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Once upon A Time We Had ATMs, Cash Transactions, Only Humans In A Bank

The reigning deity on the banking turf was the State Bank of India or “Big Daddy” as the financial markets referred to it; others of adipose-laden ilk also had a free run

Photo Credit : Tribhuwan Sharma


It’s 15 august 2047 — your kids remind you once again of the promise to take them to the museum to show an ATM. As it is closed, being Independence Day, you do the next best thing — take them to an exhibition put up by HDFC Bank on the eve of India’s 100th freedom anniversary. The exhibition is on the evolution of banking in India for school students, which has a mock branch of a state-run bank with an ATM in it. Thirty years from now — will both the ATM, and state-run banks be history? Let’s rewind to 1991 — it is not 30 years ago, but far back enough.

The reigning deity on the banking turf was the State Bank of India or “Big Daddy” as the financial markets referred to it; others of adipose-laden ilk also had a free run. None of your private banks were on the scene. You had little choice by way of range in services and products. Then, as is the case now, quibbles took up the time of the entrenched; you are reminded of the rhyme from Lewis Carroll’s ‘Through the Looking Glass’.

Tweedledum and Tweedledee,

Agreed to have a battle;

For Tweedledum said Tweedledee,

Had spoiled his nice new rattle.

Just then flew down a monstrous crow,

As black as a tar-barrel;

Which frightened both the heroes so,

They quite forgot their quarrel.

Beating a Retreat

In a little over a quarter century, our banking world has been turned upside down. A handful of private banks led by HDFC Bank account for the bulk of the sector’s market capitalisation even as their collective market share of business is in the lower double digits. Investors flock to these worthies to offer them capital hand over fist. Best-in-class customers — both in India Inc., and retail seek out them (and a clutch of foreign banks). The near-70 per cent share of state-run banks in systemic assets mean for little as the cream of business has shifted over to nimbler players.

Of course, it is not in any way to suggest the as-on-date “unviable” is not worth going after. The larger point is — 40 years after bank nationalistion, the objectives for which it was done have not been realised. The success of the Jan-Dhan Yojana is testimony to it — even if one were to concede that many accounts are dormant or have little cash-balances in them.

If it is not quicksand enough, you now have fintech and other forms of life parachuting into the field of play — like hitherto pure-play technology majors and differentiated banking licenses; they have the potential to eat the lunch of the established.

So, how will the banking topography look in 2047? It can be safely said, the writing on the wall is clear for state-run banks — they will not be around in their current

avatars. So too other relics like cooperative banks. You may also witness creative destruction of banks — you create something within to eat you up— like First Direct, the telephony-bank of Midlands Bank, which was later gobbled up by HSBC. Look at Facebook’s induction manual, which is all for the creation of an offering within, that will one day replace it.

So, you may well see banks incubate a fintech arm, scale them up and, who knows, merge into them. You can loosely think of ICICI Ltd’s reverse-merger with ICICI Bank as a pointer. The idea is straight out of the Hindu texts — you take on an avatar for a specific task; once the deed is done, the avatar is finito.

Point is, the distance between 2017 to 2047 will be shorter than your trip to the ATM!

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