Digitization – an absolute necessity now

Reported by: |Updated: January 30, 2017

Digitization has been the catch phrase for banks in 2016. Mobile-based payment solutions, blockchain technology, self-service, social media-based transactions and seamless P2P transactions are on their agenda:

Today, digitization is not a mere option for the banking industry. It is a must for them to be functional, efficient and competitive. Digitization ensures improved customer experience, cuts down costs, brings in cashless transactions and with technology available for processing data in near real-time, they can take data-driven dynamic decisions. Digitization also complements mobile banking, which is now being increasingly adopted.
Digitization affords a cost-saving opportunity for banks. This is mainly possible through automation of servicing and fulfillment processes and migration of front-end activity to digital channels. It is estimated that 40% to 90% cost reductions are possible through careful deployment of work-flow tools and self-servicing capabilities for customers and staff. On front-end, savings are possible by converting existing branch activity into digital channels, use of digital tools to augment frontline servicing, which can considerably increase staff productivity and enhancing the customer experience.
Digitization does not mean huge investments or massive changes in operations. In fact, much of the technology required would already be in place in most of the Indian banks. What is needed is to leverage the existing platforms and make investments on the basis of requirements.

A study of three Indian banks – a public sector bank, a private bank and a foreign bank – indicates digitization is on the top of the agenda.
“Banks,” says Hardeesh Kumar B., ED at Canara Bank, “should focus on right mix of digital as a whole, mobility, self-service and customer delight, in their different line of operations. In my opinion providing secure banking services digitally to cater to all segment of customers is the need of
the hour.”
He says going forward, considering the high mobile penetration among the masses and ever growing smartphone users in the country, it is imperative for the banks to have a clear thrust on   mobility based inclusive service platform. “We at Canara Bank are constantly transforming and revamping our various mobile-based apps with a customer centric approach. We are also exploring the possibility of tie-ups with fintech companies for adopting niche and innovative technology.”
He adds that the bank had recently launched several customer friendly mobile apps like Canara Empower UPI for digital mobile payments, Canara Geo Locate for easy location of nearest branches/ATMs, Canara Swipe for bringing under one umbrella various digital services offered by the bank through SMS or Missed Call and Canara m-Serve, a mobile based app for customers to disable and enable cards as and when required and keep them secured. In addition, the bank has also launched an umbrella app, Canara Cart, bringing all mobile based applications under a
single app.

According to Ashutosh Kumar, regional head, Transaction Banking, South Asia at Standard Chartered Bank, digital is prime. “Digital is not an initiative or a technology. It is a way of life and it should be core when you start thinking about transformation or change or how you interact. This goes beyond technology. It is also about how you want to interact and how you want to incorporate the client’s feedback etc. Digital is the way to go,” he asserts.
Deepak Sharma, chief digital officer at Kotak Mahindra Bank, says the bank realized quite early that digital is a long-term journey and has several building blocks and each block needs to align with the organization’s strategy, as well as both long and short term goals. “We identified areas in each of these quadrants, like business process transformation, online acquisition and transaction, lending and payment initiatives, customers and employees experience, innovation etc. Each of these were aligned with the current business roadmap with defined short to medium term objectives. Digital at Kotak functions as center of excellence and cuts across business and customer segments. By doing this we are taking our current products and processes digital, and at the same time rolling several ‘digital first’ initiatives,” says he.

Do they think it is relevant to initiate technology projects keeping in mind the fact that ultimately it is the mobile and cloud that are going to be the preferred media for transactions?
Undoubtedly, future will be for mobile based banking, says Hardeesh Kumar. “With more than 1 billion mobile connections in the country, adoption and acceptance of mobile-based payment solutions will be much easier and faster,” says he.
He is confident that in tune with the existing government policy for extending banking services to hitherto excluded segments, high mobile penetration will help reach the masses in the unbanked areas and offer banking services at a lesser cost.
He feels that a key challenge for major investments in new technologies has always been the capital expenditure for new infrastructure. “With cloud computing, financial institutions need to budget only for operational expenses and pay for the services they use. This makes it easier and cost effective compared to present infrastructure. Cloud computing can offer our bank a number of advantages, including cost savings, usage-based billing, business continuity, green IT etc. But before moving to the cloud, we must consider issues such as data confidentiality, security, regulatory compliance, interoperability of standards, and quality of services,” he points out.
“Absolutely,” says Ashutosh Kumar. “We at Standard Chartered have been doing that as a bank. We will soon introduce the next-generation of our front end Straight to Bank (S2B). This was designed for a tablet and mobile and then for PC. Earlier, you would design a product for a PC and then retrofit it into a mobile device. That would not work in some cases. User experience is very important in a digital world. So, you need to design a product for a device where there would be maximum usage or interaction. And that’s a mobile device.”
Sharma of Kotak Bank emphasizes that mobile is at the center of the bank’s digital products/experience. “We currently have one of the highest mobile adoption rates among Indian banks. We offer close to 100 products and services on mobile channels. For example, we were the first and still among select few banks to offer one time fund transfer on mobile. This solved customers’ problem of making payment without the need to register a beneficiary. Today, over 50% of fund transfers have moved to mobile. Customers love this feature. We also launched switching on & off feature for debit cards for domestic/international transactions, when not in use, as well as changing its PIN on the app itself. This too was well appreciated by customers. We are also amongst first and a select few banks to offer a range of eCommerce transactions within the banking app in partnership with players like Go-Ibibo (flights, hotels & bus), Flipkart & PVR (movies). We recently launched Mobilepay where our customers can make payment in restaurant though the banking app. This apart, we had launched India’s first offline, multilingual app ‘Kotak Bharat’ which offers over 35 services including small value fund transfer and recharge,” says he.

