Accelerating Change through Digital Banking


Banking has been transformed compared to 1990s, in India. We still remember the hoardings at a large nationalized bank in 1990, stating that they will be able to process a cash withdrawal transaction in 20 minutes. This was supposed to be the fastest transaction in that branch. Today, money transfers can be done using a mobile phone, sitting on your couch at home, within a minute.

Mobile connectivity and declining data costs have dramatically increased the usage of internet. Over 80% of the households in India have access to mobile phones and over 300 million Indians use smartphones. This is roughly equivalent to the entire US population. The social media platforms such as facebook, Whatsapp and Instagram are logging more than 250 million monthly users in India.



The increase in volume of digital payments, as shown above is indicative of the changing behavior of customers and their rapid acceptance of Mobile phone as the device of choice. Banks need to take a note of this, if they need to attract the next millennial group of customers.

Market

There is a huge market to be tapped for financial services. The aspiring group of the population (i.e, large sections of lower middle-income and lower-income) who are just above the bottom of the pyramid are the target segments for the bank. This segment is around 150 million households with monthly household incomes ranging from ₹ 6,500 – 25,000. They represent the broadest array of ages and occupations such as drivers, maid servants, delivery boys, plumbers and construction workers. This is the group, which has the highest level of aspiration to move up in the society. If banks can fuel their aspirations with timely financial services, they will become the growth ambassadors for the country.

Why now ?

Technology has made the banks address the needs of this group (Aspiring sector of the population). Over the next five years, half a billion (500 Million) first time internet users are expected to come online via their mobile phones.

Processware has designed and developed digital banking tools to enable banks to address this growing segment of the society. The digital suite of banking tools include branchless banking, AI based loan origination bots, QR code based customer insights. Banks can use these set of tools to meet the growing financial needs of the aspiring sector of the population.

Today, the payments space has been already conquered by a set of fintech startups. They have developed solutions on India Stack consisting of Aadhaar, eKYC, DigiLocker and e-signature. Users have gladly accepted these new channels for meeting their payment requirements.
Banks can use branchless banking tools to acquire more customers, grow their credit portfolio by automating the loan origination process, and optimize their loan approval process. All these can be done at a lower cost by adopting technology. The demand for financial services is healthy across the sectors as shown below.



The banking sector should put greater emphasis on providing improved services to their clients and also upgrading their technology infrastructure, in order to enhance the customer’s overall experience as well as give banks a competitive edge. BankSoft – Digital banking solutions will help banks achieve this goal.

India’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion by FY2023 driven by the five-fold increase in the digital disbursements.

To be part of this massive growth, banks need to rapidly adopt technology and make mobile phones the key device to communicate/transact/acquire new customers.

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