The AI Book

CHAPTER 12The Future of Deposits and Lending

By Anindya Karmakar¹

¹Business Head – Digital Lending, , Aditya Birla Finance Ltd

It is believed that the word bank comes from the Italian word banco, meaning a long bench. These benches were placed in open markets or near places of worship, where people used to get loan services and currencies from bankers. While banking has evolved since then, it is really only in the last five or six decades that it has undergone a dramatic change, driven by the emergence of better technology and data management. Today, “banking” as provided by traditional banks is not considered to be the best way to bank by most young consumers. Anyone who can make it easy to pay, invest and get credit and is able to bring convenience to the most common banking needs will take the lead; and the reality is that it may not be a traditional bank.

Technology has moved banking to the fast lane. Mainframes have given way to cloud. Application programming interfaces (APIs) have become the norm. Challenger banks, with the knowledge of legacy issues and an eagerness to correct the situation, have appeared on the horizon. However, the two factors that have contributed the most to the disruption are consumers becoming more digitally savvy, with access to the internet wherever they go, and a surge in smartphone usage which has created an abundant supply of data. Traditional banks are at risk of becoming utilities operating behind the scenes, offering deposits and lending ...