The global financial services industry has been witnessing a paradigm shift with technology embracing each and every facet of the banking and financial services industry and people utilizing the services in terms of the delivery, consumption, and regulation of financial services. All the participants in the financial services industry landscape including the government, industry, and general public are experiencing the transition and developments.
Empowering Consumers: From ATMs to Immediate Payment Services (IMPS)
For the general public as consumers of banking and financial services, the computerization of banks, and the emergence of ATMs, led to increased services of banking and financial services in terms of payment platforms like Immediate payment services (IMPS) from banks enabling customers to make real-time transfer of money from one account to another. IMPS is utilized for the transfer of funds from person-to-person (P2P) transfers, making remittances, paying bills, and other financial transactions, and also caters to businesses holding current accounts.
Inclusion through Technology: Jan-Dhan Yojana, Aadhaar, and Mobiles
For the financially excluded people (People below the Poverty Line) not having access to bank accounts and financial services, the cost of transactions of the banks enabled access through technology. This is enabled through three important factors such as “Zero Balance Accounts under Jan-Dhan Yojana from the Central Government of India”, followed by the Aadhaar Card under the UIDAI scheme enabling Know Your Customer and the third being availability of low-cost mobiles with access to Internet services provided by the telecom companies across the country. All these three things J – Jan-Dhan Yojana, A – Aadhaar Card facilitation, and M – Mobile phones with internet services to the nooks and corners of the country enabled the financial services to reach out to everyone.
Unified Payment Interface (UPI): Seamless Transactions Across Banks
To further, the extension of financial services and payments across the different banks, the National Payments Council of India has developed “Unified Payment Interface”, which enables the different account holders to conduct seamless transfers of funds and make payments to perform various financial transactions without having a debit card (prepaid) or a credit card.
Technological Advancements: Chatbots, Virtual Assistants, and Automation
Technology-enabled services like Chatbots, digital and phone-based virtual assistants, automated of rendering service to customers, reduced manual and paper requirements, and enabled digital financial services and transactions to get processed around the clock without human intervention.
Regulatory Compliance: Streamlined Processes through Technology
The banks and financial services industry are witnessing ease in process with the enablement of technology in adhering to the regulatory requirements of the central bank (RBI). Primarily, the banks and financial institutions enable compliance through technology and comply with the requirements laid down by the regulatory agencies. This also reduces the cost of compliance and increases the efficiency of resources and their utilization.
Risk Management and Artificial Intelligence (AI)
With the advent of implementing and usage of machine learning and artificial intelligence, the utility of technology furthered the extension towards better risk management in terms of credit scoring of individuals and businesses with proper tract records and real-time fraud detection by analyzing patterns and anomalies from the data of the users.
Robotic Process Automation (RPA): Enhancing Operational Efficiency
Further, implementation of the new wave known as “Robotic Process Automation”, will further the extension of repetitive services that a bank or a financial institution renders to the customers. This process enhances the efficiency in operations along with the reduction of costs and improves the accuracy along with rationalization of various workflows. The workflows where these systems further the consumer delight could be from regular functions like Data and Processing, Onboarding of Customers, detection of fraud, reconciliation, and prevention of frauds, processing loans, compliance to regulatory bodies, and last but not least Customer Service and Support.
Future Outlook: Embracing Technological Advancements
Though technology brings with it a lot of advantages, it also brings challenges in implementing at institutions. First, training and required inputs to users with utmost confidence of safety and security measures to protect user information and financial data along with their funds. Second, the training and initiative to enable the users about secure login processes, authentication mechanisms, and encryption protocols to take advantage of technology. Third the protection of the interests of the users and the institution by protecting technology from cyber threats and attacks. The banking and financial services industry needs to invest in creating a robust cyber-security structure to gain and maintain customer trust. The future of the financial services industry is in adapting and embracing technology and implementation.
The above article is authored by Dr. Narender Vunyale, an Associate Professor in the Department of Finance at NMIMS Hyderabad
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