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Banks must transform in line with changing times: Panellists at VCCircle event
(From left): Shankar Subramaniam of BofA Merrill Lynch, VCCircle’s Shalil Gupta, Quona Capital’s Ganesh Rengaswamy, Ramaswamy Iyer of Vayana Network and Baring’s Munish Dayal

Indian banks need to keep pace with changing technologies and market conditions to thwart the challenges thrown up by young fin-tech companies that are disrupting the financial services industry, panellists at the VCCircle FinServ 2018 summit said on Tuesday.

The panel that discussed the rise of digital banking and how fin-tech companies were affecting traditional banks comprised Shankar Subramaniam, India head of global transaction services at Bank of America Merrill Lynch; Ganesh Rengaswamy, co-founding partner at Quona Capital; Ramaswamy Iyer, founder of Vayana Network; and Munish Dayal, senior partner at Baring Private Equity.

Rengaswamy said while banking has evolved over time, customer preferences are changing dramatically. Also, digitisation and new technologies are bringing changes to processes that seemed impossible till recently.

“Regulators are also getting smarter. All the wheels are churning. But banks, which had leadership position in the past, are now finding ways to continue leading the business which is a challenge to some extent,” he said.

According to the panellists, as the number of fin-tech companies and financial products increases, one way that banks can keep pace is by collaborating with these players.

“Creating an app is not necessarily going digital. Innovation and digitalization have happened more on the process side, but we haven’t done anything spectacular in terms of product innovation, and that’s the area where banks need to focus on or probably partner with companies or people who are into innovation and facilitate them in innovating,” said Subramaniam.

Dayal, however, highlighted another challenge—the fear of tech giants. “Banks don’t fear fin-tech [startups]; they fear big tech companies like Amazon. I believe fin-tech has become a facilitator for banks as they help them innovate. This is disrupting the banking sector,” he said.

Shalil Gupta, chief business officer at News Corp VCCircle, who moderated the session, said that banks will have to adopt new business models to survive.

Most panellists were also of the opinion that banks do pose a challenge to fin-tech players as they have access to cheaper capital and that banks can gain tech prowess if they use this capital properly.

“There’ll be a huge rush for much cheaper capital. Banks are the only place which can provide cheaper capital,” said Iyer. “This can pose a competition to fin-tech companies.”

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