You cannot serve the underserved without technology, says Rajat Verma of HSBC at TechSparks 2021

Technology is slowly seeping into each sector in the business world, and banking is no different. Rajat Verma, Managing Director and Head, Commercial Banking, HSBC India, believes that while a lot of the sector’s growth is conventional, they couldn’t have done it without technology. 

Speaking at the 12th edition of YourStory’s flagship startup tech conference, TechSparks 2021, Rajat presented his views on “Tech unlocking Businesses and Banking”.

Elaborating on the role of technology, he said, “Technology for us does a few things. It reduces the friction of our transactions, reduces operating costs and increases efficiency.”

Besides, technology improves the quality of information and assessment and plays a critical role in serving the underserved banking sectors of the country.

In the next two years, Rajat believes the banking sector will see the rise of blockchain or distributed ledger financing and distributed ledger transactions, especially in areas with more friction —international trade. 

Digital solutions for seamless transactions

The COVID-19 pandemic taught the banking sector that customers need not visit a bank physically just to sign papers, which is frictional.

“Today, a significant number of our clients are signing papers digitally. Obviously, regulations and laws need to keep up with that, and they have. Changes in digital laws have also helped immensely,” he said. 

In fact, the new-age B2C ecommerce sector is also seeing a lot of movement, Rajat added.

To keep up with various methods of payments, HSBC has launched Omni Collect, which enables clients to offer multiple payment options to their consumers through single API connectivity. 

Recently, the bank also launched UniTransact, which aims to simplify cross-border transactions.

“India is a regulated economy. So, when you have to make an international transaction, there are various processes and compliances with the authorised dealer or the bank. Through UniTransact, clients can address issues online,” Rajat explained.

Fintechs and banks have a clear case of partnership, not competition

The unprecedented rise of fintech startups in India has ignited discussions around if they will eventually replace banks. But Rajat disagrees, saying he feels fintechs and banks have a collaborative relationship.

While banks have customers and the trust factor, fintechs come up with innovative solutions faster than banks, or they work with banks to reach customers faster. “This is a clear case of partnership. I don’t see it as competition,” Rajat said.

He believes fintechs can push the traditional banking sector towards an innovative future, but the possibility of the former becoming banks is low. “Because beyond that, technology wouldn’t work, the trust would,” he added. 

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Apps are more encompassing today 

Talking about the role of apps in the banking sector, Rajat said, “They have gone from paying your bills to paying reward points. Some of them have also become portals for travel and entertainment. That's convenient.”

He added apps have also played a big role in improving customer experience. Today, clients can get information on their own without calling the customer service centre.

Through artificial intelligence and machine learning, an app can answer customers better than humans. All financial institutions need to have apps, he said.

Rajat summarised the conversation with three main advantages of technology in the banking sector. These include:

Cost reduction: Technology helps in reducing the cost of transaction, acquisition, and frictional pain in financial services. 

Use of data of aiding decisions: While this is still new, it is relatively easier to get small ticket loans on a cash flow basis. While tech has a clear role in aiding decisions, Rajat believes this feature still needs a human element.

Financial inclusion: Technology is critical in serving the underserved banking population of India and the underserved credit requirements of the country.

“The use of tech is for making a level playing field for credit, which will see the light of day finally,” he added. 

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