Insights on the Evolving Indian Banking & Financial Services Landscape with Dr. Ritika Dusad

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The Current BFSI Landscape in India Amidst the Global Economic Crisis

August 2, 2023

Holding a PhD in Physics from Cornell University, Dr. Ritika is an expert at evaluating long-term trends and specializes in governance, global business, technology and market intelligence. Passionate about creating the right environment for world-class research, she adopts the latest data-based models to simplify customer processes and enables them to make decisions based on insights derived from data analytics.

In a recent conversation with Siliconindia, Dr. Ritika Dusad, Chief Innovation Officer & Executive Director, Nucleus Software shared her insights on various aspects pertaining to the current banking and financial services ecosystem in India. Below are the excerpts from the exclusive interview:

Q. Share your thoughts on the current banking & financial services landscape in India.
A. Today, the BFSI sector in India is valued at ₹81 trillion and is likely to become the third largest by year 2025. Currently, India is home to one of the strongest BFSI ecosystems in the world in terms of the digital tech stack it employs, and part of its strength is due to serendipity of the country’s digitization initiatives starting in early 80s rather than 60s. While the digitization boom in the BFSI sector started with the West, the first few systems it enabled were those called mainframes. India began digitization of the BFSI space in 90s, and the concurrent privatisation of this sector helped us as a nation to adopt cutting edge technologies, some homegrown, and therefore a small fraction of the digitizsation/technology cost was paid to software players from the west.

The Indian BFSI sector was able to reach ‘digital’ lending at an accelerated pace, thanks to the latest technology stacks, that were continuously evolving, whereas the tech stack of a large number of institutions in the US still remained on mainframes augmented with digital channels. According to the World Economic Forum, maintenance of core IT systems in US banks accounts for 78 percent of all IT spending, and banks have realised that patching-up these systems is no longer a viable option. With rising maintenance costs of increasingly fragmented systems, frustration from banks is understandable.

Q. Throw some light on the latest technologies that are disrupting the BFSI space currently.
A. The technologies currently being leveraged are robust fintech systems that power the profitability of financial institutions. Specifically during a global economic crisis, keeping a very sharp eye on the shifts in repayment patterns of borrowers by studying data generated through digitization solutions is critical for financial institutions. Additionally, strong digital systems that help manage communications between the FIs and borrowers in a precise and timely manner will support delinquency management for FIs and lower the risk of NPAs rising. To leverage ‘Big Data’ that rests within the FIs, it becomes critical to collaborate with technology players that bring deep domain expertise as domain expertise is the core of any industry’s data science strategy. The stronger the understanding of repayment patterns, delinquency predictions a Financial Institution develops through data science, the better they will be able to craft variations in lending products to diversify their offerings. Fintech players with deep domain expertise can support financial services business heads diversify with the creation of variation of lending products while the IT Operations teams manage expected speed of change while keeping pace with regulatory changes and compliances.

Q. What role does technology play in BFSIs maintaining operational efficiency during any crisis situations?
A. While the recent global economic crisis has had many potential causals, an important aspect that is often overlooked is the lack of robust fintech systems that accurately keep track of people’s hard-earned money resting with the financial institutions. When public trust in these financial institutions goes down, it propels them to take unwarranted steps like withdrawing their monies in large volumes which a financial institution may find extremely difficult to support. There is an urgent need for the BFSI space to start investing in latest technologies and intellectual property that support the tracking of public monies down to the eight decimal and hence enable building trust between public and a financial institution. RBI has one of the strongest regulations globally and incorporation of these regulations in the fintech space is essential for the BFSI segment in India to remain strong. In fact, the world should take note of our regulations that has supported the economic growth of a developing nation and has led India to become one of the top world economies.

Q. How can the BFSIs promote and nourish the start-up ecosystem in the country?
A. Infusion of credit into the SME and MSME sector is one of the sure shot ways of propelling the next wave of economic growth in India. However credit assessment for this sector is complex due to lack of predictability in cashflows, level of detailing existing regarding financial information and the uncertainty related to the nature of SME business models. Robust credit underwriting systems would be essential for enabling credit infusion into this sector in India in line with the government’s initiatives. Digitization of retail lending was introduced in India in the late 80s by global players like Citibank, but in more recent times, digitization of corporate lending assessment by both banks and NBFCs has pumped in the required momentum for enabling entrepreneurship, in addition to the ever growing VC ecosystem in India.

Q. What does the future look like for BFSI segment in India?
A. Fintech is one of the fastest evolving industries with new BFSI applications, processes, and product plans. Currently, India is impacted by global factors such as a growth slowdown, high interest rates, geopolitical uncertainty, and investor sentiment fluctuations. Despite these challenges, India remains the world’s fastest-growing major economy, thanks to improved domestic macroeconomic and corporate fundamentals. While significant banking sector crises have occurred in the US and Europe, the Indian banking system has had limited direct exposure and stringent regulations, preventing a significant spill over into India’s BFSI sector. Going forward, we will see true digitization across the BFSI segment with many players moving towards robust, scalable, well integrated systems to manage massive volumes and deliver diversified product offerings with a superior customer experience.

About Nucleus Software

Nucleus Software Exports Ltd. Is a publicly traded (BSE: 531209, NSE: NUCLEUS), software product company that provides lending and transaction banking products to global financial leaders.

Nucleus Software delivers disruptive Fintech Solutions to 200+ Banks and Financial Institutions across 50 countries supporting Retail, Corporate & SME Finance, Islamic Finance, Automotive Finance, Captive Automotive Finance, Cash Management, Mobile & Internet Banking, Transaction Banking and more. We facilitate over 26 million transactions each day through our globally integrated transaction banking platform. Our lending platform manages US $ 500 billion of loans in India alone, and over US $700 billion of loans globally other than India, while enabling 500,000+ users to log in daily.

Our Flagship Products FinnOne Neo® and FinnAxia® are backed by 3 decades of BFSI domain expertise and an inbuilt AI powered platform to realize the digital transformation goals of FIs worldwide.

  1. FinnOne Neo®: The next-generation digital lending platform, designed to revolutionize the lending process. FinnOne Neo® is built on an advanced technology platform, empowering financial institutions to streamline their lending operations, enhance customer experiences, and drive business growth.
  2. FinnAxia®: An integrated global transaction banking suite, trusted by banks worldwide to optimize their transaction banking processes. With FinnAxia®, financial institutions can efficiently manage their cash management, trade finance, liquidity management, and other transaction banking activities on a single platform, thereby improving operational efficiency, visibility, and enhancing client relationships.
  3. PaySe®: The world’s first online and offline digital payment solution, created with the vision to democratize money. This innovative payment solution offers users a seamless and convenient way to conduct digital transactions, both online and offline, facilitating financial inclusion and empowering individuals and businesses.
  4. Nucleus Software Services: Our comprehensive suite of services is tailored to assist banks and financial institutions in their digital transformation journey and maintain an optimal technology infrastructure. Through Nucleus Software Services, we offer a holistic approach to digital transformation, enabling organizations to deliver seamless customer experiences, achieve operational and cost efficiencies, and gain actionable insights to drive strategic decision-making.

These offerings collectively underline Nucleus Software’s commitment to driving innovation and empowering financial institutions to thrive in an increasingly digital world.

For Media related information, please contact:
Deepika Gulabani
Corporate Communications
Phone: +91-9310334963