Private banks score better in digitalisation and cybersecurity compared with public sector banks, the Reserve Bank of India (RBI) said on Monday. The RBI’s ‘Report on Currency and Finance 2023-24′ noted that many commercial banks are planning to use chatbots in less than a year.

“Private sector banks are also ahead of public sector banks in the realm of cybersecurity. Further, in both the public and private sectors, small banks lag behind big banks in terms of digitalisation and cybersecurity,” the report, released on Monday, noted.

Private banks have also performed better in customer satisfaction. Usage of mobile and internet banking by customers of private lenders was higher than that those of public sector banks, showed the survey.

“Bank group-wise analysis of ratings of mobile banking applications of 47 banks in India shows that ratings are generally higher for private banks as compared to public sector banks and small finance banks,” said the report.

“The frequency distribution of average user rating for primary mobile banking applications of 47 banks suggests that 55.3% (26 out of 47) of applications have average user rating of 4 or above, reflecting customer satisfaction with mobile banking,” added the report.

Adoption of technology has helped lenders reduce operation costs. A special survey of banks conducted in March this year showed that more than 90% of respondent banks said their customer acquisition and transaction costs have decreased after adopting digital technologies. For 88% of banks, employee costs have come down and around 76% of banks reported lower premises-related costs due to adoption of digital technologies.

“Many SCBs (scheduled commercial banks) plan on adopting chatbots in less than a year,” said the report.

Commercial banks are digitalising their retail portfolios, especially personal and MSME loans. Information provided by five SCBs, having 53% share in the personal loan market, indicates that around 40% of personal loans by them were processed end-to-end digitally in 2022-23.

The survey on the adoption of various types of financial innovations showed that internet banking, mobile banking, online account opening, digital KYC, mutual fund investments and doorstep banking through digital means are being extensively used.

However, adoption of more recent innovations like payment aggregator services, chatbots, prepaid wallets, open banking, online Public Provident Fund and IoT (Internet of Things)-based applications have been relatively lower, with less than half of the surveyed commercial banks adopting them.

A correlation analysis reveals a positive association between the size of the bank and respective mobile banking application installations by customers, especially for private lenders.