Transaction banking: Get Set Go for Digital Transformation
The following article is an initiative of Standard Chartered and CNBC-TV18's India on the move season 2 and is intended to create awareness among readers
September 18, 2019 / 05:43 PM IST
As per Nandan Nilekani’s Report, 100 million Indians are making digital payments at least once a month and the number is expected to grow by 300% by 2021. This expectation is due to the fact that in the past few years, technology has managed to make retail and wholesale banking cheaper, faster and better. A popular belief is that tech innovations like UPI has reduced the digital transformation timelines by almost 5 years. With many more such advances on the way it is time for transactional banking systems to gear up and embrace the new age banking mechanisms
Some positive influences of technology in transactional
Shift from high value, low volume high cost transaction to low value, high volume and low-cost transaction scenario
National Common Mobility Card also known as One Nation One Card will allow single card to be used for all transactions in transport like metro, bus, suburban railways, toll, parking, and at retail outlets as well.
Banks creating specialised apps for its clients to facilitate their business transactions online. These offset the perils of cash transactions like frauds and wrong payments and instead provide instantaneous real time and seamless payments online that are 100% safe and fool proof.
Experts suggestions for meeting Nandan Nilekani’s Per Capita digital payment target
With India becoming a more formalised economy with advent of processes like GST, the fintech players have a bigger role to play
Consistent focus on data authenticity and identity of person or institution and ancillary data around it will help to find out cases where banks and fintech could together improve the processes
Banker’s suggestion for transactional banking growth
Implementing Regulatory Sandbox Draft Guidelines
Better regulatory framework required as opposed to the current system which has different norms for different players like NBFCs , institutions, banks, fintech. This would make it a level playing field for all players and avoid overlap of processes.
Is fintech a threat to banks?
Banks have their own strengths in terms of depth of franchise, clients, scale and deep pockets whereas fintech can unbundle services elevate client services, effectively use technology and move at a rapid pace. Therefore, bankers believe in adopting Fintech and offering better services should be the way ahead.Future of banking
Increased use of mobiles for banking and card usage may come down
Banks will create different types of portfolios, will work in different time zones
Both physical and digital transactions will co-exist
Further penetration of banking into insurance and investment products
Transactional Banking in 5 years’ time
It depends on how the banks exploit the 3 Ds – Disruption, Data and Differentiation.A B Ravi of CNBC – TV18 had a detailed discussion on challenges faced by transactional banking and how they are gearing up to build or break the fintech paradigm. The discussion panel included Vivek Belgavi -Partner, India Fintech Leader, PwC India , Dr N Rajendran, Chief Technology Officer, National Payment Corporation of India and Sanjay Gurjar – Managing Director & Head – Transaction Banking, India & Nepal, Standard Chartered.