Forbes India 15th Anniversary Special

Transaction banking: Get set go for digital transformation

Published: Jul 22, 2019 06:00:00 AM IST
Updated: Jul 22, 2019 02:35:35 PM IST

Transaction banking: Get set go for digital transformation


As per Nandan Nilekani’s Report, 100 million Indians are making digital payments at least once a month and the number is expected to grow by 300% by  2021. This expectation is due to the fact that in the past few years, technology has managed to make retail and wholesale banking cheaper, faster and better.  A popular belief is that tech innovations like UPI has reduced the digital transformation timelines by almost 5 years. With many more such advances on the way it is time for transactional banking systems to gear up and embrace the new age banking mechanisms.

Some positive influences of technology in transactional banking

  • Shift from high value, low volume high cost transaction to low value, high volume and low-cost transaction scenario
  • National Common Mobility Card  also known as One Nation One Card will allow single card to be used for all transactions in transport like metro, bus, suburban railways, toll, parking, and at retail outlets as well.
  • Banks creating specialised apps for its clients to facilitate their business transactions online. These offset the perils of cash transactions like frauds and wrong payments and instead provide instantaneous real time and seamless payments online that are 100% safe and fool proof.

Experts suggestions for meeting Nandan Nilekani’s Per Capita digital payment target

  • With India becoming a more formalised economy with advent of processes like GST, the fintech players have a bigger role to play
  • Consistent focus on data authenticity and identity of person or institution and  ancillary data around it will help to find out  cases where banks and fintech could together improve the processes

Banker’s suggestion for transactional banking growth

  • Implementing Regulatory Sandbox Draft Guidelines 
  • Better regulatory framework required as opposed to the current system which has different norms for different players like NBFCs , institutions, banks, fintech. This would make it a level playing field for all players and avoid overlap of processes.
  • Simplified KYC
Is fintech a threat to banks?

Banks have their own strengths in terms of depth of franchise, clients, scale and deep pockets whereas fintech can unbundle services elevate client services, effectively use technology and move at a rapid pace. Therefore, bankers believe in adopting  Fintech and offering better services should be the way ahead.

Future of banking

  • Increased use of mobiles for banking and card usage may come down
  • Banks will create different types of portfolios, will work in different time zones
  • Both physical and digital transactions will co-exist
  • Further penetration of banking into insurance and investment products

Transactional Banking in 5 years’ time

It depends on how the banks exploit the 3 Ds – Disruption, Data and Differentiation.

A B Ravi of CNBC – TV18 had a detailed discussion on challenges faced by transactional banking and how they are gearing up to build or break the fintech paradigm. The discussion panel included Vivek Belgavi -Partner, India Fintech Leader, PwC India , Dr N Rajendran, Chief Technology  Officer, National Payment Corporation of India and Sanjay Gurjar – Managing Director & Head – Transaction Banking, India & Nepal, Standard Chartered.

Catch the full episode:

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