LIVE: SBI Chairman C.S. Setty Keynote At AIMA 52nd National Management Convention, New Delhi

In banking space has gone for granted. I'll just give you, before I get into my written speech, the kind of service expectations in the banking industry are not compared between SBI and other banks; it is between the banks and the e-commerce platforms. So the expectations of service quality and the speed of service is clearly defined by the players who are non-banking entities. So how do banks, which are complex organizations, adapt to this changing requirements of customer expectations is the largest challenge. It is not about crypto; fintech will come later. The first and foremost challenge the banks currently face is how do you meet the rapidly changing customer expectations on the service front. I will give an example how these expectations are being shaped. We used to take maybe three days to open an account maybe 20 years ago. We have reduced, with lot of technological adoption, to four hours, and then we further fine-tuned. Before I tell you what is the time taken for account opening, we did a dipstick survey recently among the customers: what do they want when they go to the branch? A lot of people don't go to the branch, but those people who go to the branch, what is it that they expect from the branch? Most of them said the top of the heap was essentially a quick service. I said then the question was: do you know that SBI opens an account in 20-25 minutes if you're using Aadhaar? And the response from the customers is: why does it take 20 minutes to open an account? So the transition from people being happy opening a bank account at all, to three days, to four hours, to 20 minutes... And even today, let me tell you, my son was in Europe for his studies. It takes 15 days to open an account in Europe in many countries, but 15 minutes in India is seen to be a delayed response. So this changing customer expectations is the big challenge for the banks: how do you manage them? The whole gamut of technology digitalization, what we are focusing now is how do you capture the attention of your customer and stay relevant for the times which they're expecting.

So in this backdrop, let me just tell you what banking industry is doing in technology, and then a few questions we take after my speech. So it is a very interesting subject to talk about how India's banks, and in particular our public sector banks, must reimagine themselves as technology-led, innovation-driven enterprises if they are to remain relevant and competitive in the new Indian economy. Over the past few years, PSBs have been quietly scripting a remarkable turnaround. For some of you who have missed out on the numbers, the numbers speak for themselves. In financial year 2024-25, public sector banks posted a record net profit of 1.78 lakh crore, a 26% jump over the previous year. Net NPAs declined to a historical low of 0.52%, indicating sustained improvement in asset quality and risk management. And even as credit growth moderated in FY25, PSBs recorded a credit growth of 12.2% by deploying funds prudently and strategically. But perhaps the most transformative shift has been in the digital space. From leveraging analytics and AI to building customer-centric platforms, PSBs are moving rapidly to redefine their role in India's financial ecosystem. Initiatives like UPI and cloud computing have given them a strong foundation. Yet challenges remain, particularly legacy systems, processes, and the growing competition from nimble fintech and private banks. Just to give you the kind of volumes public sector banks handle, of course he did mention about SBI. From my own experience, let me tell you, on the UPI platform alone, SBI handles 180 million transactions every day. 180 million transactions every day. And if it is IPL time, fortunately the money real game is real money game, now some controls are there, without those controls, this 180 million volume per day goes to 220 million transactions per day. You have to build your technology stack to handle this surge in volumes which happen for two hours of IPL. So this is the technological prowess which PSBs have built today, not only in terms of reimagining the customer journeys, but the mere volumes which we all handle have to be technologically advanced.

So that is why the government of India, sometime post 2015, for some of you who follow the banking sector in India, the asset quality review which was done in 2015 put public sector banks under tremendous pressure because of the assets which have gone bad, and we were struggling with these asset quality issues. During that time, the government of India, the largest owner of these public sector banks, also realized that while you strengthen the capital, strengthen the governance, strengthen the credit underwriting in the public sector banks, you also have to have a roadmap for them to adopt the changing needs of the customers. They launched a program called Enhanced Access and Service Excellence. This is called the EASE program for many of you who do not know about it. This EASE program is in the eighth version now, 8.0, which is going among the public sector banks. This is a combination of the Government of India through the Department of Financial Services and the Indian Banks Association jointly undertaking this activity. I was very fortunate to head this EASE Reforms Committee for four successive years, and I've seen the growth of public sector banks' adoption in technology and digitalization. These reforms have pushed PSBs to reorient and reimagine how they operate, whether it is customer service, risk management, or workforce readiness. The foundational phases of EASE addressed key capability gaps and operational inefficiencies. In subsequent phases, the focus expanded to building futuristic capabilities driven by digital innovation, advanced analytics, business adoption, and tech-enabled capabilities to increase performance across PSBs. We have seen adoption of AI and GenAI, automation of back office processes and AI/ML, enhanced customer engagement through digital marketing tools like Customer 360, web analytics and social media listening, stronger data governance, and even sandboxing of over 70 GenAI use cases. The overall adoption of technology, particularly AI in Indian banking, has been studied using text mining by RBI in a recent report. In the case of PSBs, the focus on new-age technologies such as AI in their annual reports increased by more than threefold since 2015-16. The trajectory is clear. PSBs are at the forefront, active participants in India's digital revolution.

