Tech makeover to make banking simpler, more affordable

With latest offerings such as Near Field Communications (NFC), biometric authentication, card-less payment, voice authentication, the banking industry is undergoing a drastic transformation, offering edgy technology for the convenience of the customers.

"Banks are undergoing a major drive in enhancing their digital offerings," agrees Ritesh Pai, senior president and country head, digital banking at YES Bank.

The idea is to make banking simpler and more affordable so as to appeal to a younger audience that transacts even as they text over social media. With India poised to be the youngest country with an average age of below 30 years by 2020, clearly digitisation is the way forward.

After core banking, CRM and digitising of back-end operations, Indian banks are now taking digitisation to the next level wherein the entire lifecycle of the customer is digitised, including acquisition, service, transactions and sale of financial products.

Until now, banks have been offering most of these services in an ad-hoc manner, thus ending up with multiple systems and delivery channels, resulting in a fragmented customer experience. "Banks are now moving towards offering a true omni-channel experience. Thus, the user experience will be uniform across channels like mobile or internet and across devices like smartphones or tablets or laptops,'' said informed sources associated with a technology company working closely with banks.

Given that over 70% of overall bank transactions now happen on digital channels, bank branches too are undergoing a transformation. "Since the new-age customers do not frequently visit the branch, providing them self service channels of doing transactions will be on the rise," says Pai.

Bank branches are expected to transform into engagement and sales contact points as banking will be done through branches in malls, self-service kiosks and pop-up branches that are manned by a single person who helps the customer with all banking needs.

"In the days to come, banks will offer customised solutions to their customers," says Pai. This will be done by using a lot of analytics and trying to predict customer behaviour. The entire approach will move from product-centric to customer-centric.

"Digitisation has several benefits as turnaround time reduces since processes are streamlined. Thus, the outreach can increase," says Mohan Jayaraman, MD, Experian Credit Information Company India & country manager, Experian India.

The digitisation wave is fuelled by the ubiquitous mobile phone. "We are doing more than a million transactions a month using the IMPS platform," says Pai.

Thanks to mobile phones, even the non-banking customers are now able to do digital transactions. "We have seen many migrant workers use the domestic remittance channel to send money to the beneficiaries in the village," explains Pai.

"Digitisation helps to bridge the financial inclusion gap," agrees Jayaraman. With over a billion mobile phone subscribers, the market is huge. With banks now permitting e-KYC, customers do not need to rush to banks to provide the necessary documentation. "Automation helps to reduce costs as also ensures uniformity, objectivity and scalability," says Jayaraman.

One of the benefits to customers is that digitisation reduces the cost of banking transactions to one-tenth the cost incurred otherwise, said an ICICI Bank spokesperson. For instance, customers pay a charge of Rs 5 plus service tax for transfers of Rs 10,000 to Rs 1,00,000 through the IMPS (Immediate Payment Service – an instant interbank electronic fund transfer service through mobile phones) or NEFT (National Electronic Funds Transfer – an electronic funds transfer system). Compare this with the Rs 100-120 charged for sending Rs 10,000 – Rs 50,000 money via money order.

But India has a long way to go before we move into a cashless world. "At present, over 95% of the transactions are still done in cash," points out Pai.

The good news is that nowadays it is not just the large-ticket but even small-ticket financial transactions that are concluded in the virtual space.

Even drivers of taxi companies prefer receiving their payment through online payment applications like Paytm rather than in cash. This is because it is more convenient to save digital money rather than cash which gets used up by the time the driver goes to a bank to deposit the same.

In future, none of us may need to go to banks for our banking needs since the banks are now choosing to come to where the customer is, thus saving the customer's time, effort and money.