Mumbai: Reserve Bank deputy governor SS Mundra has warned that unless traditional banks quickly convert themselves in to a new-age digital banks, they face the risk of becoming history.
"The age of fintechs is here and for the incumbent banks there is no time to lose. Banks that do not quickly convert in to a new-age digital banks run the risk of becoming history," Mundra said. Asking the brick and mortar banks not to treat fintech companies as threats but as an opportunity, he said "traditional banks would need to tap the requisite talent and create an environment where such talent can innovate and be agile. Banks must view the success of fintech ecosystem as an opportunity and not as a threat."
Noting that fintech companies are disrupting every facet of the traditional financial services business and have emerged as a challenge to the banking system, he quoting a recent PwC global report said 'up to 28 per cent of the banking and payments business are at risk by 2020.'
Mundra said the imminent competition to banks' business comes from the new breed of fintechs having capacities to address specific painpoints of financial customers such as remittance, credit, savings etc. The 2016 PwC report predicted that the MSME banking is likely to be the fourth largest sector to be disrupted by fintech in the next five years after consumer banking, payments, and investment/wealth management.
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