Kolkata, Aug 14 (IANS): In the era of technology-based digital banking services, the public sectors banks have to show more flexibility in using new technology, otherwise they will lose market share, Montek Singh Ahluwalia, former Deputy Chairman of the erstwhile Planning Commission of India, said on Sunday.

"The existence of mutually supported ecosystem of Jan Dhan, mobile telephony, the regulatory changes that the Reserve Bank of India has made in order to allow banks to operate, and Aadhar system which allows remote authentication of identity ... all these taken together essentially enable banks to conduct business without any person-to-person interface or people coming to  bank.

"Now, for banks to evolve to compete in this space they have to do things differently. And those that will do things differently will be able to expand their market share. In this respect, I think, private banks have much greater flexibility," the eminent economist said .

"Public sector banks are somewhat burdened by their past legacy. They (public sector banks) have to show the same flexibility in the way to use new technology, otherwise, they lose market share," he said.

"It is good they are going to be put under pressure, they need to think what are the innovative ways they can handle in this situation," Ahluwalia said on the sidelines of the Globsyn Business School Brand Summit organised by the school's alumni association.

Speaking about digitisation, he said it is not only increasing productivity but also leading to disruption of the existing business model. "New business models come into play. That is how digitisation will lead to conflict of interests".

Citing an example of app-based taxi services, he said the role of the government became crucial when digitisation brought transformative changes and became disruptive as well.