Building the truly digital Indian bank

By Puneet Chhahira

The creation of Payment Banks in India heralds the future direction of the country’s banking industry – un-bundling of banking services. Digitalisation is a very important part of that. Soon, we will have asset-light, technology-intensive Payment Banks reaching their services to the farthest corners of the country. Although technology has been a vital enabler of the Indian banking sector over the past few decades, the context today is quite different than what we had when Kotak and Yes Bank were established in 2003-04. Today, the new providers have tailwind of modern technologies and digitally-savvy young consumers by their side. Let’s just say - India is ready to digitalise.

In response, we believe it’s time for traditional banks to reinvent the universal banking model for the digital age. The current model served well during a time when a majority of customers preferred to consolidate most, if not all, of their financial services needs with their primary bank. But the one-stop, full-service, everything-for-everyone bank is now being turned right on its head. The Fintech revolution driving this is being led almost exclusively by innovations that promise to do only one thing, but better than anyone else.

To succeed in this environment, banks need to reimagine their entire business with the help of digital technologies, which are pervading every aspect of the business, without exception.

At Infosys Finacle, we call this transforming towards truly digital banking, which we believe rests on key foundation pillars:

Making the customer the point of focus

Digital consumers are demanding to a point where even customer-centricity is not enough. They want their bank – indeed every service provider – to recognise their individual identity. Banking solutions will therefore have to become customer-specific, personalised to the needs of a “segment of one”. As they try to become truly digital, India’s banks should personalise customer experience using analytical insights, provide immersive experiences using Virtual Reality and other technologies, create interactive experiences using gamification, and get customers to determine their own experiences through co-creation. Much will be expected of the consumer banking experience, which will not only have to ease the process of banking but also deliver its functional promise.

Putting insight ahead of everything

In the truly digital bank, analytics-driven insights will play a role in every banking activity, be it providing experience, running operations, controlling cost, or mitigating risk. Analytics will enable the bank to refine its “segment of one” strategy by deploying transactional, behavioral and life stage insights to create contextual, relevant, and personalised products and services.

In the truly digital bank, analytics is neither treated as a technology nor a business function; it is part of enterprise culture and therefore applicable to everyone in the organisation, irrespective of role, job function or department. Leveraging its ability to turn real-time structured and unstructured data into actionable insight, the truly digital bank is able to differentiate itself by creating greater value for its customers and its own organisation.

Leveraging intelligent automation to improve efficiency and experience

For the truly digital bank, the customer – and derivatively, customer experience – is the reason for being in business. With digital transactions increasing exponentially, there is greater risk of friction at the customer interface. The bank will rely on automation to a great extent to streamline back-end operations so that there is no impact on experience. The imperative and scope for automation will only increase as the Internet of Things takes off. We expect the truly digital bank to leverage machine learning, artificial intelligence and cognitive computing to build new banking models where algorithms and business rules manage efficiency and experience. Not just the bank, the very ecosystem it is part of, will automate from end-to-end, further enabling it to dedicate its human resources to high-end, value generating activities. This will create huge advantages, but it could also pose a challenge to banks, which must learn to co-exist with intelligent, autonomous, decision-taking machines.

Delivering universal banking from the ecosystem

In recent times, we have seen unbundling of banking at the hands of technology driven players or FinTechs. With niches of banking activity being taken over by new players, the banking ecosystem has expanded leaps and bounds. As it continues to enlarge, the ecosystem is donning the role of the universal bank, aggregating under its roof all the services that a customer might possibly need. The truly digital bank will have to learn to coexist in this ecosystem, even collaborating with other players. Here, developments like API (Application Programming Interface), blockchain led networks, and the Internet of Things will play a crucial role. And if for some reason, we choose to ignore the call for openness and collaboration, regulators will enforce it on us. The revised Payment Services Directives (PSD2) in Europe and unified payments interface APIs by National Payments Council of India may well be just one such indicator of a brand new collaborative future for banking

The future of banking, we believe, lies in being truly digital. The author is Global Head of Marketing, Infosys Finacle