Digitisation may cut 25% Bank of Baroda costs

Mumbai: Public sector lender Bank of Baroda (BoB) has rolled out a digital lending department that will digitise half of its Rs 6 lakh crore balance sheet, including retail, MSME and agriculture.

The bank, which appointed global consulting firm KPMG to help with this transition, expects a move towards digitisation would help it bring down cost of operations by 25 per cent.

“It’s very clear that digital is leapfrogging and the pandemic has bought these digital channels to a sharp focus. Our aim is to improve revenue, return on assets, significantly lower credit cost and cost of operations,” said Akhil Handa, head — Fintech, Partnerships and Mobile Banking, Bank of Baroda. “We are looking to completely do away with paper-based lending and our major focus is digitisation of retail loans.”

The validation and disbursal of fresh loans will happen via this digital platform while past loans will also be digitised to cut costs and improve profitability. The bank is planning to digitise a large proportion of its retail and MSME processes in the next six months.

As per an 18-month action plan laid out by the bank, a significant portion of the retail and MSME loans will be digitised by the end of next financial year.

A later leg of the plan includes consolidating the bank’s ongoing digital initiatives within this new set up, after which the department will be integrated across the bank’s systems.

As of September 2020 end, the bank had gross domestic advances at Rs 6.05 lakh crore within which retail contributed Rs 1.11 lakh crore, agriculture advances were nearly Rs 94,818 crore while MSME loans were at Rs 91,195 crore.