Uday Kotak: Physical Banking’s Market Share Will Decline

Physical banking will very soon take a backseat, Uday Kotak, founder and director of Kotak Mahindra Bank said during Business Standard’s annual BS Manthan conclave on February 27 at New Delhi. Even though physical banking has an element of trust and brands, it will come down, he said.

Kotak is equally convinced that politics as an emerging discipline is likely to become a new force that will affect global finances in ways we cannot fully understand. In his view, this change in his modern day economics is clearly visible. In a talk with Business Standard in New Delhi, Kotak described the relationship between politics and economics – from trade tariffs to monetary policies to A.K. Bhattacharya of Business Standard.

Kotak claims that every morning brings new opportunities in global finance. He backs this up by saying that we, especially during the Trump period, have clearly seen how politics plays a much more central role in making financial decisions. It is true that currently, we are headed towards a new world where politics reign supreme over everything else.

He also discussed how markets in general respond to changes in interest rates and the profits that corporations make. As for India, Kotak noted, the effects of increasing tariffs in the automobile industry go further than just simple changes in market sentiment. It is a clear case of politics overriding economics,” he warned. “Change was previously gradual, now it is sudden,” he added. 

Uday Kotak commenting on the political changes and their impact on markets said, has equity markets regardless of where is where the common man believes in and comment on as a newly religion of democracy, is they are only myth. Trump’s win is a good example, Kotak explains: “They say that post-Trump’s victory, the world saw unprecedented strength of the dollar.” Reports estimate that the world is moving towards extreme dollarisation. India, on the other hand, is well positioned amid these global changes. “There is a general trend of the dollarisation but, unlike many, India is in a much better position. India remains a net positive investor and there is a lot of Foreign Portfolio Investment coming into the country,” he explains.

The discipline was led by BS herself, whose specialty is market research and analysis. Her focus is set on macroeconomics, encompassing monetary and fiscal policies both domestically and globally.

The policital, economical, social and cultural aspects of a country should be thoroughly analyzed before advanced business decisions get made so it can guarantee success.

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“India has gained much momentum, but there is effort that still needs to be put in. The advances in the banking sector and its contribution to the economy have to be understood in totality,” he stated. 

He further noted the evolution of regulation, as well as the need to build strength within balance sheets, will be particularly important. Kotak accepted and reiterated that point, but proposed a more comprehensive response. "I, too, agree with the Finance Minister. Different institutions related to policy control need to see financial regulation in totality. This country has advanced a lot over the years. Regulators have taken really great steps in developing the country’s financial sector, but the system needs to keep changing.” 

Kotak discussed how India's Inc needs a larger suffrage share towards the investment sector. 

Despite the compliments surrounding the bigger picture of the economy, India Inc’s reluctance to invest is still worrisome. In response, Kotak stated that the corporate sector tends to never follow, which is quite exactly what PM Modi said. “We will reach there, if policy and business follow each other,” he remarked, further quoting Prime Minister Modi's focus on ‘Minimum Government, Maximum Governance’ and making business easier for everyone.

Kotak on distinction, dealings, and even life itself.

Cricket bias aside, Kotak was surprisingly adept at weaving in metaphors during the fascinating discourse around evonomy and finance question. Remembering the school days of his lessons, he spoke of his coach Ramakant Acharekar, who, as some people might know, went on to coach Sachin Tendulkar. “He didn’t only focus on batting and bowling. He was passionate about fielding, discipline, and importantly, passion. These lessons apply to everything in life, especially finance,” said Kotak. 

He deepened his comparison between cricket games and the financial world as practiced in banking, stating that “Like different formats of the game, finance also has various approaches. However, a few core things like discipline, flexibility, and a clear vision will always be there." 

“Winning the contest, however, lies,” he articulated, “in regaining our animalistic tendencies. The zeal to daringly build, invest, and grow. That is what will shape India's position in the global economy.”