MSME segments will move to digital lending platforms, from sourcing to documentation level, in two to three years,” Rai said in a statement. address at Sibos 2021, an annual banking and finance conference.
He said the digital lending space is gaining ground and banks need to develop products capable of delivering online services to customers.
Rai said he foresees a big revolution in lending to MSMEs in the future.
“Working capital loans to MSMEs will shift from open credit such as working capital and cash loans, to highly targeted loans such as discounting very specific bills and discounting supply bills,” he said. he declared.
Speaking about the entry of fintech into the banking space, he said that initially it was thought that fintech would compete with banks, but now the relationship between the two has become more symbiotic.
“Now fintechs are helping us (banks). They are no longer competitors for us. The digital lending space will be nothing but fintech links,” he said.
There are many products that fintechs are already working with banks for, he added.
Rai believes banks need to continually invest in technology and upgrade.
He said that the management bandwidth in the public sector space, at least when it comes to innovations and digitization, is much less.
“We have traditional people who are good at managing technology and managing the basic banking system, but they are not in the space of innovation and new product development,” Rai said.
He said public sector banks need to get new talent from the system who are tech savvy and can bring innovations.