Digitization has had a huge impact on the banking and financial sector. For routine services, most people are using internet or mobile services and the latest trend is use of smart speakers like Amazon’s Alexa and Google Assist. It looks like in the next few years, credit cards, digital wallets and ATM would be of little use. The point to ponder is how are the banks preparing to handle the changing landscape of retail banking? With Indian retail banking being the fasting growing sectors in the emerging markets, how are the banks able to assess the credit worthiness of their customers?
Bankers believe the growth is sustainable: The growth in banking sector is driven by genuine demand from the customers who want better lifestyle much earlier in life than the previous generation. They finance their needs to a certain extent with disposable income and remaining with bank credit. Rising urbanization is also fuelling demand for loans to procure the basics like food, shelter and clothing in the new city. Positive effect of governmental measures: Jan Dhan Yojna has managed to bring large proportion of people into the banking fold. Further with digitization drive and reduction in the internet tariff, more and more people are switching over to online buying, which in turn is leading to rising demand for paperless money and credits.
Assessing the credit worthiness of the customers and recovering their dues: • Banks feel customers are aware of the need of maintaining healthy credit score. • Availability of credit score, payment data, banking data, telecom data etc helps to assess the behavior of the customer and take prudent decisions. • Support from technology like AI and Big Data is helping to gather information about the customers, check if the funds are utilized appropriately and project their ability to payback.
Focus areas for the banks • Designing and developing products for capitalizing on the tactical opportunities of short term requirement of capital and impulse buying of the people. • Having minimum or no paper work to make credit readily available for the customers.
Banks’ prediction of the next 5 years • Banks will use the latest technology like Big Data and AI to their fullest potential to make wise decisions in developing products to match consumers’ needs and picking the right customers for their products. • Brick and mortar banks will exist but to serve specialized needs.
To understand how are the banks and intermediaries are gearing up to meet the future challenges and keeping the customers delighted, A B Ravi had an detailed discussion with Shyamal Saxena – Head, Retail Banking, India, Standard Chartered Bank, Naveen Kukreja , Co founder and CEO ,Paisabazzar.com and Satish Pillai , MD and CEO, TransUnion CIBIL,