PSBs & Shared Tech: RBI Dy Guv on Economies of Scale

New Delhi, Sep 30 (PTI) RBI Deputy Governor Swaminathan J has suggested that public sector banks (PSB) consider using shared technology platforms and jointly develop digital infrastructure to leverage economies of scale and reduce costs.

The senior Reserve Bank official further said their boards need sharper tools, such as real-time insights that flag emerging risks or customer concerns. As banks adopt artificial intelligence and data driven systems, assurance must also extend to these new domain.

Addressing the PSB Manthan 2025 here on September 12, Swaminathan stressed innovation is not just about new tools. It is also about smarter ways of delivering them. RBI put the speech on its website on Tuesday.

"PSBs should consider shared technology platforms and joint development of digital infrastructure to leverage economies of scale, reduce costs, and ensure consistency in customer experience. They can also experiment with what is known as a digital twin, a virtual model that mirrors a real process such as the working of a branch or the journey of a customer applying for a loan," he said.

By testing changes on the digital twin first, banks can identify bottlenecks and improve efficiency before making changes in the real world, the Deputy Governor said.

He noted that over the past decade, PSBs have strengthened their capital position and improved asset quality. These gains must now be protected and deepened.

"Banks should hold forward looking capital buffers that reflect their risk profile and growth ambitions rather than simply complying with regulatory floors. Asset quality must also be managed with a preventive mindset, using early warning systems and predictive analytics to identify stress before it becomes a crisis," he said.

Swaminathan also said that true resilience today goes beyond capital and credit.

"It also means operational resilience. With customers relying on banks for 24x7 digital access, even short disruptions can erode trust and create systemic impact," he said.

Banks must therefore strengthen their technology infrastructure, cyber safeguards, vendor oversight, and business continuity planning so that services remain secure and uninterrupted under every circumstance, the RBI official said.

In his speech he elaborately used 'The Banyan Tree Metaphor'.

He emphasised that for PSBs, the task is not only to provide shade and shelter to millions of households and enterprises but also to ensure that beneath their canopy, new growth flourishes in the form of abundant and affordable credit to MSMEs, startups, women entrepreneurs, and rural enterprises.

"In that spirit, I find the banyan tree still a fitting metaphor for our PSBs. Its roots, trunk, aerial roots, branches, and canopy together capture the five pillars on which PSBs can build their future.

"These five pillars in today's context are strong governance, financial resilience, innovation and adaptability, people and culture, and an all inclusive customer-centricity," he said.

The Deputy Governor recalled that when State Bank of India was established in 1955, its logo was a sprawling banyan tree.

The choice was deliberate, for the banyan has long been revered as the tree of life. Its deep roots embody stability, its sturdy trunk represents resilience, and its wide canopy offers protection to all, he said.

In later years, however, the banyan tree logo was replaced by the now familiar blue circle with a keyhole, designed by the National Institute of Design.

While the banyan conveyed strength and shade, it also drew criticism for casting such a dense canopy that little else could grow beneath it, which seemed at odds with the image of a modern and accessible bank, Swaminathan added.