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Re-imagining banking:Emergence of a stronger ecosystem based banking

Together Jandhan, Aadhar and Mobile has pushed India way ahead in our overall digital transformation journey

August 10, 2017 / 01:09 PM IST

Mohua Sengupta

Radical forces are altering the banking landscape.  The banking we see today is radically different from the banking done in the last decade….banking is actually changing shape and colour every day.  Even last year’s banking is very different from todays and I am sure the bank that my 10 year old daughter will see when she will become an adult is completely different from the banking of today.

Macro economic and regulatory pressures are still a reality.  Fintechs and newer player in the financial world are intensifying an already competitive industry.

Customers today are looking for extreme personalization and segmentation approaches are often failing to enthuse the customer who believes that they need to be offered tailored experiences, products and services.  Mobile is no longer just a transactional interface; it’s an important medium of engagement and interaction. While Omni Channel approaches are to be adopted, mobile first approach to design and development is becoming absolutely essential. Sharing economy is catching up and platforms to connect people for commerce and trade are making progress, Uber, OLX, Quicker, Credit Karma are good examples of such platform. What we see banks are looking for is an integrated platform that provides them an end-to-end capability, hosted on the cloud.

As early as in 1994, Bill Gates said that banking is important, banks are not.  That’s exactly what we are seeing today.  Fintechs, Telecom Companies and various others are encroaching into the space that was traditionally reserved for banks, eating into a big part of the bank’s revenue.  So if the banks don’t innovate and come up with newer, non-traditional channels of revenue, it’s unlikely that they will survive this wave.

Banks are taking strides to address the needs and ask of the supremely demanding customers of today.  On the one hand, they have the Boomers who are probably the largest users of banking service today and are more prone to traditional ways of banking, and on the other they also have the millennial, who are digital natives, supremely demanding and are the future of banking.

Coming to our very own India, India Stack, as we call it, has had a grand journey. What started with Aadhar Authentication, has suddenly gained pace to include various capabilities like Aadhar e-KYC, Aadhar enabled payments, e-sign, UPI etc., Mobile subscription and Aadhar today has close to 1B people enrolled on it.  Jan Dhan Yojana has close to 200 M accounts.  Together JAM (Jandhan, Aadhar and Mobile) has pushed India way ahead in our overall digital transformation journey.

Coming to Digital Banking, India Stack Does provide a ready platform for a digital financial system, in the form of a public good. JAM forms the foundation of the stack and enrollment to them helps create value layers of presence less authentication, paperless documentation, cashless transactions and now a consent layer through the new progress in the data aggregation and sharing policy. The India stack construct is augmented by various digital initiatives that consume the India stack like the Direct Benefit Transfer, Goods and Services Tax Network, Bharat Bill Pay, Electronic Toll Collection and other schemes.

The Industry utility and market infrastructure created through the India Stack helps elevate financial services and commerce at large to the next level. Banks today are a key market participant in this initiative. While they help in delivering the vision of the India stack, they also avail the benefit of quicker authentication, lower transaction costs, faster transactions, personalized delivery of services – an environment that lends to innovation in the overall pursuit of economic well being.

In the view of the India stack support ecosystem and the market dynamic, we view digital banking construct to have five distinct pillars or capabilities. The first being able to delivered a tailored and frictionless customer experience that is powered by digital and deep actionable analytics  that is augmented by an ecosystem of partnerships and capabilities while managing the integrity of the transaction or interaction and supported by an automated , agile and intelligent back office.

A digital bank today needs to adopt the pillars of digitalization to grow and remain relevant in the competitive global financial system. While doing it,banks today needs to re-invent themselves to become financial ecosystem providers that bring with them capabilities from multiple stakeholders, utilities, market participants and even collaborating competitors (competition) to influence and integrate into the lives of it’s customers. Newer business and operating models need to evolve to ramp up revenues and contain costs.  In order to enable that a bank no longer needs to be gigantic in size, but needs to cultivate and develop a large, effective and trustworthy ecosystem!

Author is EVP & Global Head - Services for 3i Infotech.

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first published: Aug 10, 2017 01:08 pm