Changing Times in for Financial Technologies

By Rajeev Bhatia, Head IT, NSDL Payments Bank

Rajeev bhateiaWe are living in exciting times, there are numerous tech startups in financial space, big and small players, which are trying to change how traditional banking is done or financial services are consumed. Banks and other financial services providers are worried that these new and dynamic start-ups offer competitive products and take a pie of their market share. For example, peer to peer lending platforms now offers customers loans easily without the hassle of documentation which has impacted personal loan segment. We have already seen the impact of PhonePe and Tez on UPI transactions, large segment of customers are trusting these fintech aggregator apps to carry out transactions rather than bank provided mobile apps. Financial services industry has realized that landscape is changing and they need to evolve along with Fintechs to provide competitive solutions to customers but problem lies in the fact that financial services are trying to become FinTechs and Fintechs are trying to become banks. In My view, success lies in better amalgamation of both industries. Banks and Fintechs need to go hand-in-hand and provide innovative solutions to customers. Both parties need to realize that they cannot survive without each other, FinTechs are dependent on Banks to provide end services and Banks need to partner with FinTechs to provide faster innovative solutions to the customer.

Bitcoin and the Impact of Cryptocurrency on Financial Services

BitCoin and Cryptocurrencies are disruptive innovation that has the potential to revolutionize Banks and financial services industry. Bitcoin is the most popular cryptocurrency that enables digital transactions between two parties. Each transaction is digitally recorded in blocks which are connected to each other using hashtags to form a blockchain. We have already seen that Banks across globe including major Indian banks have formed a community called BankChain. Main purpose of this community is for banks to explore, build and implement blockchain solutions. There are various use-cases on which BankChain community is working which are disrupting the way financial services operate today. This will enable faster, secure payments and other services like KYC, LOU, BG etc to customers in a seamless and cost effective way. Few examples of already implemented projects are:

Many Banks in India have already launched ripple network powered instance payment service for retail and corporate customers. Ripple makes international remittances faster and transparent for customers while ensuring security and improving efficiencies. The transactions reach their destination account in minutes, with certainty of settlement, and with endto end visibility over the journey of the payment.

Innovation inside a large, established organization

To foster a culture of innovation, organization need to include all of its employees and not just a task force to think about what customer needs, and not only in terms of new products and services but also including existing services provided to customer, think about what problems or delays customers are facing and how same can be improved. Once every employee of the company starts thinking about improving life for a customer, they are start thinking out of box in terms of new processes, new services which can help the customer. In addition to this, Metrics and Incentives for performance need to be redefined. Normally, all employees are tasked with their day to day job and cannot come out of that to think, ideate as this will impact their day to day work. This needs to be redefined so that their KRA’s need to have an 80-20 rule, where 80 percent of KRA is about BAU and 20 percent KRA is about innovation which then needs to be properly incentivized.

Third and most important part is to give your employees enough resources to ideate, create and innovate. They need to be trained regularly on new trends emerging in market, workshops need to be conducted about innovations which help in changing mindset of employees towards innovation. I believe disruptions in financial services industry has just begun and over the new few years, this industry will be completely disrupted, so much as to say that people will not bank the way they are doing today, customers might not even turn to banks to do their business. With advent of fintechs and start-ups, they will eat up quite a lot of business of traditional service providers. Blockchain technology will change things drastically; there will be newer methods of payments which might not include banks at all. Digital will become the main go-to factor, footfall at brick and mortar branches will reduce. There is great collection of Information happening today with all the usage through mobile phones and digital methods, we have tons to data about customer behavior and how customer transacts and what they like to do, with advent of technology in AI and data analytics, it will become easier to identify what users do and what users want. Products and services will become more localized and customer specific.

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