Digital banking: Public sector banks look to boost infrastructure

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In view of the changing banking habits of customers which saw a significant shift towards digital transactions after the coronavirus breakout, public sector banks (PSBs) are looking to built a shared digital infrastructure for doorstep banking services, Mint reported.

They are exploring the idea to collaborate on a Digital Banking Infrastructure Corp, which will allow fintech tie-ups, co-lending and other digital assistance to customers who now prefer online transactions instead of reaching out to a physical bank for any assistance.

In April-June last year, 62% customers of State Bank of India (SBI) opted for digital banking services compared to 20% who went to ATMs while 40% customers of Punjab National Bank (PNB) picked digital transactions, the report said. These numbers further aggravated during October-December with 67% percent customers choosing digital mode of transaction in SBI and 46% in PNB.

A panel of the Indian Banks’ Association is working on creating the digital banking infrastructure. The size of investments for Indians is usually huge and it might get difficult for individual banks to comply to a large pool of people with limited resources. Hence, an anchor bank, if put in place could facilitate large amount of banking services under a common platform.

Service providers and technology partners will be hired for this initiative as the banks plan to float a ‘request for proposal’ in order to find a solution to the changing trends with respect to online banking.

PSBs are also planning to share common software and hardware for the back office. This is expected to bring down the overall cost and make the infrastructure seamless in nature.