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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 May, 2015, 13:30Be the first to give this comment the thumbs up 0 likes

Uday Kotak, the CMD of Kotak Mahindra Bank, the 4th largest private sector bank in India, put it very well in an interview on Economic Times today. Traditional banking is driven by short and medium term profits, so it chases 20% of customers who contribute 80% of profits. On the other hand, digital banking chases the other 80% who deliver massive losses. As long as they are well funded, digital neobanks can afford to ignore revenues and profits in the short and medium term. However, even the largest and most profitable traditional bank is answerable for its financial performance to Wall Street every quarter.

I didn't see any guidance from Mr. Kotak on whether traditional banks should ignore short and medium term financial performance and go after the 80%. Which is okay since there may be enough room for both traditional banks and digital banks to coexist.

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