Stressing the need for banks to do more on the technology and customer services fronts, finance minister Nirmala Sitharaman on Friday said banks’ systems should talk to each other to ensure better services to customers. Speaking at the Indian Banks’ Association’s (IBA) 75th annual general meeting, Sitharaman exhorted lenders to make better use of Web3, artificial intelligence (AI) and data analytics, speaking of these as priority areas for the government.
“You may think each of us has created our own empires, each of us have our own digital system. But it doesn’t talk to the next one. It is such a missed opportunity if we keep thinking that way,” the FM said, adding that customers of one bank should be able to seamlessly deal with the systems of another bank.
Use of new technology will also aid in increasing the efficiency of banks to prevent fraud detection, unusual transactions and diversion of funds for unlawful activities, she said.
Banks must also move to Web3 and AI and make it an immediate priority, otherwise, lenders will have some level of digital use, but not to the extent as to detect frauds through appropriate early warning signals, the FM said. She said there was a need for banks to join the account aggregator framework and avail of the benefits it offers.
Over the next 25 years, banks also need to have a strategy for catering to younger population, she said, adding that lenders need to come up with more products which will appeal to a younger demographic. Sitharaman stressed the need to train bank staff to make them digital-savvy.
In addition to embracing the new technology, banks also need to be vigilant and prevent hacking of their systems and prevent a black swan event, which puts the system in a crisis mode.
While banks have penetrated to rural areas to a certain extent, more needs to be done to provide last-mile connectivity, especially by private lenders. Lenders need to increase their network in the north-east India, which is in dire need of financial inclusion, she said.
In addition, sponsor banks should also focus on their regional rural banks to improve digitisation and bring them on the account aggregator system.