Even as digitisation becomes a key focus area for public sector banks (PSBs), Chief Economic Advisor K V Subramanian noted PSBs have not been leveraging the power of technology as best as they can to improvise the quality of banking services, especially lending.

"There is a compelling reason for banks to monitor the credit worthiness of borrowers with the use of technology. Their willingness to pay back can be captured effectively by quantifiable measures. But banks have not been able to leverage it effectively," said Subramanian, speaking at a conference organised by NITI Aayog and think-tank EGrow Foundation on the future of Indian Banking.

While Subramanian acknowledged that irrational exuberance and malafide intentions are two different things, he suggested banks to emphasise on governance.

Sunil Mehta, managing director, Punjab National Bank--who is also the chairman of Indian Banks Association (IBA)--pointed out that we need to decide whether we want banks to operate as banks or as technology companies.

"India stands strong on information technology front. I believe we must leverage that to innovate banking solutions. Currently, digitisation is happening aggresively in the payment space. It should gather pace in the lending space too. We must ensure quick credit delivery to customers," says Mehta.

Rajiv Kumar, secretary, department of financial services (DFS), said tremendous amount of growth is happening in digitisation, which will change the course of lending in future. "You have turnovers in GST, you have income in income tax return and you have cash flow in passbook; just connect the three and see how much ease it would bring in the system. It is being adopted now. The time taken in initial in-principal approval has reduced substantially," says Kumar.

He further added that credit worthiness can now be established easily via technology by connecting data points. "There shouldn't be any need to go to banks. The future of banking lies in data and analytics.