Blurring Lines in The Financial Services Multi Verse

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India’s financial services sector has been witnessing continuous disruption leading to an unseen unlocking of value (seven Fintech unicorns have emerged). The rapid pace of growth of online payments (UPI transaction volumes of 3.6 Bn in August 2021 worth Rs 6.4 trillion) and unabated adoption of digital banking has simultaneously led to an increasing need for collaboration across the customer value chain.

The customer is truly ‘a king’ today with unmatched benefits available at their fingertips including easy access to the widest range of banking products powered by seamless risk underwriting and interfaces which are 100% digital (web & mobile). Customized services and personalized experiences are becoming the norm.

Fintech’s have been capitalizing on this opportunity to drive exponential customer acquisitions by leveraging their innovations in UI-UX. Their easy access to unlimited growth capital which is being deployed without much friction from modern regulatory frameworks has further accelerated their reach.

This has also led to some unique collaborations across stakeholders simply because no-one can capture such a large opportunity single-handedly for customer acquisition. For example:

Neo-Banks or Challenger Banks:

Offer an experiential, intuitive and engaging mobile user interfaces for customers to open bank accounts, create standard instructions for payments, spend analysis, set rules for savings, manage investments, etc. on the front end. Of course they only have a digital presence (typically on a mobile app) while the products and services are offered in partnership with traditional Banks / NBFCs & who bring the operating infrastructure and capabilities in the mid and back office.

Account Aggregators:

These mid and back-end partnerships with banks are being further augmented at the customer acquisition layer with the integration of Account Aggregators(AA) who with the customer consent can share KYC information in a seamless, secure and encrypted manner without the hassle of the customer providing documents. In the future progressively moving ahead detailed credit information, health records of customers and other data can be shared from the Financial Information Provider (FIP) to the Financial Information User (FIU) by the AA, depending on the type of product/services required by the customer from savings accounts, loans, insurance etc.

BNPL (Buy Now Pay Later):

The reach of banking products is rapidly expanding beyond the traditional customer ‘credit-scores’. Digital customer acquisition (websites, mobile app) and physical touch points (retail stores) are leveraging products such as BNPL for short term, point-of-sale / moment-of-sale loans – absolutely the need of the hour for a high consumption growth economy like India. Whether it’s the multitude of start-ups or stalwarts like Bajaj Finance and Amazon (partnership with Affirm). This is again a huge opportunity of collaboration for traditional Banks & NBFCs to acquire new customers or even increase wallet share from existing customers improving cross sell ratios.

Conclusively, every player in financial services needs to build partnerships, collaborations, and build- up ammunition for customer acquisition. IBM as an innovation partner and technology leader has played key roles with both Global and Indian financial service organizations to orchestrate the opportunity and unlock value.


IBM Banking Technology Solutions

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