How does ‘digital’ i.e. internet and mobile technology - impact banking, and what
are the challenges they bring in? Kamlesh Pandya has the details
Internet and mobile banking technologies are driving the customer experience and
revenue growth in the banking sector by providing a better banking user experience
and opening up new revenue streams while reducing operational costs. Prakash Sreewastav,
CEO, WINIT, which is a mobile app strategy and development company, says
mobile payments technologies offer banks the potential to handle financial transactions
anytime anyplace, which can increase revenues by allowing banks to access new markets
and customer groups. “Mobile banking reduces operational costs by enabling payments
on user’s devices of choice and increases customer satisfaction by providing information
on their financial transactions anytime, anywhere,” he adds.
Digital platforms in banking pose a simple challenge, says Prasad CVG, Chief Information
Officer (CIO), ING Vysya Bank. “It is always a trade off between keeping the online
transaction experience simple and user-friendly and at the same time makes sure
that the customer is not impacted due to frauds.”
Technology is indeed a double-edged sword, internet and mobiles are no exception,
says Atul Hemani, MD & CEO, Omnitech InfoSolutions Ltd, a ‘global technology solutions
provider catering to BFSI and non-BFSI segment’. “They carry their own pros and
cons.” He lists the advantages – (i) improved dissemination of product launch information,
(ii) improved Customer Relationship with realtime updates of transactions, and,
(iii) innovation in terms of new channels of banking.
The negatives, says Atul Hemani, include (i) it has become easy for the competition
to reach the customer, (ii) new channels pose new unheard-of security threats, such
as ‘identity theft’, and (iii) traditional channels need to be upgraded as customer
expects a uniform experience, as branches which are not tech-savvy can turn a customer
away from the bank.
Digital platforms are important for banks, as a staggering volume and frequency
of daily transactions are executed electronically, points out Srinivas Chari Co-founder
and CMO, Xerago, service providers in the digital and interactive marketing space.
“Institutions that hold on to the belief that physical branches remain at the core
of what the brand does, will not adapt easily to the customer of tomorrow who rarely
visits a branch or the customer who sees no need for an over-the-counter transaction
with cash or cheques. Those who still classify ‘digital’, including web, mobile,
self-serve, ATM and iPhone applications as ‘alternative’ channels will be playing
‘catch up’ for the next decade, while intermediaries will increasingly capture niche
service opportunities.”
Taking up from this aspect, Vishwanath Alluri, Founder, CEO & Chairman, IMImobile,
which is a pioneer in the mobile data space and offers managed services for mobile
operators, media companies and enterprises says
Internet and mobile technology is set to change the whole banking experience. “Nowadays
customers don’t have to wait in queues to send money to their loved ones or with
any physical financial transactions. No matter whether its night or day, the services
can be used anywhere anytime. In Rural Bharat, there are millions of villagers who
do not have any bank accounts or access to banks but with the use of internet and
mobile technology they can easily receive money transfers – it just takes the click
of button,” he points out.
When the talk is about mobile banking technologies, it can either be on server side
or client side, and Vishwanath Alluri explains that ‘client-side technologies’ are
applications that reside on the consumers SIM card or on their actual mobile device.
“With MBanking technologies, the entire bank is in your mobile at your finger tips
at any pick of time. With the growth in mobile adoption, we now have an unprecedented
opportunity to bank the unbanked. While financial inclusion has been on the agenda
of many politicians, we now for the first time truly have an opportunity to make
this real. However, what is equally or more important is the regulatory environment,”
he adds.
The impact of Internet and mobile technology in banking is very high, says G Ramasubramanian,
Head Business Analysis Center of Excellence, Fiserv India, a global technology provider
serving the financial services industry. “For the banks, service through these channels
has lead to reduction in overall operational cost. For customers, more so for Gen-Y,
the 24x7x365 availability of banking services has added a new dimension to convenience
and is now an irreversible trend. Globally, virtual banking has taken deep roots
and many ‘virtual banks’ have created stiff competition to brick and mortar banking.”
Penetration of banking services in India so far, have been dependent on availability
of these services at Branch and/or alternate selfservice locations such as ATMs,
kiosks and to internet enabled customers through ICT devices like computers and
mobiles, says Sridhar Rao, Chief Executive Officer –Mobile Commerce, Vodafone India.
He offers statistics that bear this out: “Out of India’s 1.21 billon population,
only 40 per cent of have access to bank accounts. Out of the 600,000 ‘habitations’
in the country, less than 30,000 have access to a commercial bank branch. It is
estimated that only 100 million people have access to internet connectivity. So
the reach so far has been limited,” says Sridhar Rao. “The number of mobile phones
however exceeds 800 million and mobile service and distribution have reached every
nook and corner of the country.”
At Vodafone, the belief is that if banking needs to reach the deep end of the population,
the mobile phone has to be the most logical channel to do this, adds Sridhar Rao.
While most main stream banking and financial organizations have started implementing
online banking and m-commerce to some extent, on the other side, these organizations
need to achieve a lot more maturity in online banking related infrastructure and
services – like internet based customer support, user experience, security infrastructure
etc. Anoop Madhusudanan, Solution Architect Marlabs Software, a USA based provider
of Information Technology and Business Process Outsourcing services says, “The possibilities
of Mobile Banking are endless, but still there is a gap in customer adoption, when
it comes to new age mobile banking technologies like Near Field Communication (NFCs)
and Digital Wallets. Online and Mobile banking can definitely ease the pain of the
users, and can bring agility to financial transactions. Having said this, there
are lot more challenges in fraud detection and authentication for online banking
and electronic money transfers, especially for business customers.” The future of
‘digital banking’ whether using mobile or internet platforms, will follow a simple
logic, says Anoop Madhusudanan. “Online and Mobile banking can definitely ease the
pain of the users, and bring agility to financial transactions. But, there are lot
more challenges in fraud detection and authentication.” How well Indian banks deal
with these will determine the success rate – or otherwise.