Online Banking To Kill Physical Banks In 5 6 Years: NITI Aayog CEO Amitabh Kant

"My view is in next 5-6 years you will see death of physical banks. It will be very difficult for physical banks to survive because the cost of physical banks will be so enormous. It will be so enormous compared to an online instrument, many of the fintech start-up and their ability to do data analysis (and) providing lending," Kant said at an IAMAI event.

He said that with proliferation of mobile phones and Internet based transaction, it will be easy for financial technology firm to do analysis and provide loans to person who requires it and has good credit history.

"Amazing thing is that a lot of this going to happen because India will become data rich before it becomes rich. Our ability to use technology, analyse data and able to reach and provide financial inclusion to people in rural area will be key drivers of growth," Kant said.

He said that India is now home to about 900 financial technology players and received funding of $3 billion. This is forcing Indian banks to transform themselves riding on wave of Fintech.

"There is lot happening in India because of Internet. We have leap frogged US technology industry with very simple and practical innovation. Cost of customer acquisition in India fell down to $1 where across America and Europe the cost of acquiring is between $28-30," Kant said.

He said that in last 45 years about 28 bank licences have been issued by the government, but within last 18 months about 21 payments bank licences have been issued.

In 2015, the RBI had granted 'in-principle' approval to 11 entities, including the Department of Posts, to set up payments banks and proposed to give such licences 'on tap' basis in future.

However, Cholamandalam Investment and Finance Company, Tech Mahindra and a consortium of Sun Pharmaceutical Industries promoter Dilip Shanghvi, IDFC Bank and Telenor Financial Services gave up their plans to roll out payments bank.

Out of the remaining eight companies in the fray, Airtel, India Post Payments Bank and Chinese firm Alibaba backed Paytm have launched their commercial operations.Other players are - Aditya Birla Nuvo, Fino PayTech, National Securities Depository, Reliance Industries and Vodafone m-pesa.

Kant said Indian government is making things easy and simple for businesses.He, however, was annoyed when director of a company complained about processes at government offices and problem in online transactions in India.

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Online banking to kill physical banks in 5-6 yrs: Amitabh Kant
Online banking to kill physical banking: Kant
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Online banking to kill physical banks in 5-6 years: Amitabh Kant
Online Banking To Kill Physical Banks In 5-6 Years: Amitabh Kant
Online banking to kill physical banks in 5-6 yrs: Amitabh Kant