India Ready To Move From Banking To Neo-banking, Riding On UPI, ONDC: Report
India is ready for a move from banking to neo-banking, riding on the unified payments interface (UPI), Open Network for Digital Commerce (ONDC), according to a study by Assocham-PwC.
A pre-approved buy now pay later (BNPL) instrument, travel insurance at a boarding pass printing kiosk, auto-routing of cashback for micro-investment and seamless credit to pay for hospital expenses are amongst a host of embedded financial services that may be rolled out by neo banking business models, it said.
The paper named 'embedded financial services in India' stated that digital transformation built on the foundational blocks like UPI, Open Credit Enablement Network (OCEN) and ONDC is opening a minefield of opportunities for taking the country's banking and financial architecture to the next level of technology and user experience.
''Compared to traditional banks or money transfer companies, neobanks are considered as a more convenient alternative. Moreover, they use innovative technologies to solve existing challenges in cross-border payments,'' said Deepak Sood, Secretary General, Assocham.
The paper emphasised that financial service providers will need to embed offerings deeply within curated customer journeys around specific needs. India's digital transformation, coupled with improved consumer access, reach and technology proliferation, has opened doors for innovation across the industry.
"With multiple organisations across industries having tapped into the same to enhance customer engagement, the next wave of innovation in the financial services industry will come in the form of curated customer journeys being seamlessly embedded with financial offerings'', said Vivek Patil Partner, Financial Services Advisory, PwC.
The paper revealed that it would be helpful to contextualise the offering based on the type of customer it will cater to. While embedded FS offerings could apply to both retail customers as well as small businesses– both having their unique needs – it could be helpful to segment customers into value-conscious, savings-conscious, or service-conscious in order to determine and design the type of product and experience.
