A large portion of the average consumer’s physical world has also turned digital and the urban consumer is actively looking for options that save his or her time and physical effort.
The Digital India Program has added to the significance of disruptive technologies for banks, and the way they connect with their customers. Ambitious projects such as Execution of Payments Bank, Make in India, Aadhaar Enabled Use Cases and Wallet Disruptions along with NPCI e.g. UPI, BBPS, AEPS, India QR, are now the keywords to a bright and sustainable financial progress of our nation.
One key point driving this digitization is that the consumer of today is hyper connected, agile, and more demanding than ever before. A large portion of the average consumer’s physical world has also turned digital and the urban consumer is actively looking for options that save his or her time and physical effort. Many new technology initiatives are now catering to this new market.
However, most of the innovative technology developers still work on the underlying backend systems of banks. This is why, the backend systems of the banks need to be highly conscious of the security aspects of their customer exposure and integration with the respective apps.
Open Banking: The Platform of Innovation
A huge role is played here by the Open Banking system, where banks provide channels and APIs that enable third-party developers to build and provide financial services. Through this, consumers can now avail loan, invest in mutual funds and buy insurance without engaging with the bank directly. Compliances pertaining to this are in place across the globe. In Europe the PSD2 standard has been implemented to allow non-banking companies access to customer’s account information for promoting payments innovation.
To drive digitization successfully, banks have started relying on the external ecosystem of startups and FinTech to provide solutions to their problems. Fintech industry is extremely agile and adaptive to changes in consumer tastes, as well as to technologies available. While they cannot provide solutions to every problem, their agility ensures they can offer solutions to specific problems that the industry may face. Banks have realized the value FinTech bring to the table and are engaging multiple FinTechs at any point in time to provide various personalized banking services to their consumers.
Consequently, services like accounting, inventory management, transaction history, invoice discounting, etc. are now being offered via mobile apps as a part of such collaborations. Underlying all this, banks play a key role in following RBI regulations, reporting to the regulators and ensuring due diligence to meet compliances. The core functionality still remains with the bank while the end- user experience is driven by third party apps. One of the ways banks do it is by conducting Hackathon events where Startups, accelerators, colleges and innovators are invited to come and showcase their solutions and prototypes to solve a given problem statement.The banking landscape is changing and we are at the brink of complete digital transformation. Financial technologies are adding huge value to banking institutions, and they in turn are leveraging these innovations to ride the wave of digital disruption.
But without a doubt, the ultimate benefactors of this imminent change will be the customers.
The writer is the Head of Innovation & Architecture at DCB Bank and is one of the top influencers in the BFSI industry. The views expressed in this article are that of the author and not of moneycontrol.com or its management.