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Banking systems and financial institutions are integral parts of an economy. Seamless functioning of these sectors is important for an economy to grow. Due to the advent of digital technology, banking and financial services have undergone a massive shift in their mode of operations. New trends are gaining momentum at a fast pace as the customers find it convenient and also flexible at the same time. The emergence of financial technology has resulted in the introduction of several technological advancements in the industry. Fintech companies, internet banking and mobile banking are just some examples that mark this shift. Today, we will read about the latest trends that are revolutionising the Indian banking and financial sector.There are seven key themes which would define the Indian economy and Indian banking sector in the days to come. These are:
1. Demography: Much has been talked about the demographic dividend that India possesses. On the one hand, the numbers present a sustained opportunity for the banks in terms of a new stream of customers.
2. Urbanisation: India is also witnessing a growing trend of urbanization, this would open up huge business opportunities for the banks for the creation of public infrastructure, housing, consumption, education needs of customers and so on.
3. Digitization: Digitization is another area which is being pursued relentlessly by the Government. There is a massive focus on enhancing internet penetration in the country.
Current Digitisation Platforms & Trends
Upcoming Digitisation Trends
4. Industrialization: The Government’s ‘Make in India’ pitch also touches the right cords and efforts to increase the stagnant share of manufacturing in GDP. If that materializes, it would mean adding more domestic jobs and attendant corporate and retail business opportunities.
5. Education: Likewise, there is a tremendous scope for improving the level of education in the country with a strategic focus on the four Es i.e. Expansion, Equity and Inclusion, Excellence & Employability. It would entail significant changes in consumer awareness, needs, demands, and expectations.
6. Financial Inclusion: Financial inclusion is the pursuit of making financial services accessible at affordable costs to all individuals and businesses. Financial inclusion strives to address and proffer solutions to the constraints that exclude people from participating in the financial sector.
Following are the initiatives towards Financial Inclusion :
7. Global Integration: Growing global integration, which is already having significant repercussions on the financial sector. Be it the quantitative easing by the advanced economies and the subsequent withdrawal of it, convertibility of currency, making or breaking of a regional alliance of economies and currencies etc. There could be other hitherto unforeseen developments affecting the global structure of finance.
Some dimensions of latest changes in Banking sector:
With the rapid growth of technology, digital services became an indispensable part of banking operations as these institutions needed to keep up with the changes and introduce innovations that made services convenient. In India, the initial phase of digitization began in the 1980s when information technology was used to perform basic functions like customer service, bookkeeping, etc. Gradually core banking solutions were also adopted to improve customer experience. The main shift came during the 1990s when liberalization opened the Indian market to the global world. Private and international banks which came into operation boosted technological changes in the banking sector. Features like online banking, IMPS (Immediate Payment Service), RTGS (Real Time Gross Settlement), telebanking enabled customers to avail banking facilities from anywhere.
Almost a decade back, even though digital services came into the picture, it was only done through desktop computers which means the customer must be at home or at a place with a computer and internet connection. But the vast penetration of smart phones created a need among customers to avail banking services on their mobile phones. Cheap data charges also contributed towards the increase in usage of mobile banking.
UPI is a trend that emerged in the last couple of years and it is revolutionizing the way we pay and receive money. Transactions can be done within seconds using this interface. Goggle Pay and BHIM (Government of India) are two major interfaces among numerous other services that enable easy payment even if you are out of physical cash.
Blockchain is a robust technology that is still in the development phase. Security is a major factor as far as digital services are concerned. Despite technical advances, fraud practices are still a challenge in the digital domain. Blockchain is the answer to these challenges. Like the way in which it operates, there is no scope for any malpractices in it. The technology works on computer science, data structures and cryptography.
Many private and nationalized banks have started to make use of chatbots or Artificial Intelligence (AI) robots for assistance in customer support. The practice is still in its initial stage but will definitely evolve and make the entrance to the general public in the near future. Chatbots are one of the emerging trends that are estimated to grow.
Fintech or financial technology is indeed a disrupting force in the sector. Due to the changing landscapes in the Indian financial sector, many companies have emerged to be a significant part of this ecosystem. Fintech companies specialise in developing technology solutions that help companies to manage the financial aspects of their business, like new softwares, applications, processes as well as business models. Investments made on Fintech companies have increased drastically in the past decade making it a multi-billion dollar industry globally.
Digital Banking shortcomings: Realizing the potential of digital banking is easier said than done with legacy challenges because of the incumbency and conventional mental models, existing technology and operating platforms.
By: Vikas Goyal ProfileResourcesReport error
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