Machine learning and Artificial Intelligence

Media Coverage: Finance Derivative

India’s banking and financial services sector is in the middle of a digital revolution. Just look at the number of digital payment apps available for download on your smartphone. From newspaper vendors to your milkman, many service providers are open to receiving payments via apps. Money transfer is smooth and efficient, and banking is more consumer-centric than ever before.

Banks and financial institutions can no longer dictate to customers or act standoffish. Today it is about offering a personalized experience to customers when they want and how they want it. This means that banks and institutions need to transform their back-end operations as well and no longer function in silos. They can’t afford to miss out on the digital channels even though they could have traditional banking methods.

Looking back, Indian financial service institutions and banks have come a long way within a decade. In 2009, the concept of a wallet meant the leather one you had which came with credit or debit cards apart from cash. Ten years back, there was no concept of a unified payments interface or UPI for instant fund transfer between two bank accounts via mobile.

This was a seven-time jump from 2007 when it was a mere 1 per cent!

Over the last ten years, the Indian consumer has been slowly exposed to the smartphone, where he or she can buy anything at the touch of a button. The rise of the digital natives, those who are comfortable in the digital landscape, and are comfortable engaging with brands and businesses online has also ushered in a new way of life. Personalization, service at the doorstep and a sense of immediacy — consumers are used to these when they order a meal or book a show. They have begun to expect similar experiences on the banking front as well.

Digital revolution

There’s been a huge digital thrust in Indian banks and financial institutions, and online banking users are predicted to touch the 150-million number by next year, according to a report titled ‘Encashing on Digital: Financial services in 2020’, brought out by The Boston Consulting Group (BCG) and Facebook.

Also, consumers now choose to bank on their mobile phones or make transfers via payment apps. Mobile banking and online banking are slowly coming to mean the same thing. Government policies and vision seem to have played a role in giving cashless transactions a huge fillip. For instance, the unified payments interface or UPI is seeing huge growth, with many local and global players entering the scene. A 2018 Credit Suisse report forecasts that the digital payment market in the country will touch US$ 1 trillion, come 2023. RBI data, released by the National Payments Corporation of India, shows that UPI transactions exceeded the Rs 1-trillion mark in December 2018.

RBI data also shows that credit and debit card transactions fell by 4 per cent from October to November 2018. Even payments using RTGS or real-time gross settlement have gone down by 7.6 per cent in November 2018 compared to the earlier month. This is telling — UPI and app-based money transfers are indeed gaining momentum.

Thrust from the central bank and government

Demonetization of certain denominations in 2016 by the government led to a shift from cash to cashless, adding to the digital transformation move among financial institutions. From time to time, the central bank has also released certain guidelines aimed at boosting digital transactions in the country. Recently, the RBI has announced that there would be interoperability among m-wallets in the near future, to boost the ease of carrying out digital transactions. Also, the central bank mandates that any global payment company will have to store transaction data of its Indian customer base at local servers to ensure privacy and safety. While it’s too early to comment on the success or the six progress of the payments bank envisaged by the RBI, the government-backed India Post Payments Bank is slowly gaining traction. The future will see collaborations between banks and finch companies for greater financial inclusion.

We must not lose sight of the fact providing an enhanced customer experience is at the heart of any digital transformation. Understanding customers’ pain points and concerns can help banks and financial institutions achieve that. Indian banks are taking to the omnichannel approach to providing a seamless customer experience. They are also employing self-serve, 24×7 available chatbots and intelligent assistants to help with queries on banking. Machine learning and AI have been gaining widespread acceptance among Indian banks and financial institutions so as to offer tailor-made solutions and personalized recommendations on a certain product/service to customers. Customers also share user experiences via online reviews, ratings and social media, which can be tapped into by banks to enhance user experience and even develop better products.

The employment of digital technologies would mean a win-win not just for banks and their customers, but also for market research firms. Researchers will now have a wealth of data to analyze and provide sharpened real-time insights into financial brands and banks.

With the amalgamation of technology and market research, we have reached a point where we have data at our fingertips to dispose of. Real-time insights, do not just give you an edge over time but also give quality insights that will help banks and other financial institutes craft better service solutions for their customers. Even the ever-evolving market research tools act as a beacon of knowledge that every organization is constantly on the lookout for.

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