New India: Navigating India's Digital Banking Revolution
A recent report has revealed that while digital banking has become increasingly prevalent, nearly four in five Indian consumers (78 per cent) across various age groups still expressed a preference for having bank branches in their neighbourhoods.
These physical bank branches were deemed symbols of stability and availability, and seven in ten respondents turned to them for assistance in solving specific and complex financial issues.
However, the Accenture report suggested that bank branches needed to adapt to a changing landscape and be repositioned as advisory centres, focusing on delivering a personalised experience with a digital-first mindset.
To dive deep into India's digital banking revolution, a recent panel discussion brought together industry experts to delve into the evolving dynamics of India's digital banking sector and introduce a transformative strategy known as 'Adopt and Build.' The experts highlighted the challenges, advancements and opportunities faced by Indian banks as they strive to enhance customer experiences, foster innovation, and maintain competitiveness.
Ashish Kakar, Research Director, IDC Financial Insights in Asia/Pacific said, "65 per cent of mid to large-sized banks in APAC have opted to build their engagement banking platforms in-house to achieve digital transformation. However, 70 per cent of these projects have failed due to costly and lengthy in-house efforts.”
Kakar added that building in-house has been a de-facto strategy by banks, but it’s no longer feasible to deliver to the pace and scale that is required to be competitive. "The complexities that come with the extensive amount of data layers, channels, features, upstream and downstream integration that needs to support legacy and modern systems to manage and orchestrate sophisticatedly is where in-house implementation breaks apart,” Kakar said.
Riddhi Dutta, Regional Vice President (Asia) Backbase emphasised the role of platforms that enable banks to seamlessly coexist with their existing investments, amplifying their capacities and driving innovation. "Engagement banking platforms are designed to seamlessly operate alongside a bank's current investments or infrastructure," he underscored.
Dutta highlighted successful partnerships with banks like HDFC, which they have been working with since 2016, showcasing how contemporary platforms seamlessly integrate with established systems.
Kakar lent support to the 'Adopt and Build' concept, accentuating the importance of partnerships between banks and fintech startups. "Banks need fresh ideas, while startups require a robust technology stack. This necessitates a symbiotic relationship where both parties coexist," he emphasised.
according to the experts, such collaborations empower banks to embrace emerging technologies without the complexities of constructing everything from scratch.
While talking about the role of data, artificial intelligence (AI) and machine learning (ML) in shaping the digital landscape, Dutta pointed out, "Banks are making substantial investments in data transformation and optimisation." He highlighted how AI and ML are revolutionising lending processes, decision-making and customer engagement. Kakar concurred, noting the increasing integration of AI in lending operations.
The panellists also addressed the subject of the Unified Payments Interface (UPI). Dutta shed light on interoperability enhancements, allowing UPI to extend its reach across international borders. "UPI interoperability is now a reality with payment ecosystems of other countries," he mentioned, illustrating how Indian banks are actively propelling cross-border digital payment capabilities.
