Why State Bank of India (SBI) is Afraid of Small but Nimble Fintech Companies
More than 24,000 branches and 42 crore customers make the State Bank of India (SBI) the goliath of all banks by sheer size and physical presence but its new chairman Rajnish Kumar is worried about the competition from nimble fintech companies.
“Today, the risk is the disruption that is caused by the technology ,“ Rajnish Kumar, chairman, State Bank of India (SBI) told ET in an interview. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority .“
India’s banking landscape has undergone tremendous change in the past 3-4 years with the likes of Paytm, and ItzCash disrupting banking services. Banks are increasingly worried about the businesses that these startups could eat into. Wallets and other payment mechanisms have become the preferred mode of payments as people walking into branches have dwindled. “We cannot live in this comfort that we have such a huge dominant market share or customer base,” said Kumar, who would serve at the helm till 2020. “When you are incumbent, the biggest challenge will be protecting the turf and continue to remain dominant player.”
Although it is two-century-old, Kumar’s predecessor Arundhati Bhattacharya laid emphasis on technology by launching products like Buddy, a wallet, and regaining number one position in mobile banking, hired experts from outside, including Shiv Bhasin from Barclays. SBI now has 30% market share in payments space despite facing competition from new players. “We should not be smug about it. Even if it is a small player challenging you, you should not underestimate it, because it can become big player,” said Kumar. “We have to ring fence our market fully.SBI has brand value and we should not do anything that erodes that trust.“SBI is set to launch a new mobile app Omni Channel where a customer can carry out all banking transactions except depositing and withdrawing cash.