Most of the small finance banks had MFI or NBFC background and had focused sharply on branch based acquisition and servicing of clients. This was the perfect way of growth for these banks as they had branches at the core of their business model.

However, as these banks have gained traction, many of them have lagged in their digital business model. This has resulted in almost 100% dependency on the branches to build scale and their costs have remained high. I believe that with the next wave of licenses coming in, competition would be heavier and newer banks would also have an opportunity of building new age business model.

What they should do at strategic level?

A) Build Digital Strategy along with Business Strategy

B) Build IT Strategy aligned with Digital & Business Strategy

These strategic initiatives will ensure that the organization will not be in catch-up mode as business scales.

What kind of hiring they should do?

A) Onboard digital leaders at the board level

B) Hire CEO with deep understanding of business and technology

C) Ensure that Technology & Digital is led by entrepreneurial leader rather than a business as usual leader

D) Hire technology / digital team with same intent and focus that is typically seen while hiring business teams

Ensure limited and focused on Ops team

A) Push for Zero Ops.

Operations should exist only in those spaces where technology fails to deliver

B) Ensure 100% coverage of reconciliation by Ops as most things get automated

More details coming in future blogs

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