“Traditional banks will have to transform and evolve to keep pace with the digital revolution underway in India,” he said.
Digital payment platforms like UPI Bhim have already brought a rural revolution at the local kirana stores and for urban street vendors, he said, adding that it has also ushered in an era of transparency and timely payments. With biometric-based authentication becoming the front line of digital security in the banking sector, Thakur asked fintech innovators to ensure the encryption of these systems remain foolproof and unbreachable.
If banks wanted to remain gatekeepers of funds, they would have to guarantee sound advice and secure and timely services, resulting in sincere trust from customers, according to Thakur.
Newcomers in the fintech space would pick and choose a few banking services that would be the most profitable, unlike traditional banks that offer the full menu of services, he said, adding that banks would have to evaluate their offerings in order to compete in this new era.
“Will people looking to invest and manage their assets, trust artificial intelligence and virtual advisers? Especially in the Indian context, where we value human interface, will the absence of a human touch affect our levels of trust and decision-making?” Thakur asked.
While people were willing to take the two-minute loans available through banking apps, they might not be so keen to invest in schemes simply on the advice of a chatbot or virtual manager, he said.
Another crucial factor for the future of the industry was the customer complaint redressal mechanism, the minister said. Along with the ease of digital payments, people would also seek ease of redressal of complaints, he said. “This is a crucial element in winning trust and there is no better publicity than word of mouth positivity,” Thakur said.
According to the minister, banking jobs that were repetitive and rule-based would eventually be taken over by AI and virtual systems, but this would represent a replacement of jobs rather than a loss of jobs, he added.
“They will be replaced by those who can manage these back end artificial intelligence-based solutions, programmers and coders, cloud computing experts,” he said.
The future of the banking sector would also see the democratisation of personal banking services, according to Thakur.
“Personalised offers and financial product promotions will be the future and preferred choice. Personalised banking solutions will no longer be a luxury limited to the urban or wealthy,” he said.