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
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.