RBI governor’s recipe for banks of the future: Oodles of social media, new tech & a dash of human touch
RBI governor Shaktikanta Dasrecently spoke about the future of banking in India and said it would include adoption of emerging technologies, and customisation of products and services.
- He advised banks to prepare themselves for facing the dynamic environment while keeping their focus on appropriate business models, sustainability, stability, and consumer centrality.
- Business Insider India analyses the future of financial services in India.
AdvertisementThe future of India’s banking industry has a powerful weapon in its arsenal – social media and new technology. The success of banking will be determined by how well the banks can leverage the full potential of social media and data analysis to personalise offerings and meet growing customer expectations.
He said that retail customers now expect banks to provide them quick, reliable and personalised services. To evolve with the changing times, the governor advised banks to necessitate significant investments in technology and organisational capability.
“The Indian banking system has undergone significant changes. The increased adoption of technology by traditional banks to self-upgradation or collaboration with fintechs is resonating with the idea of New Age banking. This is leading to innovative products, services and newer business models,” said Das.
Sharing his vision for banking in India, Das said, “Banking beyond tomorrow would revolve around adoption of emerging technologies, customisation of services, enhanced business and process automation.”
The future of banking will also involve development of suitable business models with strong governance frameworks, better information management, changes in the mode of working, building of enhanced resilience capabilities and a more responsible societal and environmental role for the banks, he added.
Emphasising that the banking sector is going through a period of churn and was facing competition from fintech firms, Das suggested that banks should equip themselves for the future.
“To stay relevant, banks would need to embrace newer and tested technologies for effective and timely business decision making, understanding the needs of their customers and delivering personalised services to them.”
While the apps and websites of banks have grown by leaps and bounds over the years, the presence of human touch in traditional branch banking could still be relevant for customers in many respects and in many areas, said Das.
A new paradigm of digital banking
AdvertisementTo usher in a new paradigm of banking and stand in good stead for India’s economy, the governor suggested banks use social media actively.
“The analysis of social media use has the potential to help banks in reviewing their strategies in terms of customer segmentation, customer acquisition and furthering financial inclusion. Social media can also be used in customer grievance redress management. Continuous knowledge acquisition and staying ahead of the curve would become even more crucial in the days to come,” said Das.
Covid 19-induced lockdowns pushed the banking, financial services and insurance (BFSI) sector to take a closer look at their technology architectures.
“Technology advancements in the BFSI sector have brought about a broad spectrum of benefits ranging from fraud and risk management, to decreased costs, and improving the inclusion of the excluded sector into the formal economy,” Sanjay Sharma, MD of fintech platform Aye Finance told Business Insider India.
The adoption of artificial intelligence (AI) and machine learning models, big data analytics and blockchain technologies by fintech players have allowed for customised products and services and radically transformed customer experiences, he added.
AdvertisementWith fintechs in the mix, expectations from banking are no different. Consumers expect responsive brands that are quick to address grievances 'on tweet'.
This puts additional pressure on banks, which are looking for ways to ramp up their social media strategies, improve customer experience and expand business opportunities.
From AI to blockchain, machine learning to robo-advisory, there is a new realm of possibilities that banks are now experimenting with.
“Having an active presence on social media platforms can help banks establish connections, provide value to the customers, promote sales, and increase engagement with prospective customers,” Vineet Tyagi, Global CTO of SaaS platform Biz2X told Business Insider India. “Social media can revolutionise the banking sector with an immense customer base.”
For instance, banks could create loyalty programmes, find specific interest groups – such as seniors, women or farmers – on social media for their various offerings, Tyagi added.
AdvertisementIn an age where business owners are now used to optimum efficiency and speed in most fields, Tyagi said that a slow traditional banking process is something that would not sit well.
Naushad Contractor, founder and CEO of Fable Fintech, believes that the future of banking will be invisible, connected, insights-driven and purposeful.
“Very soon, a few banks will find themselves operating as technology companies. The expertise to provide all-in-one access to a range of digital channels, products and services will soon be inevitable in the banking sector. The digitally-driven technologies will impact how individuals save, invest, and how they interact with all aspects of their finances,” Contractor told Business Insider India.
Neha Juneja, CEO of IndiaP2P.com, a fintech platform for retail investors, agrees that the banking model of tomorrow will be more personal.
Advertisement“This personalisation and the ability to treat every user as a premium user is only viable with the use of technology for efficiency and social channels - where the users already are,” said Juneja.
It would also see big banks struggling to play catch up with creative fintech start-ups, said Manoj Mohan, executive director at Centre for Financial Studies at Bhavan's SPJIMR.
“We will see the creation of Amazon equivalents which took business away from Walmart. A big reason for this is the dichotomy between the culture of safety at big banks and culture of innovation at start-ups,” said Mohan.
He suggested that to change with evolving times, banks will need to create teams or subsidiaries exclusively tasked to innovate.
“To be at the forefront of innovation in finance, banks will need to disrupt their thinking and the way they approach innovation and risk of change caused by innovation,” said Mohan.
Popular on BI
- Elizabeth Holmes ordered dinners for Theranos staff but made sure they weren't delivered until after 8 p.m. so they worked late: book
- The CEO of software giant Intuit, which has avoided mass layoffs, says tech firms axed jobs because they misread the pandemic
- I flew cross-country with my 5-month-old son on my lap. Next time, I'm paying full price for him to have his own seat.
- Major train accidents that India witnessed in last 15 years
- Odisha rail crash: Rescuers try to raise buried coach, death toll at 238
- Largest road networks in the world – India beats China to take the second spot
- Manoj Bajpayee joins the league of on-screen lawyers like Pankaj Tripathi, Shriya Pilgaonkar & more
- List of famous things to buy in Lonavala