What are the products in the pipeline in consonance with technology induction?
Says Ashutosh Kumar: “In the global context, we are working on blockchain technology. We have an initiative called TradeSafe, which is a blockchain backed trade finance initiative where we are able to process and work with our clients and their clients in processing and initiating trade finance in day to day transactions using blockchain technology. We are also working on blockchain related payment technologies. We are also working on enhancing the interaction with the client. And that’s what the next version of our Straight to Bank portal is all about. This platform is designed with mobility in mind. It will completely change the way a treasurer in a company does his banking related tasks and how he sees information and analyzes data. All of that will be at
his fingertips.”
Hardeesh Kumar feels with the advent of a host of self-service devices and applications coupled with improvement in digital infrastructure and internet bandwidth, banking habits of the people have changed in the recent past. “We at Canara Bank have always given prime importance for the induction and adoption of latest technology in all areas of operations. We have a robust, secure scalable infrastructure in place and we have always strived to adopt the latest market trends and provide the latest digital solutions for improving the productivity, efficiency, security and customer and employee satisfaction.”
He says in line with the bank’s digital strategy the bank has taken up number of new projects to be introduced in the near future. “As we move towards a less cash economy, we plan to launch an exclusive mobile app ‘Canara m-Campus’ for making fee payments to educational institutions, the area which remains untapped and has huge potential for growth. As part of re-engineering and digitizing our operations process, we also propose to launch a ‘Customer on-board app’ aimed at simplifying the account opening process. Users can fill in the forms online and can later visit the branch of his choice at his convenience to complete the process. Many more digital initiatives like platform-agnostic internet banking and cloud based token management system etc are also in the pipeline.

Sharma emphasizes on Kotak Bank’s effort to connect with all consumers across digital divide. “While on one side we launched the world’s first Twitter banking experience ‘Hashtag banking’, on the other side we were also the first to launch India’s first offline, multi-lingual app ‘Kotak Bharat’. Similarly, while we have feature rich banking app, and our UPI app ‘Kaypay’, we have also launched USSD banking, which offers funds transfer and basic banking on feature phones. Through our products & services, our focus is to serve all customer segments across the country.”
He adds that in digital innovation the bank is focused as much on the under-served and the un-served as on mass affluent and affluent segments. Some solutions like USSD and Bharat Banking are examples of the bank’s commitment in this direction, he says, adding, the bank is also looking at launching several digital initiatives such as Aadhar based account opening, transaction, payments and signature. This will go a long way in supporting inclusive banking, he avers.

What are the plans for mobile money by banks?
Ashutosh Kumar is emphatic that UPI changes the whole game. “We have to start thinking quite differently in the UPI context. The P2P context was more in terms of wallets. When transferring money, it had to go through intermediaries (net banking and wallets), but wallet has become a redundant technology. With UPI, you can directly transfer money from one account to another. The entire P2P space will be dominated by UPI and that is what we are working towards.”
Hardeesh Kumar points out that Canara Bank is offering several mobility based payment options such as UPI eMpower, mWallet etc, which have become popular. “We are contemplating partnering with one of the leading wallet providers in the country shortly to extend state of the art digital wallet experience to customers as well as non-customers. In our case, P2P fund transfer facility is already in place. Our customers can make instant transfer of funds using the bank’s mobile banking and UPI platforms through IMPS channel. Person to Merchant facility is also available to our customers through UPI and mobile banking solutions using IMPS platform of NPCI,” says he.
Sharma of Kotak Bank responds on a different level. Says he: “Digital payments are reaching an inflexion point, more so after the demonetization. There is a spring in everyone’s feet in the ecosystem. With a host of interoperable payment initiatives and customer readiness to adopt alternatives to cash, we will see major action in this space. UPI with seamless payment across individual and merchants is a game changer and it will reach its potential this year. Further, India QR code will offer interoperable merchant payment ecosystem where customer with any payment instrument – card, bank account, virtual payment address – can make a payment by scanning QR code. At the same time, USSD and Aadhar Enabled Payment System (AEPS) will provide ease of payment to every common citizen with or without even a basic phone.  We will offer all choices to our customers and educate them with benefits of using these in addition to existing mobile and card based
payment options.”

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