We are currently in a phase of ‘Digital Darwinism’, an era where technology and society are evolving. The bang of digital forces like Social, Mobile, Analytics, Cloud and Internet of Things (IoT) are creating flow of business information in a more direct and cost efficient manner. India is not un-touched by this phase of ‘Digital Darwinism’. The new technology trends such as Cloud Computing, Artificial Intelligence and Biometrics etc, are likely to bring about significant changes in the way payments would be processed in the future.
Already the Indian banking sector is making substantial investment in forming digital infrastructure to offer various solutions like mobile banking, e-wallets and virtual cards, etc. Payment Systems have paved the way for New Banking Paradigms by bringing new financial technology driven instruments with customer’s satisfaction and risk mitigation techniques.
Technology that is driven by innovation and its ability to design new products and services is dynamic and hard to predict precisely. One would not have thought about making transactions in simple touches, but technology has made it possible. Today, mobility and customer ease are viewed as the basic factors of growth and banks are continually evolving with new technology. Markets for banks are completely customer driven and hence technology needs to be customer centric ease of use and safety of transactions. Technology thus plays an enabler role in providing a win-win tool for both the banks and their customers.
The major trends that are expected to influence the Indian banking sector in 2018 will be:
Digital-only/Virtual Banking: Digital-only banksare paperless, branchless and signature-less. In India,these banks are running on the Aadhar’ s infrastructure and providing end-to-end services through digital platforms like mobile, tablets and internet.
Biometric Technology: Linking of Aadhaar number to accounts has enabled banks to recognise their customer by evaluating one or more distinguishing biological traits like face, hand, retina, voice and ear features in wake of an issue. The growth of such technology is far more reliable and will continue to spread across in the times to come, since it can eliminate the requirement of multiple passwords and PINs.
Artificial Intelligence: Artificial Intelligence has provided personalised services by dealing with each customer and focusing on his or her specific requirements. It will be used to collect informationand automatically build models based on that information. Large banks have already introduced this in their services, others are likely to follow.
Blockchain Technology:NITI Aayog is creating ‘IndiaChain’- India’s largest blockchain network, to reduce fraud, speed up contract enforcement and increase transparency in India. As Blockchain is virtually un-hackable due to time stamps that mark a data entry in a distributed ledger, banks will explore options to leverage the power of blockchain to transform backend operations.
Bitcoin: In India, the RBI hasn’t yet authorised the use of bitcoins cautioning the users, holders and traders of bitcoins about the potential financial, operational, legal, customer protection and security related risks. Despite this, bitcoin exchange platforms like BTCX India, Coinsecure, Unocoin and Zebpayare operating in India.
Augmented Reality: Today, AR mobile app has been launched by banks listing all dining destinations, property lists, shopping centers, bank ATMs and branches etc. withpictures along with distance and directions. It is majorly prevalent in the private banking sector as of now.Going forward, installation of Bluetooth beacons at bank branches will allow banks to integrate physical and mobile channels to provide effective communication.
Cloud and IoT Technology: It is the only technology that supports many other disruptive technologies such as big data, artificial intelligence (AI), and blockchain. Banks have begun to realise the degree of agility it brings into business, a fact that has already been evident through the success of fintech companies. As a result, business models for banks in the future are expected to give much greater emphasis to cloud computing.
Banking innovations driven by technology, government regulations and private players are leading to greater financial inclusion, as everyone will get access to advanced banking services and a wide range of financial offerings. The aforementioned trends are sure to play a key role in banking transitions.
Highly technology dependent solutions also necessitate adoption of safety and security measures, which are best in class, on a continuous basis. In order to ensure better monitoring, it is important to have unfettered supervisory access to data stored with these system providers as also with their service providers/intermediaries/ third party vendors and other entities in the payment ecosystem. It has, therefore, been decided by the Reserve Bank of India that all system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India.
Competition, technology, increased customer demand for comfort and convenience and regulatory initiatives have resulted in the introduction of several payment products and channels over the time and shall continue to do so.
This article is contributed by Archana Kumar, Managing Director, Image InfoSystems Private Limited.