5 Ways Fintech Is Transforming Banking In India – Fintech Zoom Advisor INDIA
The banking industry has evolved from physical to digital, and now to hybrid banking models. Thanks to emerging technologies and the fintech companies that are using digital tools to transform the way we bank.
The use of the Aadhaar Card and video know-your-customer (KYC) along with card-less cash withdrawals, paperless customer on-boarding, ‘tap and pay’ through mobile are some of the technology-first tools that reflect acceleration in the digitization of banking in India. Let’s look at the five fastest ways in which fintech has brought more agility to banking and aided a versatile digital experience for users.
Advanced Self-Service Capabilities
Gone are the days when consumers had to wait for hours to reach the front of the queue, complete formalities, fill forms, access customer care for assistance at banks. With fintech banking solutions, self-service capabilities provide customers with operational processes that were previously only available via a physical branch.
These services are not only limited to basics like checking account balances online or transferring money but others such as customers can open new accounts, opt for loans, and buy insurance–all, digitally.
This is helping customer with a choice to understand their financial position, learn about alternatives, and make better financial decisions for themselves and their families.
Application Programming Interfaces (APIs)
A decade ago, the Reserve Bank of India (RBI) introduced NEFT and RTGS, followed by the National Payments Corporation of India (NPCI) introducing IMPS. This was followed by API-led banking. The way that works is simple:
- For banks to perform functions digitally and seamlessly, it is imperative to integrate their products and services with various third parties.
- To link both parties, they need APIs in the middle to communicate with each other.
- In a nutshell, an API is the bridge that helps banks and third parties to connect safely and leverage each other’s offerings in real-time.
- An interesting example would be the money transfer requests sent by mobile wallets and received by banks during a transaction, hence providing a low-effort and faster experience to the end-user.
- Applying for a business loan, checking credit score, viewing balances all in one place, has been made possible due to APIs.
- They allow banks and third-party companies to augment their strengths and complement each other, to provide great features and services to the customer in a better way than when they did it by themselves.
While most of India still preferred cash payments as late as the last decade, and point of sale or POS terminals had begun to see acceptance only around 2016, the rapid penetration of mobile internet internet services and demonetisation played a role in Indians’ larger acceptance to digital payments.
The federal government has since been providing people with incentives for opting to use online methods of making payments in the hope of making India more cash-light. KYC bottlenecks were tackled and fintech rose to innovate in the payments sector to bring in new technologies at a faster pace.
It now takes a few seconds for a payer and payee to send and receive funds, changing the way people spend and shop, increasing accountability.
So far, we have seen banks launch their own chatbots that are designed to interact with customers meaningfully and address their frequent queries. With technological advancements, voicebots are likely to replace chatbots in the days to come. These voice assistants are aimed to enable consumers to interact with them using voice recognition technology backed by artificial intelligence and natural language processing.
What we have already seen in the form of voice-based searches on Google, Netflix, and various other customer-centric platforms, is going to be married to banking as well. Imagine a scenario when the system asks you to generate a new passcode or pin or open a new account and you are able to do so without typing and instead using direct voice commands.
Iris, face and voice recognition as password and using other forms of biometric authentication, validation chip for cards, invisible payments, and thumb impression to validate payments are some other technology-led processes that are being actively built for banking in India.
Neobanks are digital banks with no physical branches. They offer a wide array of banking and financial services such as instant loans, mutual funds, savings accounts, fixed deposits, lending products, among others, which can be easily accessed online, either through the website or a dedicated app in association with other licensed banks. This trend has picked up during the pandemic with many consumers looking for digital ways to bank.
Though the journey of digitization has taken decades, its acceleration has been exponential as mobile data plans became cheaper and the world faced the Covid-19 pandemic.
2021 is set to offer organizations the opportunity to leverage technological capabilities and drive digital transformation across the financial value chain much more than just another app. The rapid pace of adoption may fundamentally change the cost structure of a financial institution and a completely new set of offerings to the customer that has never been seen before.