After a decade-long hiatus, the country’s banking, financial services and insurance sector seems set to switch digital transformation into high gear.
India’s Banking, Financial Services and Insurance industry (BFSI) has over the past few years benefited greatly from the Fintech sector. Almost every significant core banking platform is now automated, with integrated analytics, AI, big data, Machine Learning (ML) and other similar technologies.
Back in 2009, digital technologies in the sector were still new in the country, but since then, BFSI organizations have gradually modernized.
For early adopters in the Indian banking ecosystem, one technology consultancy that has been in the landscape from the beginning is Decimal Technologies.
The firm has helped many BFSI firms to modernize and also reduce customer acquisition costs by moving digital touchpoints closer to the customer. Its Chief Executive Officer, Lalit Mehta, shared with DigiconAsia the country’sBFSIdigital transformation journey and the current state of modernization in the sector.
DigiconAsia: What are the latest technologies and enhanced digital touchpoints for customers in the Indian BFSI sector?
Lalit Mehta (LM): In our experience, we have observed four broad technological aspects driving digital touchpoints: user interface, assessment methodology, customer communications and data analytics.
User interface technologies like chatbots, voice and video interaction platforms are being employed for better user experience. As for assessment methodology, AI, ML and Application Programming Interface (API) technologies are being used to assess and analyze alternate data, including telecommunications information and purchase history.
These technologies help staff to assess an individual’s income potential, creditworthiness and the risk factors associated with it. For example, we can pull out all the information of a customer with the Permanent Account Number (PAN) and mobile number. With the accounts and transaction history, we can project the customer’s future financial behavior.
Keeping customers informed and updated at every stage of the relationship is another crucial aspect being driven by technology. Several communication modes are adopted during key points of financial journeys, and this immensely impacts lending. Data analytics helps financial institutions to leverage data for better and more informed decision-making.
DigiconAsia: All the aspects you mentioned involve sensitive user data. How should the country’s BFSI players ensure information security?
LM: Compared to the old days when information was stored on paper-based documents, the digital medium is relatively more secure when it comes to ensuring data security in India.
Now, to breach the digital data, it takes sophisticated attackers and not just human fallibilities.
That said, BFSI businesses need to stop monetizing data, including cross-selling user information. There should also be stringent regulations in place against data misuse and misappropriation.
DigiconAsia: How do digital touchpoints enable financial institutions to make quicker, better decisions and improve user experience?
LM: Over the last couple of years, the digital journey of a customer on-boarding in India was taking around five minutes. Now, assessment of security and collateral for loans up to Rs 5 crore consumes probably 10 minutes, and in-principle approval for unsecured business loans take less than one week’s time. Almost 80% of decision-making has been expedited by digital touchpoints nowadays.
Going forward, most of the in-principle approvals will happen in real-time within the next year or two. These positive developments are happening because every BFSI player has realized the need to make the customer journey smooth, swift and seamless.
DigiconAsia: How can banks and Non-Banking Financial Companies (NBFCs) control or cut down on customer acquisition costs by digitalizing their operations?
LM: The cost to acquire a customer involves two phases: getting the customer to your channel, and then fulfilling their requirements. Once banks and NBFCs introduce something like customer self-service digital kiosks, the cost of fulfillment naturally goes down. Then, they can focus more on acquiring new customers.
DigiconAsia: Despite Digital India and similar initiatives, several Public Sector Undertakings (PSU) and cooperative banks in the country are still behind the curve in terms of digitalization. What are your views on this?
LM: The scale and customer base of our PSU banks are massive. There should be futuristic vision as well as quick decision-making on the part of government banking authorities to leverage modern technologies, as the return-on-investment for digital is too high.
Digitalization efforts should ideally be deliberated upon, decided and rolled out within weeks. Now, the scope of digital initiatives has changed from lack of trust to keeping trust in mind. So, government authorities and banking decision-makers have to expedite the whole process from requests-for-proposals to implementation.
DigiconAsia: With revision of financial policies and banking regulations always on the cards in a country like India, to what extent do digital technologies facilitate compliance?
LM: Digital technologies have ensured transparency and visibility of data for one and all. This applies to compliance purposes as well. Unlike in the olden days when staff used to rummage through folder after paper folder, anybody can access structured data now. All core banking systems have integrated analytics to slice and dice data to bring down anomalies.
Earlier, compliance and regulatory processes were quite complicated, but this is not the case anymore. Digital technology helps in checking, verifying and meeting compliance requirements almost in real-time.
DigiconAsia thanks Mr Mehta for his insights.