Digitisation helps banks evolve

Digitisation has transformed many walks of our life. Banking is one of the many segments which have been modified, both for consumers and bankers, by digitisation.

At macro-level, one of the biggest drivers behind digital banking is the government’s endeavour towards a cashless economy. The payment infrastructure of the economy is evolving continuously with initiatives like the proposed unified payments interface (UPI), which can alter the payment experience for consumers. Such initiatives, together with other steps such as Aadhaar-enabled KYC and e-sign, are likely to provide a window of opportunity for banks to further transform themselves.

The rapid growth of internet access, nearly 100 per cent penetration of mobile phones and expansion of 3G and 4G smart phones have provided a platform for growth in digital banking. It is estimated that nearly one-fourth of customers in India, who have internet access, do some form of digital banking. And this number is growing fast. With digitisation, banking is far more convenient, and is possible 24x7. Almost all transactions and interactions with banks can now happen at the place and time convenient to customers, leading to rapid adoption of digital channels by customers. For private banks, which were the first to offer transactions on digital channels, 50- 60 per cent of their total transactions are on digital today.

Digitisation has also resulted in emergence of completely new platforms, formats and channels for banking. Banks have introduced a host of initiatives such as cash recyclers, tablets for mobility of sales staff, self-service branches, video-banking and banking using social media and messaging platforms such as Facebook , Twitter and Whatsapp.

Innovation in this space has also seen acceptance of new offering such as e-wallets by customers. Wallets allow users to carry out mobile recharges, pay bills and shop online. Some solutions also allow customers to pay for e-commerce purchases or even at physical stores thereby becoming a complete payment solution.

Other technologies such as NFC (near field communication), which have seen rapid adoption in other countries, are likely to see wider acceptance in India in the near future. This will also lead to rapid adoption and proliferation of cashless banking in unbanked segments.

It is no surprise then that ‘digital banking’ has emerged as the most preferred form of banking. Most banks are witnessing paradigm shifts in how a customer chooses to interact with them over their digital channels. Banks today are in a pole position with the amount of data available to them on customer preferences and behaviour.

They are also reinvesting on “big data” and omni-channel platforms to better leverage the vast pool of external and internal data and provide immediate and relevant offers to their customers as and when they are needed. The ability of banks to harness these opportunities will separate the leaders from the rest.

(The writer is general manager & head, digital channels, ICICI Bank)

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