Digital India will connect every Indian, boost Financial Inclusion: VG Kannan

VG Kannan

VG KannanDigitisation is rapidly changing the banking and financial sector, ensuring innovation, speedy delivery of services and easing the working hours at the bank branches. It is true that Digital India is connecting every Indian and banking the underbanked segments of the society for holistic growth, said VG Kannan, Chief Executive, Indian Banks’ Association.

Addressing the CXOs from across the banking and financial sector at the Elets Gamechanger Summit, Goa, he highlighted several vital points pertaining to the benefits of technology implementation.

Excerpts of his speech:

I am not a technology freak but with the onset of the digital revolution, I too have started completing using my mobile phone for banking transactions, mutual funds, insurance, capital markets, tax payments, e-commerce.

All the banks are actually benefited from tech-revolution. Most of the lenders even reported over 70 percent of the transactions done outside bank branches.

Imagine what would have happened if digitisation would not have taken place. The number of banking formalities, crowd visiting the banks, depositing of cash, cash withdrawals would have inflated the working hours at the branch offices tremendously.

In the last few years, Internet Banking, Mobile Banking, IMPS, QR Code transactions and the usage of other digital payments including NEFT, RTGS etc were operational before the demonetisation and gave impetus to the popularity of e-payments post the note ban.

Today, all banking institutions have gone ahead and making it easy to onboard new customers digitally without any personal visit.

While the industry is facing more and more regulation especially due to fears of a security breach, in alignment, it has also responded well keeping their best foot forward, improving the quality of services.

We must also compliment the government machinery keeping pace with digitisation and providing an environment conducive to the easier, faster and more secure experience.

The institutions are also on-boarding customers by invitation using advanced data analytics. They now use old data, data from social media, Artificial Intelligence and Machine Learning.

Risk exposure management of single unit, industry, group, region which was very cumbersome and manually done have given way to system enabled facilities which are done at the time of appraisal.

These have enabled cross-selling and up-selling of liability and asses products across the spectrum. These are not only meant for existing but for bringing potential customers on board.

Analytics-enabled tools not only help in onboarding new customers but also price the products making them attractive to the client. I agree, that this has led to a lot of cross-selling at times, which the entire BFSI sector is concerned about.

 A couple of years ago, the Reserve Bank of India (RBI) announced the setting up of payments banks whose model of banking mainly depended upon on minimal cash usage and maximum digital transactions. I expect that they along with the Small Finance Banks would add to the volumes of the banking industry and a true Digital India would emerge connecting every Indian to the BFSI sector, this playing a major part in the Financial Inclusion.

It is certainly a proud moment to note that we are one of the top users of digital transaction in the world. However, when it comes to capturing the unstructured messages in the core banking system a lot of issues on reconciliation occur. Here usage of Machine Learning and Artificial Intelligence by banks could help in avoiding the errors and provide faster transmission.

The RBI has recently announced a FinTech Sandbox framework to permit 1-12 companies to test new products. Let us see, how it works. This would give further impetus to technology in banking.

While the BFSI sector has made considerable strides in the areas of innovation in new products, ease of business and comfort. The major worry is the insecurity surrounding this. Banks have been trying their level best to process loopholes in the system.

Globally, people are talking about innovations but a major segment is also worried about security concerns. Every now and then there are reports of breaches, most of them are rumours though.

Some major breaches have led to major concerns across the sector and also some pushbacks from the pessimists of the digital revolution.

Security issues cannot be handled with a one-time approach. It is rather an ongoing process and needs regular interventions.

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