Digital banking: The way forward

A panel discussed the way forward for digital banking across various dimensions like generation-switch, 5G, challenger banks, and automation.

By Pratima Harigunani

At the 20th Telecom Leadership Forum organised by Voice&Data Ibrahim Ahmad, Consulting Group Editor, CyberMedia asked an impressive roster of panelists about the factors and trends that were defining the banking sector and whether the telecom sector was helping the banks on the new path.

Speaking at the technology session on Digital Banking: The Way Forward, PaySprint CEO S Anand highlighted that 4G and smartphone penetration have accelerated the new way of banking. “Without mobile, telecom network, 4G and 5G networks, we cannot think about digital banking. Everything is connected today. Economical costs of data and widespread adoption are strong factors here.”

“The last twelve months have been a drastic change for banking. We have seen the need for keeping on innovating and collaborating with partners. The right technology at the right time matters a lot. ATMs would have been a big deal when it first came out but today they are a staple. Today people expect service to be available on their gadgets. The human experience has changed towards banking branches. Life has really changed. The customer has become smarter than before. Banking is moving out of the branches. The era is about WhatsApp banking and instant mobile payments.” Shared Prasanna Lohar, Head-Digital, Innovation-DCB Bank

He also put the spotlight on how every generation works in a banking scenario. From traditionalists (born in 1900-1945) to Millennials (1977 to 97) and Gen 2020 (born after 1997) – banking is changing a lot. “Those who do not innovate will be wiped off. The old paradigm was of expertise but the new paradigm is about agility.”

Today we are moving to a new normal of extreme digital banking that encompasses one-touch sales, completely digital banking, and zero-paper and zero-touch interactions. Also, the way banks communicate is changing. “Earlier it was through keyboard and mouse. Today it is about apps, gestures, and mobile expressions. The next era will be about mood-based banking.” Lohar reminded.

Monica Jasuja, Vice President, Comviva explained the role of telecom infrastructure in banking. “Telcos have been at the forefront of creating both the ability and infrastructure of mobile internet. They are primarily responsible as the first port of call for banking services. Banks used to be branches. Now a bank is on the phone. The cheap and fast internet has created new ecosystems. They have created pipes and connectivity that enable banking. OEMs, then, reduce the cost of phone and providers, then, help banks to create simple, understandable, and easy access. The whole ecosystem, along with the policy lever helps here. Creating awareness about frauds is now not just the responsibility of a bank, for instance.”

Mobile money, financial inclusion, and expanding reach – these are also areas where telcos have accelerated digital banking.

In fact, the future of banking hinges a lot on 5G. The panelists discussed this on various aspects like low latency, real-time banking, new use-cases, etc. But we need to take care of security on this path. “We are still waiting for 5G. Any move that helps with speed and access is definitely something we look forward to,” averred Jasuja.

The panel then discussed the impact on traditional banking sectors. Do these players look at new trends as threats or opportunities? “There is a proper regulatory structure for challenger banks and open banks. It will come in some time. Several entities claim the challenger spot. But banking will stay and grow in India. Partnerships and collaborations will be the next way forward. RBI is smart and it can convert P2Ps into NBFCs. Regulations can come to shape these challenger entities in the right way. Even the account aggregator model that is coming up will standardize data-sharing and KPI-sharing ahead. Challengers and fintech players are important because they help banking to reach everywhere,” Lohar stated.

“We need to draw attention to why challenger banks form a wave. It is essentially a technology innovation. Fintech players are faster and are able to solve one problem very quickly. If they are getting into space, that means there is a need for these solutions. In India, where RBI has a rigorous stance, it is important that new banks walk arm in arm with traditional banks. This would be a different model than what we have seen in the US and Europe. Banks can do a great deal of micro-personalization because of all the data. Can your bank offer you this experience? If that starts happening consumers will stay happy. Big tech can offer similar solutions that a challenger bank does. So even the challenger banks have to ask – can we serve a new segment, an unmet need, or give a new service? It is much more than a problem of faster players taking on traditional players.” Jasuja suggested.

Ahmad also put the lens on where telecom players can improve further. The suggestions that came up were as follows – reducing frauds, helping the industry to move to new use-cases with blockchain, collaborating with new partners for better customer experience on smartphones, ironing out problems in back-end areas, and portability. The panel also recommended steps like – making mobile money more pervasive, global-level providers of financial inclusion, wider reach, collaborating with other Telco players to promote interoperability on this path.

In short, micro-personalization, data-driven solutions, API-first banking, open banking, access, reach, agility, and banking-on-screen – that looks like the shape of modern banking ahead.

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