The financial services industry is changing rapidly nowadays. It always does in keeping with the times. But whether due to shifts in technology, changes in regulation, or global events, the changes can be radical. From the largest multinational firms to the smallest community institutions, each entity has to keep up with these changes and shape up accordingly.
In India, a confluence of factors is causing to disrupt India’s financial services industry. Stakeholders who ignore these factors or are slow to react place themselves at significant risk. So what are the most important issues facing financial services firms in India in 2018?
From buying groceries to booking movie tickets, customers are getting used to product and service standards provided by modern internet companies in every aspect of daily life. Evidently, they expect these experiences from their financial institutions as well. Moreover, falling costs of wireless data access and smartphones are unlocking access for thousands of consumers every day.
Public Digital Infrastructure
The large-scale public digital infrastructure put in place by the Indian government has been an important game-changer. With digital platforms such as the Aadhaar and BHIM in place, customers can now skip the cumbersome paper-based processes of account opening which has now become digital and remotely executable. Usage of this digital infrastructure is increasing at a rapid pace what with over 10 million Aadhaar identifications and four million eKYC verifications being carried out daily.
Criminals will target financial firms because that’s where the money is and the digital era hasn’t changed this fact. Instead, the oncoming of digitisation has only ramped up its speed and the consequences. Financial firms have to balance being open with being secure. As attacks increase, the pressure to act mounts. They must remember that hackers will always look for vulnerabilities. They can improve the way they design and deliver services, manage risks and train their teams.
The new Reserve Bank of India regulations have broadened the definition of bank outlets by including all types of branches and bank correspondent (BC) outlets, which can now open full-time or part-time. This can have wide-ranging implications. It is now possible for incumbents to deliver financial services by sharing the physical distribution networks of non-banking partners. This saves the cost of full-scale investments in distribution infrastructure.
These are some of the most important issues facing the financial services industry facing India today. However, each issue is also an opportunity for something better. All that is required is a change in strategic posture.
With over 200 million mobile data-subscribers, the smartphone is turning into a focal point for delivering a range of experiences in financial service. What it also does is collect detailed information on user behaviour. The huge amount of data can be very helpful in providing seamless customer service. It’s all about differentiated customer experience, providing what customers want, when they want it and how. The Aadhaar and BHIM platforms can be used to enhance the reach and scale of customer base especially in remote areas. This further sets the stage for the digital roll-out of more complex banking services such as lending and wealth management.
Financial firms have to create the right ecosystem and digital networking to make the most out of the current situation and deliver the best. The current period of disruption presents opportunities for tremendous growth. The Adani Capital has aptly leveraged the market to provide sound financing options to its customers at highly competitive rates.