Banks should shift from isolated service provisions to personalised embedded banking: RBI’s Rao

Published - November 23, 2023 09:10 pm IST - MUMBAI

Reserve Bank of India deputy governor M Rajeshwar Rao on Thursday said the banks will have to transition from a sectoral approach to an ecosystem approach. The banking of future is going to be hyper-personalised, and banks may have to shift from isolated service provisions to hyper-personalised embedded banking, he said.

He was speaking at a conference organised by FICCI and IBA in Mumbai.

“The current form of business segmentation may give way to customer preferences-based verticals and the traditional break-up of assets and liabilities may likely undergo drastic changes,” he said.

Mr. Rao also said that over the course of time, it has been said several times that we need banking, but not banks.

“Banks will continue to be the primary drivers of India’s growth story, but the trajectory that the banks would adopt during this transition will determine how the banking landscape will look in the next decade,” he emphasized.

Speaking on the future of banking, he said the recent crisis episodes in the U.S. and Europe have brought back the question of robust and sustainable business models again to the fore. 

“The business models of the banks have evolved depending on the roles they have played throughout the history, with the current focus being on the intermediation paradigm i.e., acceptance of deposits and credit creation,” he said. 

“This approach needs to change with newer players entering the financial service space and disrupting the traditional rules of the game. In the newer paradigm, markets are likely to become the central point for intermediation where banks may become but one amongst the host of other entities interacting in the marketplace. The traditional banking business model needs to pivot to address this evolving paradigm,” he stressed.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.