BT Banking & Economy summit: Here's how COVID-19 altered India's small finance banks' landscape

COVID-19 was a testing time for the Indian banking ecosystem. However, several models got tested and the stakeholders of the ecosystem were able to identify various opportunities within the sector, according to experts. One of the models that has been tried and tested during the pandemic and emerged resilient are payment banks and small finance banks. 
 
Speaking at Business Today’s Banking and Economy Summit 2023 on Friday in Mumbai, experts said that the small finance banks and the payment banking sector have a wealth of opportunities to offer but everything depends on the technology they are deploying and the products they are building. 
 

“The fact that almost all institutions have come out strong from this difficult two-and-half-year phase is a testimony to the risk models that were established five years ago,” said Rajeev Yadav, Managing Director, and CEO of Fincare Small Finance Bank.
 
He also said digitisation is not the only learning that has come out of the pandemic because people knew before also how to leverage technology.
 
Rishi Gupta, MD, and CEO of Fino Payments Bank shared his own experience of how testing the COVID-19 period was. “I coined a term at that time…” he shared, adding, “...which is COVID means creating opportunities in virus-infected days.”
 
He also added that the large migration from metros to Tier III cities and beyond led to many people becoming their customers. “Today a customer has many choices to make transactions. He can go to the bank or do it digitally using the app,” Gupta noted.
 
This is a major accomplishment for India, he said, because when the COVID-19 pandemic struck, everyone was worried about carrying out banking activities safely and securely. 
 
Gupta said that customer resilience stood out for him as one of the biggest takeaways from the pandemic. Sanjay Agarwal, MD and CEO of AU Small Finance Bank responded in agreement and said, “Customers became very loyal to you. They deposited their money with us and that led us to grow…”
 
He also said that the bank’s relationship with customers went beyond transactions. “We were assuring them that the world will become better, helping them with medical supplies, etc,” he revealed. 
 

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