Banking

Banking the “unbanked” in India

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Banking in India is in the midst of a major reinvention, a digital reinvention to be exact. Prime Minister Narendra Modi promised in 2014 to end “financial untouchability” and launched a government campaign to reduce the forty percent of the population without access to basic banking services. Since this government program was implemented, almost 300 million households have opened formal bank accounts for the first time in the South Asian country of 1.3 billion, including a Guinness World Record of 18,096,130 confirmed new bank accounts during the first week of the program.

Prime Minister Narendra Modi promised in 2014 to end “financial untouchability” and launched a government campaign to reduce the forty percent of the population without access to basic banking services.

Photo credit: Jasveer10 CC-BY-SA-4.0

The massive influx of new customers creates both an enormous growth opportunity for banks as well as fundamental logistical problems of handling this boon. To accommodate the challenges of accepting 300 million new banking customers, banks in India are digitally reinventing themselves by embracing digital technology including cognitive banking, data and analytics, and end-to-end digitization.

Across the globe, including India, the banking industry is facing a challenge in how to best embrace emerging digital technology, to keep pace with global leading practices, and to differentiate their organization from their competition. A report from the IBM Institute of Business Value (IBV), in collaboration with Oxford Economics, surveyed more than 2,000 banking leaders in 31 countries, including 150 in India, to explain what major banking organizations are doing to achieve digital reinvention.

Digital India

In 2015, the Indian government launched a major initiative, Digital India, to upgrade the country’s online infrastructure and provide government services to all of its citizens electronically. This campaign connects rural areas with high-speed internet and builds a secure and stable digital infrastructure including the digitization and modernization of India’s banking and financial systems. Once Digital India began to be implemented, tens of millions of new bank customers opened accounts creating a massive increase in digital financial transactions. From the IBV study, the quantity and value of mobile banking transactions increased by almost five times between 2015, and is expected to further grow by almost twenty percent each year through 2021.

To coincide with the enormous increases in banking customers, accounts and transactions, the Indian economy has become ripe for growth in the FinTech industry. Mobile-only banking and payment services, digital lending, point-of sale, blockchain and cryptocurrency, investment services, and other digitalized financial solutions are all seen in a hyper-growth phase in the country, due in part to the high adoption of technology currently in India along with the government initiative of digitization of the country’s infrastructure.

Cognitive banking in India

Cognitive banking allows banks to make smarter decisions, streamline and improve the customer process, and give deeper insights on what their clients want today and also what they will want tomorrow. A number of Indian banks have already begun adopting cognitive.

Cognitive banking allows banks to make smarter decisions, streamline and improve the customer process, and give deeper insights on what their clients want today and also what they will want tomorrow. Yes Bank, one of India’s largest private banks, has announced an implementation of a payment system utilizing blockchain transactional security, as well as chatbots using IBM Watson Conversation to further enhance their client experience and provide a higher quality customer service. Another example is the country’s largest bank, State Bank of India, is collecting massive amounts of data and using cognitive analytics solutions to interpret this information to manage customer accounts and make smarter decisions. Another of India’s largest private banks, ICICI Bank, is even using software robotics to automate banking processes with facial and voice recognition, machine learning and natural language processing. Given the success of this program, ICICI has planned to double the amount of 500 robots employed by the end of 2017.

IBM helps banks digitally reinvent themselves

IBM is uniquely positioned as an industry leader in cognitive banking solutions, and more specifically, customer analytics solutions, to provide superior customer experiences, develop agile banking systems, and analyze large quantities of customer and other data in real-time to make smarter decisions. Financial institutions who have begun adopting these cognitive banking systems are then well on their way to achieve digital reinvention.

Get more information on cognitive banking from IBM at: What is a cognitive bank?

Also be sure to visit IBM Banking to see what IBM can do for your financial institution.

 

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