Tech Shift and the Challenges Ahead- Banks Face Their WhatsApp Moment

  • Most of the banks expanded their branch network, acquire more customers through ground sales force and unsure that they get to apply for loans at the ATM counters. But demonetization has changed all of that.
  • Almost every bank is going to its basics to figure out what to do when banks will have millions of customers but none would visit the branches as the customers would pay via their mobile phones.
  • The Indian Banking Industry is in midst of transformation for the 1st time since Citibank introduced plastic money, 25 years ago.
  • Digital transactions have gone up manifold over the last couple of months. Several digital payments modes such as UPI, e-wallets, credit and debit cards have leapfrogged.
  • In 2016, 90% of retail transactions happened in electronic format. The forced withdrawal of currency and transfer of funds are expected to usher a kind of change that will be hard to swallow.
  • With ATM running low on cash, banks and companies are quickly jumping on to electronic transfer bandwagon. Even the National Payments Corporation of India has launched UPI (Unified Payments Interface).
  • Digital transactions have grown 40% month-on-month in the past 1 month. While withdrawals have fallen but the main idea of launching ATM failed, which was to sell loans.
  • Demonetization has led to a rapid increase of tools for customers which raise issues like security and usability. Kotak Bank’s Mahindra Gupta says that from a technology point of view, it is very confusing. A lot of things have been tried and tested over the last 30 days.
  • Amitabh Kant, Chief Executive of NitiAayog is of the view that by 2020, all debit cards, credit cards, ATMs, PoS machines will become irrelevant.
  • The banks face a very unpredictable future as they don’t know where to place their bet. Some are chasing UPI, some QR code and some PoS and 5 other things. But the reality remains, that they have to place their bet on everything so they don’t run the risk of missing out on anything.