Coming to a branch near you

Coming to a branch near you

Will your children bank the way you did? Perhaps your child may grow up understanding ‘bank’ as a mobile app. Tech-driven aggregation of businesses has already changed how we commute and order food. Financial services are ripe for similar change.

In India, bankers have not yet seen cataclysmic changes due to traditionally high entry barriers. And yet, the tide of change is rising inexorably, and only ships fitted out for more challenging — and more promising — voyages will ride out the rising waters and rule new seaways. Small finance and payments banks, embrace of technology by some conventional banks, consent-based data-sharing, sandboxes for new technology, and Unified Payments Interface (UPI) platform represent the rising tides in technology, competition and regulatory enablement that are upending banking as we have known it.

India’s financial landscape needs to be viewed against the backdrop of 120 crore-plus bank accounts with validated linkage to Aadhaar and mobile numbers (JAM), potential user-modelling through access to humongous data captured through accounts on cash flows, by goods and services tax (GST), income-tax (I-T) data, MCA21 corporate filings, credit bureaus, direct benefit transfer beneficiary data like Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri-Kisan Samman Nidhi (PM-KISAN), Kisan Credit Card (KCC), and Jan Dhan, common secured asset data with Central Registry of Securitisation Asset Reconstruction and Security Interest (Cersai), and the introduction at hand of account aggregators and public credit registry.

Integrated, these will form the digital pipeline for clean, better-informed and faster lending and other services, within an ecosystem of fintech, artificial intelligence (AI), machine learning and blockchains.

Riding on JAM (Jan Dhan-Aadhaarmobile) and consent-based real-time customer data access that’s set to roll out soon through account aggregators, banks and other financial service providers will be able to offer financial products based on operations data of startups, invoices or cash flows, cardless access to cash, single-window for all personal finance activities, and doorstep banking.

Introduction of credit default swaps, app-based invoice financing leveraging GST Network (GSTN) and UPI, and subordinate debt financing for MSMEs — coupled with reengineered financial business models — would change the scenario from having borrowers run to lenders, to borrowers being chased by multiple competitive products available at a click.

The trajectory of banking is clearly towards ‘palm banking’, or banking from home. Branch visits have already diminished, and the time isn’t far when ATM visits, too, shall be anachronistic, with affordable, easy, 24×7 financial services delivered at a click, or at the doorstep, arriving.

Picture this: no sooner is your salary credited that your bank’s roboadviser messages you mutual funds to invest in, based on your risk profile. Your daughter has secured college admission, and within minutes, both she and you receive quotes for education loans based on credit bureau scores.

Immediately on the receipt of a message for collecting your passport endorsed with the visa sought, you receive another message offering a prepaid card in the destination country’s currency. Superannuating? There will be a wealth management solution customised for you. As a businessperson, your goods just got accepted with payment due in 90 days. Can we get lenders to compete to finance this invoice for you?

Real-time combining of data and banking make all this possible. Consent-based solutions are already coming in, protecting privacy and efficiently eliminating friction and delays. Branches, too, will continue, focusing on branding, acting as hubs for doorstep banking, and serving customers preferring branch interactions and the reassurance of printed passbook and records.

This year’s budget also holds out the vision of a pensioned society: with auto-enrolment for pensions, portable pension accounts, single pensions regulator, and enhanced access to debt instruments like government securities. Taken together, a ‘New Deal’ is being stitched.

Aspirational India needs a financial system with heft and integrity, to ensure that it is not held back by a financial system that is not commensurate. Strong, competitive banks will invest in technology, enabled by scale efficiencies, and leverage large customer base and networks to offer services at no added cost to customers.

A new way of governance delivered through the digital pipeline, and readiness of financial institutions, has been put in place under a welldesigned strategy. Today, this looks within reach, provided we stay the course. Short-term pains are almost over. Tangible, long-term gains from formalisation and tech-based decision-making that can’t be gamed are becoming visible.

Far more robust and substantial measurable improvements in commercial banks and all-India financial institutions at the top-tier with wide reach, small finance and cooperative banks at the middle, and non-banking financial companies (NBFCs), housing finance companies (HFCs) and microfinance institutions (MFIs) forming a broad-based customerconnect at the grassroots are ready to gain speed now. Synergies and competition are going to bring much gains to the customer.

Tech-driven clean and robust processes will ensure integrity. Real-time banking, with the ability to deliver efficiently, will mean sharper focus on customer needs and choices. Banking and delivery of services are coming to a set of fingertips near you, in the not-too-distant future.