State Bank of India, the nation's biggest lender, is taking steps to understand its tech-savvy rivals for which a team led 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. SBI is looking to engage with early-stage firms to catch up with rising new-age payments banks, mobile wallets and digital currencies.
A dozen startups, like enStage, Novopay, Happay, Vote4Cash, Probe Equity and Capital Float, pitched to SBI how point-solution startups would take over the financial services industry if the banking industry didn’t act on time and come 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 responded to Economic Times in an e-mail. "In fact, we were so impressed by the overall concept that we have personally invited a few of these guys for demonstrations at our office for a larger group of audiences," said Mahapatra.
A number of old-worldly Indian businesses are now launching corporate accelerator programs 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 licenses 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," Nandan Nilekani, Infosys Co-founder and former Chairman of the UIDAI, said to ET in an interview last week. "There is the rise of mobile wallets and also of e-commerce. 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 (a) very fertile situation for that."
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, said to ET. SBI has engaged with iSPIRT to understand the broad changes in the technology landscape globally and the specific catalysts in India impacting financial services; interact with some of the innovative startups in payments, lending, analytics as well as find out how it can partner with them "to 'leapfrog' in new technology adoption within the bank and industry in general," he said.
Another person directly familiar with SBI's involvement with startups said to ET that SBI was attempting to create an ecosystem around its services that would compare with other more tech-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.