Banking on new technology

The Nachiket Mor Committee has recommended the RBI new banking concepts such as payments banks to boost financial inclusion. But there is also a strong pitch for embracing new technology to reach unbanked areas of the country.

 

When it comes to money management, India has proved that it has miles to go in bringing banking facilities at the doorstep of every Indian citizen. The Reserve Bank of India (RBI) admits that half of Indian population still don’t have a bank account, which means they don’t have access to keep money safely with decent returns or borrow money for various requirements. 

There’s an answer to this problem. Bringing new technology in banking is a key factor. The banking regulator and banks have seen the writing on the wall. “Fifty per cent Indians still don’t have bank accounts. How do you allow this 50 per cent to be part of the economy? You thus have a revolution of demand. How will you ensure that they can avail of banking services?” asks Deepali Pant Joshi, executive director, RBI.

How will you use technology to reach out to the vast unbanked population and, at the same time, give a better and more user friendly experience? “This is the biggest challenge and opportunity facing the Indian banking industry,” Joshi said.

Arun Jain, chairman, CII Banking Tech summit and executive chairman Polaris Financial Technology, said, “The ability of technology to bring together various aspects of banking has added phenomenal value to every day banking transactions for customers. In today’s challenging times, when broadening reach and access to banking is the key to drive growth in business, innovations in technology in all likelihood will change the equation between cost and access.”

What’s the need of the hour? A report by Confederation of Indian Industry (CII) and PriceWaterhouseCoopers (PwC) says that measures like data aggregation, customer relationship management and financial inclusion initiatives is essential to take banking to the next level of growth.

According to CII-PwC, technology is considered as a critical pillar to meet the strategic objectives of the business by 63 per cent of banking survey respondents. “Thirty eight per cent of the banks felt that technology has played an important role in bringing improvements in operational efficiency. 52 per cent expects the investment in technology to be primarily around regular maintenance and improvements in infrastructure,” it says.

Debdas Sen, leader, Tech Consulting, PwC India said, “Indian banks have grown accustomed to using technology. However, we have now reached a point where technology needs to be used as a value lever to traverse a fast-paced growth trajectory.”

Innovation to help develop the product, process and service is the new mantra. Increased customer awareness has mandated banks to align their strategies to provide an enhanced customer experience. The advent of social media, changing regulatory environments and other macro-economic factors are further strengthening the strategic role that technology plays in the industry.

“Over the years we know how to manage traditional media, but social media does not have editing and anyone can say anything. How do you react to it?” said Shikha Sharma, managing director and chief executive officer, Axis Bank.