State Bank of India Chairman (SBI) CS Setty on Friday said most of the banks including SBI are not getting into a rate war but competition for deposits is likely to continue for some time amid the movement of funds to other asset classes. Addressing the Global Fintech Fest (GFF) in Mumbai, Setty said, “It is a fact that due to the change in asset allocation of the customers, some movement of investments is going to other asset classes. So, obviously, increase in credit growth and savings to other asset classes is putting pressure on deposits of the banks.” “We want to attract customers by way of improved service quality and some banks are looking at opening branches,” Setty said. Banks have been witnessing a bigger growth in credit offtake and a sluggish growth in deposits of late. “Everyone is looking at how to get more value out of their existing customers and attract new customers by offering better quality of service. Essentially there will be some tweaking in interest rates particularly in the one-to-two-year bucket, which is the popular one. Competition for deposits is likely to continue for some time,” Setty said. “Fortunately, we have very comfortable CD ratio, and we are not under pressure to reduce CD ratio. We have robust credit growth, and we expect 14-15 per cent credit growth,” he said. Even if we have 8-10 per cent deposit growth in SBI, because of the large base in absolute number, it will be larger than the absolute amount of credit growth, he said. On the fintech sector, Setty said, “the good thing about fintech ecosystem is they are reshaping the way we do business. It is helping conventional players to re-imagine customer journey. The agility to deliver is a good factor of fintechs.” “One suggestion for fintechs is – any solution that fintechs bring in, it should be available to scale. The scalability has to be brought in,” he said. Sharing his views on AI (artificial intelligence) and Gen AI, Setty said, “we are widely using AI for quite some time. We were the first to have AI/ML based lending models on personal loans. We use AI extensively for lending, fraud management, KYC, proactive risk management and our approach to AI is enterprise-wide adoption of AI.” As far as Gen AI is concerned, it is too early to say what will be the commercial impact of Gen AI in the BFSI space, essentially the first use case is to be knowledge based – how easily internal knowledge is available to employees, and efficient delivery of services, he said. On the digital transformation of the SBI, Setty said, “SBI is a microcosm of India… it is as diversified as our country. The digital transformation for SBI is a five-year roadmap and this five year roadmap has different elements.” “It is not just about digital at the front-end, we are focusing more on technology and technology resilience,” he said. “This includes investment in data architecture, revisiting infrastructure, network, and what we are focusing now is especially the customer omni-channel experience - a customer who is a branch customer can seamlessly move to internet banking, but this requires deeper architecture of IT platform and this is what we will do in 2.0. It is about scalability, robustness, resilience and more importantly cybersecurity,” Setty said. “We are also looking at large scale adoption of marketing technology, which will enable us to make hyper personalization offers for retail, financial inclusion, MSMEs, and our digital transformation is also focusing on new to bank customers,” Setty said.
