s s mundra : indian banking sector – gazing into the crystal ball keynote address by mr s s mundra, deputy governor of the reserve bank of india, at the mint annual banking conclave on the theme “ disruption, innovation and competition ”, mumbai, 4 february 2016. * * * assistance provided by smt. usha janakiraman and shri sanjeev prakash is gratefully acknowledged. dr. k. c. chakrabarty, former deputy governor, reserve bank of india ; smt. chanda kochhar, md and ceo, icici bank limited ; shri aditya puri, md, hdfc bank limited ; shri b. sriram, managing director, state bank of india ; shri p. s. jayakumar, md and ceo, bank of baroda ; shri uday kotak, ex - vc and md, kotak mahindra bank ; other senior colleagues from the banking and financial sector ; members of the print and electronic media ; ladies and gentlemen! 2. at the outset, i thank the mint management for inviting me to deliver the keynote address at this annual banking conclave. the galaxy of speakers that headline this event provides a testimony to the importance of this event. a lot in the indian banking sector has changed since i first spoke at this conclave three years ago. disruptive events have taken place ; innovative practices introduced and competition as it stands today, is stiffer than ever before and is likely to intensify further in the coming months. 3. some of you who attended this event last year might recall that i had briefly raised certain issues at the end of my address stating that they could emerge as potential challenges for the banking sector in the days to come. many such challenges which were looking abstract or distant then are appearing imminent now. i have, therefore, chosen to elaborate on few such issues in my address today. these issues essentially revolve around “ disruption, innovation and competition ” in the banking sector, which is the theme of the conclave. you may also recollect that in my address last year, i had referred to brett king ’ s book “ bank 3. 0 ” in the context of a single channel solution to multiple product offerings. i would once again invoke him. in the concluding chapter of the book, king has raised 15 questions as a checklist to assess whether a bank is prepared to withstand the disruptive process that is currently underway. according to king, answer to these

more imaginative uses. last but not the least, i would also like to sound another note of caution for the bankers present here. with all talks surrounding changing profiles, social habits and requirements of the gennext customer ( gen y or the millennials ), the banks must not lose sight of aging population. the next 15 years would see approximately 70 mn more people crossing the age of 60 years. these old age people would have different banking needs and would need to be serviced through appropriate delivery channels. similarly, the pace of urbanisation in the country is only going to get heightened in the coming years and hence, banks would need to be geared up to cater to the requirements of this migrant population also. conclusion 6. i think i have scared you enough by highlighting the impending challenges that the banking sector is likely to face going forward. as clay christensen, harvard professor puts it “ disruptive innovation can hurt, if you are not the one doing the disruption. ” most of the scenarios that are going to play out are external to our system and hence, you need to be prepared, lest you get hurt. i believe the elite panel gathered here today would deliberate and reflect on some of the issues i have raised today. i once again thank mint and tamal for inviting me and wish you all a fruitful deliberation. thank you! bis central bankers ’ speeches