India's financial landscape has significantly changed since the advent of UPI and the rise of fintech companies. From payments to digital lending, how Indians transact has seen a paradigm shift. However, there's more to financial inclusion beyond payments and lending. The majority of the time, Indian customers complain about a plethora of bad experiences with their banking apps, specific physical processes in bank branches or even things like KYC or eKYC.
The Reserve Bank Innovation Hub (RBIH), a 100 per cent owned company by the Reserve Bank of India, puts innovation at its heart to solve such friction in financial services that customers face. Rajesh Bansal, CEO of RBIH, says their mission is to provide frictionless finance for a billion Indians.
Bansal says that RBIH focuses on three central pillars of innovation - process, product and policy. Process innovation relates to the various processes that a customer may have to go through to access a financial service, product innovation deals with how financial services providers should focus on what the customer wants and policy innovation is about enabling a conducive environment.
Getting Into Customers’ Shoes
Bansal recalls telling people what RBIH does as one of the biggest challenges after taking over as its chief. "We are a very different company, not a product or services company," he says. Bansal explains that the mission started with the philosophy of getting into customers' shoes.
One of the case studies that Bansal tells is the loan disbursement process to the farmers. The RBIH team talked to multiple banks and consulting firms to understand the customer journey for a farmer to get a loan. The response centred around three-four boxes - applying, assessment and disbursement.
"After going through all the steps, our young team went to the field and did the full customer journey. We gave ourselves a challenge that the farmers should get a loan through the straight-through process (STP)," he explains.
Through such innovations, Bansal says that RBIH has leveraged most of the Digital Public Infrastructure (DPIs) that India has built, and such processes are digitised or automated today.
Bansal emphasises that India has to do a lot more design thinking and suggests that financial leaders should stand outside their banks and look at what can be done to improve the customer journey.
Leveraging Emerging Tech
Another key area where RBIH is brainstorming is how emerging tech can be leveraged to ensure a frictionless financial system.
"I believe that blockchain or distributed ledger works best in a low trust environment," Bansal says.
He explains that there are multiple use cases in the banking sector, such as Inland Letters of Credit and Syndicated Lending, and they are working with the banks to explore more use cases.
"We are pretty bullish that there are real problems with banks and can potentially be solved by Web 3.0," he says.
Hyper-personalisation of Banking Apps
Bansal also stresses the hyper-personalisation of banking apps as the need of the hour, especially among the Gen Z population.
"A banking app of a bank has to be different for two individuals; it cannot be the same. Unfortunately, my bank has shown me the same app for the last ten years. It is throwing the same menu to all its users," Bansal says.
He believes the Chief Digital Officers of the banks are now taking the lead and are working towards reinventing the customer experience to cater to their specific needs in the financial realm.