There is a huge opportunity for banks to collaborate with financial technology (fintech) companies going forward, said State Bank of India (SBI) chairman Dinesh Kumar Khara. He added that SBI is constantly on the lookout for opportunities to collaborate with these entities.

“The way forward needs to be collaborative. Financial technology offers a solution to a problem. Also, fintechs in isolation may not be a success because domain knowledge about finance and customers is available with the banking system,” he said at the Financial Express Modern BFSI Summit on Friday.

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“If fintechs and the banking system collaborate, perhaps very real opportunities will emerge. We are engaging with fintechs to figure out solutions for a wide range of customers through our innovation hub.” Even as various economies across the globe are ‘coupled’, Khara noted the Indian banks were relatively insulated from the US banking crisis due to tight regulations for Indian financial sector entities. Additionally, the capital adequacy of various banks has helped them absorb “shocks”. In this regard, SBI will continue to build internal reserves going ahead.

Nevertheless, Khara acknowledged that cyber security is a key risk as far as the financial sector in India is concerned. “With the adoption of digital, cyber risks become more pronounced. When it comes to cyber security issues, it is not merely the banking system. It is actually all the players who are within the ecosystem who contribute to this risk,” he said.

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Khara feels cyber-security requires “long-term vigil” and that adequate steps must be taken to ensure that the inner systems of the bank is protected. The role of financial literacy, the broader ecosystem and intermediary network is also key.

“While we have such strict Know Your Customer norms in the financial sector, is there room for the telephone operators to have the KYC? It is only because of the KYC that the fraudster can acquire the number. I think it is a menace for society in general,” he said. Additionally, the overall cost of deposits of banks must also be monitored.