Role of technology in indian banking
I believe in todays time the Indian Banking industry is in the middle of a digital revolution & 2016 is undoubtedly a year of digital transformation for financial sector,
I do not recall when last time I visited my bank for so called banking transactions . Today’s customer is interacting with the world through many digital platforms like social media, websites, digital wallet, Mobile Apps, e-commerce etc. Therefore, Banks have now bloomed into one-stop Supermarkets. Their focus is shifting from mass banking to Class banking to the introduction of value-added and customized products in order to survive the competition.
Technology enablement products like ATMS, internet banking, mobile banking (Apps), digital wallets and pre-paid cards have had favorable benefits on both banks and customers. For the customers, the important benefits are anywhere banking, ease of payment, use of secured debit and credit cards. For the banks, the major benefits are centralization of customer information, centralized transaction process, centralized accounting process, basic MIS reporting and real-time information availability.
So who is leading the charge here?
Last year ICICI bank launched many digital services which include Smart Vault which is India’s first automated locker facility with high-end robotic technology.
SBI introduced three digital banking facilities using TAB banking which enables the customer to open the saving account, apply for a housing loan and do e-KYC (Know your customer) at their doorstep.
HDFC Bank has introduced location-based mobile service for customers who will receive notification on their iWatch. ICICI Bank is also considering to add NFC tag which will introduce `tap and pay’ feature without the customer having to reach for his wallet.
NFC is a great digital initiative taken by banks. It is enabled contactless debit cards, with which the customers need to only tap their cards at the point of sales (PoS) terminals, instead of swiping them.
Mobile banking and digital wallets – front running technologies
Digital wallets and mobile banking are opening the door for telcos and software players. In an increasingly crowded and cashless financial system, traditional banks may no longer be key players.
The success of mobile payments would not have been possible without the massive growth in the number of smartphones and the falling cost of computing power, both of which are lowering the barriers to new entrants.
Researchers are sometimes tempted to ask – ‘Do we even need cash’? Here’s a video which talks about the decreasing role of cash in the global economy.
https://www.youtube.com/watch?v=BZW3s9-9Hgg
The number of mobile banking users globally is forecasted to double to 1.8 billion, over 25 percent of the world’s population, in the next four years, according to research by KPMG
Banks tying up with e-commerce platforms
Today many businesses are embracing e-commerce to expand their business and stay connected to their customers globally. With this emerging trend, banks are designing and deploying a range of new e-commerce products to interact with the customer, improve their reach and the quality of engagement.
Snapdeal and HDFC entering into a three-year partnership to launch a co-branded credit card which will drive more purchases as customers will now have a payment mechanism to use for snapdeal and will also open up customer acquisitions in smaller towns for HDFC Bank.
“Banks will have to take cognizance of e-commerce the way it is galloping,” said HR Khan, RBI deputy governor in a report in The Economic Times.
Banks will continue to invest in fin tech, with more banks having an increasing focus on ROI. A significant number of banks will also open up their APIs to the fin tech community in 2016.”– said Danny Tang, Channel Transformation Leader, Global Banking at IBM
Breaking barriers of truly social banking
Last year, Facebook announced that in America its instant-messaging app will soon allow users to send each other money just as easily as texts and photos. All they need to do is link their debit cards to their Facebook account, tap on a dollar sign in the app, type in the amount and press send. In Asia, messaging apps, such as WeChat and Line, have offered P2P transfers for some time.
Were Facebook to expand its offering internationally and make it truly instant, the impact could be huge. Facebook has 1.4 billion members, its messaging service 500m users. When this comes to India, you can expect nothing short of a revolution.
The lending business
Lending, one of the primary functions of the business, is also changing. Various players like Neogrowth are now using technology to make loan payments hassle free. For example, in Neogrowth’s business model, the repayment is automatic and flexible so that the merchant doesn’t need to pay a fixed EMI. It is based on the merchant’s average card sales.
Threats and challenges
There are many bridges to be overcome in the journey
Let’s take mobile banking for example The weak spot in any mobile-payment system is the point of enrolment when a customer’s existing credit card is linked to the system. This has to be made a fool proof system so that fraud levels do not increase in the mobile environment.
Taking due note of such challenges would ensure that 2016 is called the year of Indian banking transformation
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In ancient times, a king had a big rock placed on a roadway. Then he hid himself and watched to see if anyone would remove the huge rock. Some of the king’s wealthiest merchants and courtiers came by and simply walked around it. Many loudly blamed the king for not keeping the roads clear, but none did anything about getting the big stone out of the way. Then a peasant came along carrying a load of vegetables. On approaching the rock, the peasant laid down his burden and tried to move the stone to the side of the road. After much pushing and straining, he finally succeeded. As the peasant picked up his load of vegetables, he noticed a purse lying in the road where the rock had been. The purse contained many gold coins and a note from the king indicating that the gold was for the person who removed the rock from the roadway. The peasant learned what many others never understand. Every obstacle presents an opportunity to improve one’s condition.
