SBI is threatened by new-age payments banks, flies to Bengaluru to catch up with tech-savvy rivals

To catch up with rising new-age payments banks, mobile wallets and digital currencies, State Bank of India (SBI) is now looking to engage with early-stage startups and outpace its rivals.

The SBI wanted to understand its tech-savvy rivals and tap the potential of ventures at an early stage, for which a team lead by SBI Chairman Arundhati Bhattacharya visited startup hub Bengaluru and attended a session on how disruptive technologies and fledgling ventures were taking over the financial services industry.

Startups like en-Stage, Novopay, Happay, Vote4Cash, Probe Equity and Capital Float informed SBI on how point-solution startups will take over the financial services industry, if the banking industry did not act on time and came out with new-age solutions.

"We were surprised to see how these people are developing/working on technologies to solve some of the problems we didn't even know existed. It was very interesting to see how point solutions by start-ups have the potential to impact the banking industry,” SBI Chief Information Officer Mrutyunjay Mahapatra told Economic Times in an e-mailed response.

As per reports, a number of old-worldly Indian businesses are now launching corporate accelerator programmes and incubators to leverage the potential of startups.

Due to this, traditional financial services giants, including SBI, are facing disruption.

"The rise of smartphones, payment bank licences from RBI, unified payment interface from the National Payment Corporation of India, the huge amount of global capital coming into the payment industry will all lead to disruption," Infosys cofounder and former chairman of the UIDAI Nandan Nilekani told ET in an interview last week.

Nilekani added that the recharge alone is 3.6-billion transactions a month. “It is up to existing banks and others to create disruption or else a new startup will come and do it. I think it is very fertile situation for that,” he told ET.

Meanwhile, to engage with startups, SBI has decided to partner with iSPIRT. "SBI, as the leading banker to the nation, is keenly aware, keeping abreast of the changes and is desirous of 'leapfrogging' by adopting the technology innovations disrupting the banking industry," NRK Raman, director at Trimax IT Infrastructure & Services and an iSPIRT adviser, told the financial daily.

Through this partnership, SBI will get an understanding of broad changes in technology landscape and the specific catalysts in India impacting financial services.

Another person directly familiar with SBI's involvement with startups told ET that SBI was attempting to create an ecosystem around its services that would compare with other more technology-savvy banks and financial services firms, and create a platform that would give users the maximum number of options for different solutions being provided by the startups - like Android's "app store" where users have access to a plethora of apps.

(Image: Indiatimes)