What’s Next for India’s Corporate Banks? Adapting to a Disrupted World

The pandemic exposed a critical vulnerability: the fragility of interconnected supply chains. It created an unusual supply-constrained economic crisis where the breakdown of supply chains meant that businesses could not fulfil demand. This disruption continues to ripple through economies, creating a unique challenge for corporate banks.  Traditionally focused on enabling business growth, they now face a new mandate—to empower clients to navigate these disruptions and rebuild a more resilient economic landscape. Adding to that are emerging waves of technological evolutions such as AI. 

Under these challenging conditions, what are some key actions Indian corporate banks can take to stay ahead? I recommend the following 5-point action plan:

Take the friction out of trade: Apart from supply chain disruptions, trade finance inefficiencies hamper the smooth flow of goods and services. This is true globally and in India. Indian corporate banks can address the latter by digitising trade processes throughout the procurement-manufacturing-delivery value chain. Trade documentation especially continues to rely on manual, paper-based processes.  With technologies like sensors for tracking the physical movement of goods and blockchain for converting paper documents into highly secure, immutable, irreversible digital documents. corporate banks can transform high friction, high cost, low trust trade transactions into low friction, low cost, high trust interactions. India Trade Connect, for example, is a blockchain-based solution for digitising trade finance business processes on a distributed, trusted network, including ownership validation, document certification, and payment fulfilment.

Facilitate faster and cost effective cross-border payments: International payments and remittances carried through traditional payment hubs suffer from high costs and delay. Indian corporate banks can create fast, efficient, and reliable cross-border payments by leveraging the Digital Rupee, the country’s Central Bank Digital Currency (CBDC), and other distributed ledger-based solutions so Indian businesses can send and receive funds securely and seamlessly. A pre-requisite for success is to combine the latest technology with the latest standards. For example, an AI-based payment solution with ISO 20022 standards for real-time payments, which is not only faster and cheaper but whose cross-border payments are also robust and secure. 

Build resiliency through data: With the geopolitical situation looking fragile for the foreseeable future, it is imperative to make financial systems resilient to shock. The European Union’s Digital Operational Resilience Act (DORA) mandates an information and communication technology (ICT) risk management framework for the region’s financial sector, which has among its five pillars. ICT-related incident reporting and information and intelligence sharing. Taking cue, Indian corporate banks should form comprehensive data-sharing collaborations to share information about a breach or any perceived threat with other parts of the financial ecosystem, including client organisations, in real or near-real time. This would prevent global trade and financing networks from breaking down when attacked; network interoperability is crucial for enabling data sharing across regions.  

Move fast on embedded finance and ecosystem banking: Embedded finance is the future of corporate banking. Banks should strike partnerships with businesses to embed their services within the latter’s workflows, from order procurement to fulfilment to payment, to eliminate the need for manual intervention. While digitising their services for embedding, banks should leverage security measures, such as fund tokenisation, to track and trace the end-use of the funds provided. 

Mitigate ESG risks: Environmental issues—climate change events, emission regulations, resource scarcity—pose some of the biggest threats to supply continuity. Corporate banks can mitigate such risks by taking a strong ESG stance, such as lending to green businesses and reducing exposure to polluting industries. They should also invest in research and partnerships to build business banking solutions for financial inclusion and positive social impact. ICICI Bank’s rural / semi-urban loans have empowered ~1 crore women, 40 per cent of whom are first-time borrowers. The bank also provided ₹7,400 crores in responsible financing. Yes Bank lends to communities and businesses to adapt to the impacts of climate change and resiliency efforts.

An enduring lesson from the pandemic is the importance of resilient systems— healthcare, supply chain, financial, technological, social, and so on. Indian corporate banks can contribute by leveraging digital technology to improve global trade processes, create interoperable networks, share data across ecosystems, and reduce ESG risks. 

Rajashekara V. Maiya

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Rajashekara V. Maiya is VP and Global Head of Business Consulting at Infosys Finacle.