Data Analytics in Banking sector to ‘boost’ the economy

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Krishnamurthy V Subrahmanian, Chief Economic Advisor has asked to figure out the right model for large corporate lending which would in turn increase the investments and help the economy grow into a $5 trillion one.

For this, he suggested that the Indian banking sector needs to invest in technology and data analytics. Indian banks, especially those in the public sector category controlling two-thirds of the sector’s loan assets, have turned risk against following a series of large defaults by private sector promoters and entrepreneurs. This has negatively impacted investment and economic growth.

While delivering Bandhan Bank anniversary lecture, Subramanian mentioned that the upsurge of public sector banks via fintech is crucial. Private sector banks also need to invest in data analytics to find out the best model for large corporate lending. He added that the banking sector needs to grab the opportunity to support the growth of the Indian economy.

In today’s world banks have become more like fintech companies that use data science and artificial intelligence in their dealing with customers. Analytics used in banking can help to advance how banks segments, target, acquire, and retains its customers. Risk costs involved in banking can be solved through analytics- abetted techniques, such as digital credit assessment, next-generation stress testing, advanced early-warning systems and credit-collection analytics

Identification of fraud in banking is a critical activity that can help bridge a series of fraud schemes and fraudulent activity from bank employees and customers alike. Analytics help in fraud detection.

The economic advisor said that Indian banks used data analytics in times of corporate lending, many defaults could have been avoided. If AI can design strategy and defeat Garry Kasporav in chess, it can surely defeat wilful defaulters

The credit growth of the banking sector declined during the first half of 2019-20 falling further to 5.9% by March 2020. Due to COVID-related disruptions, it remained subdued up to early June 2020

Subramanian said that despite being the fifth largest economy in the world, India’s credit penetration as a ratio of GDP remains low. He concluded by saying that it is now time to evaluating ourselves in a global perspective.

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