Digital banking is set to boom in India, with 43% of Indian adults expected to have an account by 2025, reports the latest research from financial comparison platform Finder.com.
The survey results reveal that an estimated 205 million Indians, approximately 22% of the adult population, currently have a digital-only bank account, with 192 million more (21%) planning to open an account in the next 5 years. And to top this, the Coronavirus pandemic will likely act as a catalyst for the digitization of banking.
With the Reserve Bank of India instructing customers to use digital banking facilities as much as possible during the lockdown period and to maintain appropriate social distancing, the five-year projections on digital banking could be squeezed into a much shorter time frame.
Finder’s global fintech editor Elizabeth Barry indicated that the report compiled by the company compared India’s neo banking adoption rate to 12 other countries. Surprisingly, the company found that India is expected to see the biggest spike over the next year with anticipated double-digit growth over the next 12 months.
Setting the stage for neo-banking options
Now with this COVID-19 induced lockdown conditions, it is only obvious that a large segment of the Indian population is going to embark on learning and adopting new banking ways that have never been explored.
Bhavin Patel, CEO & Founder, LenDenClub shares an interesting banking trend that is unfolding now. Patel says, “Referring to the current situation of COVID-19, contactless payments is one of the best ways to avoid human interaction. Money changes hands frequently and cash even more so. Therefore, contactless payments can assist public health in a big way in the wake of the ongoing pandemic. This is not to create panic or anxiety but to take preventive measures. I believe it is also an ideal time to enable the public at large to get acquainted with the ease and flexibility of digital payments. Institutions like banks can consider increasing the limits on contactless payments, while payment-related companies and aggregators should consider incentivizing their payment options. Also, other institutions and companies should integrate various options of contactless payment options in their system which will reduce human intervention to a great extent.”
While contactless payments need to be embraced fervently in this challenging period, some geographies and customer segments will have to be assisted to be moved into the digital mode. It is especially important during these testing times that citizens across all segments of society have the resources to take care of their needs. In places where physical money exchange is unavoidable, players need to build awareness around the situation and on a war footing cultivate best practices while cash is getting exchanged, opines Anand Kumar Bajaj, CEO & Founder, PayNearby.
Increasingly, people (especially in the rural belt) will be made aware that physical cash is a potential substrate that can harbor the Coronavirus. Covid-19, having the ability to survive on a surface for upto 4 days, can also survive on notes and coins and thus become a primary source of infection, during lockdown and post lockdown.
Aware of the risk posed by physical cash, Anand Kumar Bajaj shares some precautionary measures and awareness taken at his company’s end. “At PayNearby to curb the spread of the epidemic and raise awareness, we are focusing all our energies to run campaigns that train people to sanitize their hands before and after exchanging cash. The campaign is called “Zidd aapke Suraksha ki; Zidd Surakshit aage badhne ki” where customers and retailers are made aware of the need to wash their hands with soap and water or a hand sanitizer, after conducting any financial transaction. This has been communicated to over 10 lakh retailers across 17,000 plus PIN codes. Our teams are putting all their energies to ensure every retailer is made aware of it and puts this into practice. We are happy to share that more than 250 videos replaying this core messaging have already been made and shared by our retailers in various social forums, and it gives us great comfort to see this level of awareness and proactive social messaging.”
Presently, India is facing the extremes of the Coronavirus outbreak and many precautionary measures need to be taken to prevent a vast community spread. Considering the current situation, contactless payments could be the way ahead and payment modes like UPI, IMPS, RTGS, mobile wallets and net banking could contribute effectively in reducing human interactions.
Varun Sridhar, Lead, realme PaySa, indicates that the company’s UPI payment service is expected to launch soon and he anticipates that the demand for it will be higher as in the given lockdown situation many more people will shift to digital payments. “I think it will be a tough year, but in crisis comes opportunity. We will continue our rapid pace of innovation in the fintech space,” says Sridhar.
Contactless payment is the way to tide over the current tough times – affirms Mandar Agashe, Founder and Vice Chairman, Sarvatra Technologies. “Media was flooded with articles on South Korea quarantining and burning cash to prevent the spread of Coronavirus. It is believed the virus can stay on surfaces in its fully active state for days. In this context, physical cash handling as a daily routine is being considered as a major cause of concern for the risk of contamination. While WHO hasn’t explicitly corroborated this, a statement issued says that it is advisable to use contactless payments to reduce the risk of transmission.”
Not only will things change at an individual level but even at a company level, foresees Agashe. Many companies have been undergoing a digital transformation or promoting new technologies such as self-checkout. Practices like this will see rapid adoption of digital payments to reduce the risks of transmitting the virus through human interactions with exchange of cash one source.
The government has explored other measures to curtail the spread of the virus through cash. Physical cash is being sterilized before release to customers. But largely incentives on using digital payments is taking the lead in adopting the change from cash.
The government has urged the entire ecosystem associated with banking and financials to build proper awareness and education around contactless payment besides undertaking other preventive measures to collectively combat the risks involved in cash transactions.
Agashe opines that this move will also encourage India to bring a shift in their everyday habits, facilitating financial inclusion at a macro level. Today’s Coronavirus situation can cause a drastic change in payment habits, as consumers shift to digital channels to reduce their risk of infection from handling cash. It’s the same way how demonetization paved the way for digital payments in India overnight and the adoption has been increasing ever since.
App-based banking transactions are also doing its part in the times of a crisis like this. Niyo – a branchless banking platform has always had avenues for digital banking through its Niyo Bharat App, which includes bank transfers, e-commerce/grocery shopping transactions, account led information like – balance checks, passbook updates, and provisions of locking and blocking the card through its app.
Darpan Sharma, Business Head, Niyo Bharat, says, “In the recent lockdown scenario, Niyo has ensured that we educate our customers through a unique online classroom session which has seen non-app users move to the app ecosystem to be able to make the most of the features. Our feature of P2P transfers has seen a substantial growth on the network, which clearly indicates our customers being connected as peers and extending support to each other in these difficult times. We have also observed a consistent outflow of customer funds being transferred to their hometowns or loved ones through fund transfers. So, this habit continues to grow and Niyo offers a free fund transfer on its Niyo Bharat App.”
In several of its efforts to onboard digital payment users, Niyo Bharat has also initiated a pilot of its utility and bill payment solution and has also observed a great transaction on usage. This feature will be made live to its entire user base soon. Also, keeping the security of its customers as a top priority, Niyo Bharat recently started its live capsule of Niyo Suraksha on Facebook ensuring that its customers don’t fall prey to any digital crime scenarios.
Referred and stated here is just a small percentage of players who have invested their efforts to help India stay safe while banking. Several initiatives similar to the ones mentioned above from domestic and global players will be unleashed soon, which makes payments more digital in a safe and secure manner.