Noida: Co-operative banks and credit cooperative societies in India play an important role in rural, semi-urban areas. These financial institutions help in rural financing, funding for agriculture, milk, personal finance, self-employment, starting of small-scale businesses and so on. However, with the advent of technologies, it is necessary to adopt the digitalization of this banking system as it holds the potential to enhance customer experience. The Union Budget 2022-23 has allocated a sizeable amount for building a robust system that enables easier access to finance, the marketplace and new-age technology.
The panel titled, ‘Impact of Digitization in cooperative Banks and credit cooperative societies’ by APAC News Network as a part of their two-day conference had extensive discussion on various aspects of banks and financial institutions. Daya Prakash, Founder, TalentOnLease moderated the session. Srinivasa Rao Muppaneni, Group CIO, Telangana State Cooperative Bank, Vishal Rathod, CIO, NKGSB Bank, Rohit Singh, CISO, Arihant Bank, Milind Varekar, Dy. CMG, Saraswat Cooperative Bank, Jatinder Mohan Singh Shah, COO SME & Payments, Fincare Small Finance Bank, Vinayak Chavan, Digital Banking & Innovation, GP Parsik Bank were other speakers.
By initiating the session, Daya Prakash asked questions on the digitization of cooperative banks and how digital technologies are playing a role in streamlining their operations and enhancing profitability.
Jatinder Mohan Singh Shah, COO SME & Payments, Fincare Small Finance Bank said in the opening statement, “Cooperative banks represent the real India because they have huge number of accounts from rural and semi-urban areas. Also, there are some bigger cooperative banks in metro and tier 1 cities. Cooperative banks have to keep up with the pace with private sector banks because these banks are moving towards these semi-urban areas. There is a new wave of small finance banks that have been given license in the year 2017. There are about 11 small finance banks out of which 7 are MFI players. They are converting the customers of these MFIs to banking customers. They are going to be direct competitors for Cooperative banks by the virtue of their location as well as the segmentation.”
“Now as an expectation from the customer, today every customer will look at a digital product. Now every customer wants to visit a bank for getting bank account statements. If cooperative banks do not adopt the bandwagon of these digital technologies, they will be left behind”, he added.
While Vishal Rathod, CIO, NKGSB Bank addressed the issues and expectations from the customer’s point of view. He said, “The generations of customers are changing so their needs. They are also keen on having a similar kind of app experience that they have on other banks. To keep up with these expectations we have to build a digital platform.”
Vinayak Chavan, Digital Banking and Innovation, GP Parsik Bank threw some light on the challenges faced by Cooperative banks due to NPAs and other old due loans that hampered their functioning and operations and how digital technologies can help in overcoming such situations. “Not just the cooperative banks, but every kind of banks have certain worries about the NPAs. Digital technologies will surely help to tackle this situation to some extent. Fundamentally, lending is a risk-based business so keeping that in mind your recovery process should be robust enough to recover the bad loans. A recovery strategy is a kind of reactive measure that you implement. GP Parsik Bank itself have very strong recovery NPA management. To complement this, while onboarding you can categorize any customer. Here technology plays a vital role in the digital onboarding of a customer. You can have a questionnaire that can help you categorize customers based on their rating capacity, credit score and so on. This way you can also leverage tools available in the market. Subscription-based tools for fraud check, verification, background check and more which gives you direct access to bank statements, ITR forms, form 26 etc.”
Rohit Singh, CISO, Arihant Bank said, “There are 5-10 major cooperative banks in India who are leading the banking sector. Apart from those 10 -12 banks, there are other small banks where we have seen they have not been opting out for LMS systems, integrating their CPS system with operating card information bureaus. I feel there is a problem with smaller banks. There are about 1300 UCB banks in India or more that.”
Milind Varekar, Dy. CGM, Saraswat Cooperative Bank said, “Digital strategy needs to be driven from top-down. There has to be a file at the board level that we need to go on the digital journey and there has to be a budget. That is the approach we follow. We have given the roadmap to the board for the digital journey and that has been enabled by the board so from there onwards when you are looking at the digitization then you are setting up any digital channel that we ensure there has to elasticity to the infrastructure that we provide. You also need to have a robust cyber security framework in place because along with the digital transaction we have also seen that there is a surge in cyber frauds and customers despite educating them regularly about sharing their PIN, OTP, login but still out of ignorance that is happening.”
According to Srinivasa Rao Muppaneni, Group CIO, Telangana State Cooperative Bank, “Digitization of cooperative banks is not different from private or public sector banks. Entire digitization should be customer-centric. Unless we have complete digitized customer data in hand, it will be very difficult to identify exactly which are the advances, which are becoming NPA and what kind of measure that we need to take to bring down the overdue position and the prospecting NPA position then we can counter these with the support of the technologies. We need to digitize the entire banking products so whenever we are going to the remote rural areas their customer wants to know the balance of the account or close the account. Now we wouldn’t have books in our hands, if we completely digitized then we will be having devices in hand to resolve customers’ issues.”