Former deputy governor of Reserve Bank of India (RBI) S S Mundra on Friday said that partnership between banks and fintech companies is a win-win proposition. Speaking at the foundation day lecture of private lender Bandhan Bank, Mundra said that data security and privacy is important and thus no core activity should be outsourced.
“Partnership between banks and fintechs is a good and win-win proposition. Given the importance of data security and privacy, no core activity should be outsourced. The relation is akin to that of the crocodile and the plover bird”, he said.
The large animal and the small bird share a mutually beneficial relationship. The plover picks tiny bits of meat from between the crocodile’s teeth. The reptile needs the bird to keep its mouth free from infection, while the plover requires the crocodile to get its food.
Mundra said regarding innovation and inclusion, an integrated network to harness data is a challenge to the bankers.
Banks need to promote inclusion, he said, adding that there is a huge data assymetry between banks and customers.
He said that risk management of the banks should start from the beginning and not be treated as the second or third line of defence.
Banks are now functioning 24×7 due to digitisation, he said, adding that managing risks should not be viewed as compliance necessity.
The RBI had been cautioning the banks about systemic risks emanating out of digitisation.
Regarding digital currency, Mundra said he was not very optimistic about its usage.