Let me step back for a moment. Banking technology adoption has been a global story since the 1980s. For India, the journey began with core banking in the 1990s, ATMs and credit cards in the 2000s, and an explosion of smartphone-based services after 2010. With every phase, the role of technology has deepened, not just as a tool for efficiency but as a strategic differentiator. Today, AI, data, and digital platforms are shifting banking from standardized products to hyperpersonalized experiences. Looking ahead, I see five big shifts shaping the next decade of Indian banking. First, hyperpersonalization through artificial intelligence. Services will move from reactive to proactive, anticipating customer needs and tailoring solutions in real time. Second, the rise of blockchain. No longer limited to cryptocurrencies, blockchain will underpin secure, faster, transparent, and low-cost cross-border payments, trade finance, and compliance. Third, technology-driven sustainability. Banks will increasingly use analytics to track ESG compliance, helping align growth with environmental responsibility. Fourth, symbiotic partnerships. Banks will collaborate more deeply with fintech platforms and non-banking entities. The future is about partnerships and active engagement across areas like payments, lending, and analytics, where banks provide the financial infrastructure and partners deliver the customer interface. Customers do not care about who builds the technology. They care about seamless experience. So collaboration is going to be the wave forward. Fifth, cybersecurity as a core differentiator. As digital adoption grows, so do risks. The Economic Survey 2024-25 noted that Indian banks were the most affected by cybersecurity incidents, with reports indicating that almost one-fifth of all reported cyber incidents involve financial institutions. Safety, trust, and data security will define the winners in digital banking. This transition also requires rethinking the way our digital infrastructure functions. Legacy mainframes that powered our past operations will give way to greener, more efficient modular architectures. Well-capitalized banks are better positioned to take investment risks in new technologies due to significant capital buffers and confidence in pursuing AI solutions. The shift will not just cut costs but also reduce the carbon footprint in banking. And yet, amid all this technology, one truth will remain. Banking is ultimately about customer connect and trust. Algorithms cannot replace empathy. Codes cannot replicate human understanding. The winning model will be high-tech with high touch, where digital speed meets human values. Going forward, I firmly believe India will emerge as the world's largest digital banking market, with public sector banks spearheading the transformation. Their mission will not only be to deliver seamless financial services but to stand as trusted partners in every Indian's journey of growth and prosperity.

To conclude, let us remember that technology may be an enabler, but trust will always be the currency, the true currency of banking. The future will belong to those institutions that combine innovation with resilience, and digital capabilities with human touch. And PSBs are well poised for it. Thank you and Jai.

I think the demography of 52 crore customers if you see in SBI is highly diversified demography. Contrary to what we believe, we know that a lot of people think most of the PSBs, particularly SBI, serves very senior citizens. Yes we do, it is one of the very important customer segments for us. They are the largest depositors with the bank. But among these 52 crore customers, more than 30-35% of the customer base is below 30 years. And among this demography of youngsters, some of them are obviously digital native. They've never gone to the branch. The onboarding happens digitally. So the interfaces when we talk about the human touch, not necessarily that it is a physical interface what we are talking about, even in the digital context, how do you establish that empathy with them? For instance, we are revisiting completely Yono 2.0, and there we have introduced one simple feature which I believe appeals to a lot of youngsters. People talk about carbon footprint, right? So we are giving an app within the app that measures every activity of the individual in terms of what is their carbon footprint. So how do you create this kind of empathetic interfaces is also something which digitally we are working. But as you know, we have the largest physical presence in the country with 1.5 lakh touch points: branches, customer service points, and ATMs. Someday, even these digital natives, one time or the other, they go to these places, and that is where we want to create an experience for them.

So the culture of SBI is essentially the trust element. That of course is taken at face value, but we also are essentially, when you are, the footfall today, even today despite 98% of the transactions happening outside the branch network, we have about 4 million people visiting every day, 4 million in branches alone. And these people, eventually the branches will get converted from a transaction-based branch network to an advisory network, and where this experience, years of experience of dealing with the customers in the physical interfaces, I think will give a very good standing for banks like SBI to move from transaction-oriented interactions to advisory-oriented interactions. I think this is where we want to use the human touch predominantly.

I think the distinctions are slowly eroding in the sense that the items they consume and the kind of aspirations what the rural population have are dynamically altered. But in the financial services, what we see is that in the rural areas, while we keep talking that every pin code is now covered by the stock exchanges, investments and SIPs are happening across the country, the rural population is still invested in the physical assets. I think the financialization of the savings is slowly happening, but I think it'll take some time. The first choice of a rural saver is either to invest in his own land if he's got a piece of land or gold. Gold and silver continue to be one of the asset classes which are most preferred by the rural population. But the urban agglomerations where rural areas have got into the semi-urban mode and around the cities, we are seeing that the financial services are also increasing. And whenever the financial savings start happening in the rural areas, the first step is to put in a bank deposit, and probably some of this bank deposit movement is happening towards SIPs. But I'm yet to see that complete financialization of the savings in the rural areas.

I'll just give you the database. In our 52 crore customers, the penetration of mutual funds is just about three or four percent. So it's a long way to go in terms of financialization of this savings.

That is for the analyst to ask, not your company.

So the corporate capex pipeline is very strong. The announcements are good. In fact, in our own books which we have disclosed in June, we have almost 3 to 4 lakh crore worth projects which are either approved or under discussion with us. But this is predominantly coming from refineries, particularly in the public sector refineries, and data centers as you mentioned, and EVs and renewable energy. The core sector is yet to invest; steel, cement, we hardly see major investments happening. I believe that everybody is waiting for a sustained domestic consumption to come back, and hopefully the measures the government is taking, the RBI is taking in terms of ensuring adequate liquidity, interest rate reductions, they all should play out in terms of providing this confidence to corporates that the consumption is here to stay. And most corporates are operating at 75 to 80% capacity utilization; this is the time actually to go for expansions. They're just looking whether the sustained demand comes back.

See, I think a lot of measures have been taken, and particularly I believe the GIFT City is a once in a lifetime opportunity for all of us. We are working very closely. We have the largest international banking unit in the GIFT City, and a convergence of the regulatory frameworks in the GIFT City is a very good opportunity for cross-border investments to come in here. In terms of FDI norms, I think many sectors are liberalized. But what I hear from many of the investors when I go across the globe to interact with them, while they believe that the central government's ease of doing business is much improved, they seem to be having challenges at the state level. There is no uniform ease of doing business facility across the country. I think this is something we've been conveying to many state governments, that they need to work on that.