India’s Leading BFSI & FinTech Companies 2024

[ BANKING SECTOR OVERVIEW ] India’s Leading BFSI and FinTech Companies 2024 9 SCBs strengthened their capital buffers in FY23 as indicated by increase in Capital to Risk Weighted Asset Ratio (CRAR) from 16.8% in FY2022 to 17.3% in FY2023. Within bank groups, CRAR of private sector banks declined marginally from 18.8% in FY2022 to 18.6% in FY2023 owing to increase in their risk- weighted assets vis-à-vis their capital funds. BANKING GAME CHANGERS INCLUSIVE BFSI MODELS The next growth opportunity for Indian banking sector will be in serving India’s vast number of micro, small and medium enterprises (MSMEs). Currently most of the MSMEs meet their financing needs through informal source and non-banking financial companies (NBFCs). The use of unstructured data like prior transaction details and data from GST platform can enable banks to assess the creditworthiness of MSMEs and alter their lending mechanism to better serve MSMEs. Moreover, to cater to the rural or remote areas, banks may partner with local retailer outlets. With the help of technology, they can allow their rural customers to cash in or cash out through these retail outlets, bypassing the need for traditional bank branches and ATMs. TECH TSUNAMI It is expected that AI, and data analytics will be increasingly used by banks for enhancing efficiency, predictive analytics, and risk management. Reliable and diverse data sources like e-commerce purchases, utility payments and social media will be leveraged to make smarter and faster decisions. Further, AI will be used not only to analyse historical data but also to make predictions about future customer behaviour, which can be used to identify and assess risks. NEXT-GEN CUSTOMER EXPERIENCE As per the RBI’s Trends and Progress of Banking in India 2022-23 report, around 79% of SCBs had some form of chatbot and virtual assistant by using AI and ML to enhance efficiency and customer experience. In the coming years, SCBs are expected to leverage AI and ML further to make hyper personalised product recommendations based on the customer financial status. Moreover, the use of ChatGPT in the banking sector will help in analysing customer data to understand their preferences and requirements. This information can be used in providing customer support on real time basis. CYBERSECURITY REVOLUTION With the expansion of digital banking, cybersecurity and data privacy are also expected to gain utmost importance. It is expected that banks will invest substantially in robust cybersecurity measures to protect customer data and transactions. There will be increased adoption of cloud interconnect solutions that facilitate direct and secure connections between banks’ IT infrastructure and cloud platforms, enabling seamless data transfer to cloud resources. REGULATORY SANDBOXES The RBI has introduced Central Bank Digital Currency in 2023, with 10 banks participating in the wholesale pilot and 13 banks participating in the retail pilot. The RBI has been testing various technical architectures design choices and use cases under both the pilots. The digital form of currency is expected to boost innovation and efficiency in the coming years. Dun & Bradstreet