Finance Minister Nirmala Sitharaman on Wednesday (August 25) unveiled a set of reforms for public sector banks (PSBs) called EASE 4.0 (Enhanced Access and Service Excellence). These reforms have been rolled out by the government to further the agenda of customer-centric digital transformation and embed digital and data into PSBs’ way of working.
Here’s an explainer on the agenda for PSBs under EASE 4.0:
What reforms fall under EASE 4.0?
The EASE 4.0 reforms looks at four key initiatives for public sector banks to adopt: Smart lending backed by analytics; 24x7 banking with resilient technology and cloud based IT systems; data enabled agriculture financing; and collaborating with the financial ecosystem.
How will PSBs adopt smart lending under EASE 4.0?
PSBs will have to design and improve the performance of their loan initiation processes by simplifying them on the basis of standard operating procedures and time-bound actions.
Banks will have to introduce end-to-end digitised loans to new customers. The lenders will have to focus on customising loans terms, interest rate and processing charges for customers availing digital loans based on their past behaviour and information from third-party sources.
The PSBs will have to broaden their customer base and increase credit off-take through analytics and technology-driven credit offers. Banks can look at lending opportunities like pre-approved car loans and EMI offers on e-commerce/point-of-sale terminals.
Banks can also make analytics-based credit decisions for MSMEs by assessing their transactional data, GST and tax data, etc.
How will PSBs build 24x7 banking with technology?
Under the EASE 4.0 reforms, PSBs will have to fast-track the migration of their IT systems to secure cloud-based solutions in line with board-approved policies and the regulatory framework. The PSBs will have to conduct time-bound audits and testing in line with board-approved policies.
The public sector banks will have to strengthen cyber resilience by fast-tracking implementation of advanced cyber-security measures such as zero trust network segmentation, as well as adoption of AI- & ML-based threat detection, API security and analytics-based cyber-risk quantification.
PSBs have been asked to draw up and implement board-approved roadmaps for the automation of high-volume and manual processes.
How will public sector banks collaborate at the ecosystem level?
PSBs will have to collaborate with NBFCs to build co-lending models with API-based data exchange and IT integration between NBFCs and banks. The banks will have to design and improve performance of lead management systems, loan management systems, loan monitoring systems, etc. to facilitate co-lending with NBFCs.
The public sector banks will be providing doorstep delivery of banking services and will have to improve time-bound auctions of secured assets on the ‘eBkray’ auction platform.
How will PSBs deliver tech-enabled easy banking services?
The EASE 4.0 reforms guide banks to establish and enhance outbound call-centre based customer outreach to the retail and MSME customer base in regional languages, according to the customer’s preference.
The banks will have drive an expansion in the adoption of digital payments in semi-urban and rural areas. The reforms are also directed towards a systematic reduction in customer complaints and time-bound remedial actions for complaints. To enable this, the banks will have to integrate an IT-based grievance platform with internal and external channels for customer complaints.
The PSBs will be working to improve their presence, marketing and social media engagement on the internet by adopting technical performance (website), SEO and digital marketing tools.
Further, PSBs will have to carry out an objective risk assessment and identify KRAs for risk-adjusted pricing and improve the effectiveness of their IT-based early warning system.
What are the governance and HR reforms planned under EASE 4.0?Public sector banks will have to focus on long-term talent/leadership development and succession planning with business outcome-focused appraisals. The banks will have to implement an IT-based performance appraisal system with centralised tracking and monitoring linked to the performance management system.