RBI’s Rabi Sankar Calls on Banks to Reinvent for the FinTech Era

Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar has issued a clarion call for India’s traditional banks to reinvent themselves amid the rapid rise of FinTechs. He emphasized that the future of banking will depend not on balance-sheet size but on digital agility, data intelligence, and ecosystem collaboration.

Sankar observed that innovations like Unified Payments Interface (UPI) were adopted far more aggressively by FinTechs than by banks. “FinTech players needed UPI much more than banks did,” he noted, underscoring the need for banks to seize technological opportunities rather than react to them.

He argued that banks’ legacy IT systems, built for compliance and stability, now serve as barriers to speed and innovation. Their high fixed-cost structures—branch networks and outdated processes—make it difficult to match the responsiveness of digital-first competitors.

According to Sankar, the way forward lies in modernising core infrastructure. Banks must dismantle rigid, monolithic systems and move toward modular, cloud-ready architectures that allow faster upgrades and scalability.

Second, he urged banks to embrace platform collaboration by using open APIs to integrate with FinTechs and third-party service providers. Collaboration, he said, should replace competition as the primary mindset driving digital transformation.

Third, he stressed the importance of re-engineering innovation culture. Investing in human capital, digital skills, and analytical capabilities will be critical for building sustainable competitive advantage.

Sankar cautioned that as banks digitize, cyber and fraud risks will inevitably rise. Strengthening risk controls and security frameworks must therefore evolve hand-in-hand with innovation.

He reiterated that the real strength of a modern bank will rest not in its physical assets but in its data management and customer experience excellence.

For India’s banking sector, the message is clear: survival hinges on agility, partnership, and customer-centric innovation.

Ultimately, Rabi Sankar’s roadmap signals a paradigm shift — from fortress-style banking to adaptive, collaborative ecosystems that thrive in the FinTech-driven digital future.