Digital transformation in India's banking sector: What is next?

The biggest challenge with bringing in digital transformation in the Indian banking sector is fulfilling the various needs of a diverse population, said Abhishek Rungta, Founder and CEO of INT. (Indus Net Technologies).  “Challenges are multifold  because India, on the map, might look like a country but it’s more of a continent with different cultures. We have  different needs, types of people, professions that they are into. The challenge is to stay relevant and create products that all of them can use and benefit from. To make it relevant is  the biggest challenge,” he added, while in conversation with The New Indian Express’ Editorial Director Prabhu Chawla and Senior Journalist and Author Kaveree Bamzai during TNIE’s webinar series  E-Expressions, which aired on Saturday. Abhishek was speaking on the topic ‘Digital Transformation in the Banking Sector’.So, how can we make it relevant? Abhishek responded, “We have adopted a lot of our banking systems and our methodologies from the West and we have to understand what the different segments of our population need. What do women need? Even women have different needs compared to men in banking. Forget about regional diversity, the same household might have two different people who will have completely separate needs. You need to go into the long tail of product creation and have to deep-dive and understand where the needs are, what they are, are they being fulfilled by the existing product sets. If not, then invent products by engaging with them. The whole discovery process has to be there. The biggest change that is happening right now is the arrival of Fintech. Fintech is this beautiful layer on top of banking, basically trying to solve a problem until the last mile. It will ensure that the long tail of the consumers is being served properly.”Abhishek also pointed out that there are two basic issues when it comes to digitisation and getting people into making the shift. “First is the trust issue. In India, there has been a lot of financial fraud, starting from chit funds to other scams. People who have already burnt their hands in these will be apprehensive about trusting a FinTech organisation or any other company. How the communication is done and how the governance is done will be a challenge the regulators will have to think about. Second, literacy is a problem. A lot of people don’t know how banking works, they are open to being defrauded, not by organisations but by phishing and hacking attacks. People don’t know how to protect their money. The challenge is that if they lose money by putting it in one of these banks, the blame would be on the entire community of banks and Fintech,” he explained. Further delving into the issue, Prabhu Chawla asked, “The Indian economy is still a 50 per cent cash economy, how would we transform that? We talk of financial inclusion in digitisation, but most of the country is not included in that, people still like to earn in cash or conduct most of their transactions in cash.” To this Abhishek said, “This is exactly the problem India faces. The challenge here is to understand the friction areas these people face when they are dealing with cash. Then, we have to link problems to the solutions that digitisation brings.You can open a Jan Dhan account but the usage is in the hands of the janta. The base has been set, now you have to explain to them the options. For people to move from cash to banks, they need offerings that actually solve their problems. As you rightly said, if a person earns money in his town and he wants to move this to his family, he still goes and gives this to someone who carries the cash to the village. I am sure there is friction, there is a risk element, there might have been fraud.So, how do we solve this? By creating low-cost instruments that are safer. When the money is in their bank, they can use it for transactions, money has to be linked with some kind of payment mechanism that is on their mobile phone.”He further spoke about the challenges involved in payments through phones. “The challenge is people have basic phones, but not everyone has smartphones. We are trying, in our own way, to facilitate such transactions through basic phones. So, this problem has to be solved, make payments through your basic phones, you have to make sure that the money that is going out is safe. The whole ecosystem has to be built. There’s a huge responsibility on technology companies to make it work,” said Abhishek.“Trust and literacy are challenges yet to be solved. It cannot be solved overnight, you cannot make the entire country literate on digital transactions, it will take its own time. India has done a phenomenal job on the infrastructure for banking and digital money. Traditional banks cannot stay away from this, they should also create products as they already have that last mile access,” he said.

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