'Nobody can compete with banks': Ex-SBI chief Rajnish Kumar identifies the gap fintechs can fill

Rajnish Kumar, the former State Bank of India (SBI) Chief and current Chairman of Mastercard India, said that when it comes to gathering money, nobody can compete with banks. However, he said, they don't know how to deploy that money, which is where fintechs can play a role.

Speaking about the divide between banks and fintechs with Business Today TV, he said, "When it comes to gathering money, nobody can compete with banks. That is very clear. Banks are doing a fantastic job but they don't know how to deploy that money and that is their problem. There, the fintechs can play a role in helping them to increase their outreach and help in what we call as intermediation and financial inclusion."

He further spoke about the gaps where fintechs are playing a critical role.

"Banks, nowadays, are very happy for giving housing loans, car loans, but there is a huge section of the population where credit needs are high and that are being served by the informal sector. That is a gap and that is where fintechs or digital lenders are playing a critical role," Kumar said.

Kumar had earlier spoken about why fintechs are flourishing in India and the advantage they have over non-banking financial companies (NBFCs) and legacy banks.

"In terms of cost arbitrage, fintechs are best placed today when compared to non-banking financial companies (NBFCs) and legacy banks. They are flourishing because legacy institutions could not sense what the customer needs. There was a gap which fintechs have very beautifully filled in," he had said at BT’s Banking & Economy Summit in Mumbai.

"What a bank would do to acquire a customer in terms of cost, the fintech will do it probably at a 25-30 per cent cost," he had said.

At the event, he had also said that no one can beat banks when it comes to trust factor.

"The trust factor when it comes to banks is very high. Their capability to gather liabilities is unmatched. NBFCs and fintechs don't have that advantage," he stated.

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