RBI Deputy Governor Swaminathan J highlights banking risks, calls for stronger bank-fintech collaboration

Reserve Bank of India (RBI) Deputy Governor Swaminathan J on Monday outlined a detailed six-point agenda to strengthen India’s banking sector, calling for stronger risk culture, customer-centric reforms, and deeper collaboration between banks and fintechs. He was speaking at Standard Chartered Bank’s annual event “Success Through Synergy,” attended by industry leaders and former cricketer VVS Laxman.

Traditional risks becoming more complex

Swaminathan said that core banking risks such as credit, market and liquidity risk have not diminished but have become “more granular and interconnected” as lending becomes more diversified and markets deepen. Simultaneously, new categories of risk including cyber threats, climate-related risks and reputational shocks are growing sharply.

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He highlighted that technology has blurred boundaries between banks, non-banks and big tech companies, with competition increasingly coming from “apps on a customer’s phone.” In an era of instant information flow, he said even a single unresolved customer complaint can escalate into a public issue within hours.

He stressed that risk management and governance must be central to a bank’s strategy, with Boards actively reflecting on the risk culture they promote, not just financial returns.

Despite rapid digitisation, the Deputy Governor said customers still expect fairness, simplicity and transparency. “The real test today is not whether the bank responded, but whether it solved the issue fairly and quickly,” he said.

Fintech–Bank partnership is the future

Rejecting the idea of competition between banks and fintechs, the Deputy Governor described the partnership as a strong batting partnership. Fintechs bring innovation and speed, while banks offer trust, balance-sheet strength and regulatory expertise. The future, he said, lies in structured partnerships that leverage both strengths.

He dismissed the notion of rivalry between the two, likening the relationship to a cricketing partnership where both players complement each other. The challenge, he said, is to structure partnerships that are safe, sustainable and mutually beneficial.

Stronger response needed to cyber frauds

With digital frauds increasing, Swaminathan called upon the banks to build stronger internal grievance systems and enhance fraud detection capabilities. He said tackling scams requires coordinated action, including sharing fraud patterns among banks, eliminating mule accounts and working closely with law enforcement.

From the customer’s viewpoint, he said, what matters is whether the bank stands by them during moments of stress, not just the legal fine print.

Tech outsourcing raises new systemic risks

With more banks shifting to cloud and outsourced technology platforms, the Deputy Governor warned that system outages now affect “millions, not just a branch.” He said banks must understand the risks tied to external service providers, including concentration risks when many institutions rely on the same vendor.

He also highlighted the rise in digital frauds and stressed the need for better fraud detection systems, more information-sharing among banks and closer coordination with law enforcement.

He added that customers care less about legal clauses and more about whether their bank stands by them in stressful situations.

Strong governance and ethics are the foundation: Swaminathan J

Concluding his remarks, the Deputy Governor stated that the three pillars of a strong banking system are excellent governance, an ethical culture, and effective teams. He also underscored that financial literacy will play a key role in building a safer and more inclusive digital financial ecosystem.