We live in exciting times. We can now open bank accounts online, transfer funds from one account to another in just a few clicks and buy things off the internet in a matter of minutes. The banking industry has undergone a digital transformation and customers are feeling empowered like never before.
A little crystal gazing will tell us that it is only going to better from here. A PwC report titled ‘Banks taking a quantum leap through digital’ says that by 2020, digital natives will form a majority segment of customers and force organizations to adapt to changing customer needs.
Despite all these advances in banking, financial inclusion remains a challenge, especially in developing economies such as India. And digitization is an important tool towards addressing this challenge. As digital frontiers expand, banks will be able to deliver highly customized services at relatively low costs and expand their customer base by reaching people who were until now outside the banking ecosystem. In other words, the spread of digitization and the Internet of Everything will accelerate the process of financial inclusion.
The power of IoE
A 2014 study by Cisco revealed that of the 7200 retail banking consumers surveyed across 12 countries including India, customer expectations from financial services were not being adequately met. It showed that 4 out of 5 customers would rather trust a non-banking organization for their banking needs.
Those surveyed were keen to explore the following five IoE-related solutions: virtual financial advice, virtual mortgage advice, automated advice, branch recognition and mobile payments. While these services may not necessarily be the most relevant for people outside the fold of formal banking, IoE offers a number of opportunities for the bottom of the pyramid as well.
For example, while it may not be feasible for banks to build physical branches in remote areas, they can still be accessible and provide requisite services to the people through mobile banking, interactive electronic kiosks and smart payment devices.
This bodes well for a country like India whose smartphone market is expected to witness manifold growth in the coming years. According to Cisco’s Visual Networking Index mobile forecast for 2014-2019, India will have 651 million smartphones, 18.7 million tablets by 2019. Mobile data traffic is expected to grow 13-fold between 2014 and 2019.
It is these devices that will empower India’s unbanked population and introduce them to the benefits of the financial ecosystem. It is these devices that will generate intelligent data and communicate with one another and iron out the creases in India’s financial services landscape. Mobile payments will become ubiquitous. Apps will be an integral part of the mobile revolution powering financial inclusion.
IoE will help banks keep pace with growing customer demands and help them deliver unique and real-time solutions.
Pushing the cause of financial inclusion
With a view to introducing the benefits of banking to India’s unbanked population, Cisco has launched its ‘Connected ATM solution’. This technology will help banks deploy automated teller machines in remote corners of India in a faster and economical manner. The solution will offer banks connectivity options through 3G and CDMA networks. Connected ATM solution brings down the cost of deployment to nearly half making it a viable option.
Not only this, Cisco also offers a Remote Expert Smart Solution for retail banking that enables virtual face-to-face meetings with high-definition video. This way, banks can be more accessible to their customers and they can interact with each other in real time.
In a country the size of India, such solutions will go a long way in helping the cause of financial inclusion and bringing more and more people under the banking system.
Fueling disruption and innovation
While IoE is expected to usher disruption in the banking industry, wearables and augmented reality have emerged as the two popular innovations that people are looking forward to, the 2014 Cisco study revealed. Fifty-one percent respondents said they would like to know about health or life insurance products that had their rates tied to a wearable device that in turn tracked health and lifestyle habits.
When asked about using augmented-reality applications developed by banks and financial services companies, 89 per cent respondents were interested in one or more of the seven augmented-reality concepts that Cisco had tested. Augmented reality refers to the superimposition of a digital image over the real world, seen through a mobile device.
The last word
Globally, consumers are readying themselves to reap the benefits of IoE-enabled solutions for banking. In countries like India, IoE can enable banks and financial institutions to address the massive challenge of financial inclusion.