According to Union Bank of India’s Managing Director and CEO Rajkiran Rai G, now that digitization is gaining pace, close to 50 per cent of retail and MSME loans offered by banks will shift to digital lending platforms over the next two to three years.
Digital lending is changing the banking landscape in a big way because of the availability of data and many ecosystem partners collaborating with banks. Rai said the digital lending space is gaining traction and banks need to develop products that can deliver services online to customers. There is a big revolution happening in MSME lending going forward.
“I feel that at least 50 per cent of the loans under retail and MSME segments will move to the digital lending platforms, right from sourcing to documentation level, in two to three years,” Rai said.
He was speaking at the Sibos 2021, an annual banking and finance conference.
“The working capital lending to MSME will move from open credit like working capitals and cash credits, to very-targeted lending such as very specific invoice discounting and supply bill discounting,” he further added.
Speaking about the entry of fintech in the banking space, he said initially it was thought that fintech will compete with banks, but now the relationship between the two has become more symbiotic.
“There are many products where fintechs are already working with banks,” he added.
Rai believes banks need to continuously invest in technology and upgrade themselves. “Public sector banks need to get new talent from the system who are adept in technology and can bring in innovations.”
