Digital bank­ing ser­vices to boost busi­nesses

Digital tech­nol­ogy brought a wel­come change in the way bank­ing op­er­a­tions are be­ing con­ducted in In­dia. The en­vi­ron­ment is con­ducive to digital adop­tion and this ad­van­tage can help In­dia leapfrog over the de­vel­oped coun­tries. In the fu­ture, digital ser­vic

FICCI Business Digest - - News -

this en­cour­ag­ing note was struck by N S Vish­wanathan, Deputy Gover­nor, Re­serve Bank of In­dia (RBI), while in­au­gu­rat­ing FIBAC 2017, the largest an­nual con­fer­ence on fi­nance and bank­ing in In­dia on Nove­me­ber 6, 2017.

The con­fer­ence is a pre­mier event in In­dia’s bank­ing cal­en­dar and is or­gainsed by the Fed­er­a­tion of In­dian Cham­bers of Com­merce and In­dus­try (FICCI) and In­dian Banks’ As­so­ci­a­tion.

Draw­ing in­sights from the book Homo Deus, Deputy Gover­nor Vish­wanathan de­scribed the im­por­tance of data in today’s digital world, stat­ing that “Con­trol of data is go­ing to give hu­man be­ings the power of di­vin­ity,”. The in­ter­sec­tion of in­for­ma­tion tech­nol­ogy, bio­genet­ics, ar­ti­fi­cial in­tel­li­gence and nan­otech­nol­ogy is rev­o­lu­tion­is­ing the world at break­neck speed, and mankind may not be able to apply the brakes on it.

De­scrib­ing how digital will im­pact the bank­ing and fi­nan­cial ser­vices in­dus­try, he said that the rel­e­vance of banks’ ‘brick and mor­tar’ branches is di­min­ish­ing. Trans­ac­tions are car­ried out dig­i­tally, and ac­tiv­i­ties have be­come less labour in­ten­sive with cen­tralised pro­cess­ing and KYC. Branches are now be­ing re­placed with bank­ing out­lets as the point of cus­tomer ser­vices. Pay­ment banks now act as bank­ing chan­nels of reg­u­lar banks. Their en­try can rev­o­lu­tionise bank­ing ser­vices. Many in­sti­tu­tions now com­bine to pro­vide fi­nan­cial ser­vices to the cus­tomer. The need for in­ter­me­di­a­tion has re­duced. Fin­techs pro­vide c-2-c ser­vices with­out the bank be­ing an ag­gre­ga­tor. Cus­tomers now have a range of choices through the click of a mouse. “What took hours now takes a few mo­ments”, he added.

How­ever, all these ben­e­fits also come with chal­lenges. Cy­ber se­cu­rity is an is­sue. “Banks will have to put in place strong IT sys­tems that pre­vent fraud,” cau­tioned Vish­wanathan. He dis­closed that two-stage au­then­ti­ca­tion is an RBI-en­abled frame­work to pre­vent fraud. Banks need to be alert to var­i­ous risks and in­sti­tu­tion­alise mech­a­nisms to deal with them. “As our digital foot­print ex­pands, the threat of cy­ber se­cu­rity can­not be ig­nored.” The risks may be known, but the out­comes can­not be known fully. He called upon banks to keep their cus­tomers well-in­formed about risks and mea­sures to counter them. On the other hand, the digital ecosys­tem has brought ad­van­tages to the reg­u­la­tor, and en­ables pol­i­cy­mak­ing. He in­formed the gath­er­ing that RBI is work­ing with banks to cre­ate an au­to­mated data flow sys­tem.

On the oc­ca­sion, Vish­wanathan re­leased a Knowl­edge Pa­per re­port pre­pared by BCG and launched the FIBAC 2017 Digital Tool.

Jatin­der­bir Singh, Chair­man, IBA and Chair­man and Man­ag­ing Di­rec­tor, Pun­jab & Sind Bank, ob­served that ini­tially banks adopted com­put­er­i­sa­tion with ap­pre­hen­sion but today they have em­braced it to­tally. They use tech­nol­ogy ex­ten­sively to im­prove the ease of busi­ness, speed and ac­cu­racy. The last three years saw sev­eral in­no­va­tions in the digital pay­ments space. UPI re­cently crossed 1 bil­lion trans­ac­tions. Tech­nol­ogy also plays a big role in fi­nan­cial in­clu­sion. “In­no­va­tions are tak­ing place so fast that it is dif­fi­cult to keep pace,” he said. The key dif­fer­en­tia­tor, he felt, will be cus­tomer ser­vice.

Sau­rabh Tri­pathi, Se­nior Part­ner and Di­rec­tor, BCG, made a pre­sen­ta­tion on the con­fer­ence theme. He pointed out that In­dia ranks within the first 30 coun­tries in the world in get­ting credit. “In­dian bank­ing is the pride of the na­tion; it has achieved what many peo­ple will find dif­fi­cult to achieve,” he said, al­lud­ing to the her­culean task of open­ing of mil­lions of ac­counts. He pointed out that other coun­tries are sur­prised by what is hap­pen­ing in this coun­try. The heights that In­dian bank­ing has scaled are not pos­si­ble even in coun­tries like Sin­ga­pore and the US.

Tri­pathi later mod­er­ated a panel dis­cus­sion on ‘Fi­nance in Digital Era: Nav­i­gat­ing the Knowns and Un­knowns’. The pan­el­lists in­cluded Jatin­der­bir Singh; Ra­jnish Ku­mar; Chair­man, State Bank of In­dia; Chanda Kochhar, MD and CEO, ICICI Bank; C S Ghosh, MD and CEO, Band­han Bank; Vish­wavir Ahuja, MD and CEO, RBL Bank; and Zarin Daruwala, CEO – In­dia, Stan­dard Char­tered Bank.

Banks have the high­est amount of data about their con­sumer per unit of rev­enue earned com­pared to any other in­dus­try and can lever­age this strength to their ad­van­tage.

N S Vish­wanathan, Deputy Gover­nor, Re­serve Bank of In­dia, de­liv­er­ing the in­au­gu­ral ad­dress at ‘FIBAC 2017’, in Mum­bai.

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