DIGITAL INNOVATIONS IN BANKING INDUSTRY IN INDIA

A. Kadar Mohideen, Assistant Professor, Department of Management Studies, AJK

Abstract
Digital technologies are evolving at an unprecedented rate all across the globe. India is also
witnessing radical growth in Information and Communication Technology at a very rapid
pace. As a result, Indian Banking sector is undergoing huge transformation to offer better and
enhanced services to its customers. Continuous innovation in ICT in the banking domain has
made Virtual Banking a reality in India. Establishment of Innovation Labs is facilitating the
banks to explore various avenues in the banking arena like Biometrics, Artificial Intelligence,
Robotics, Data Analytics, Wearable technology etc. Digital wallets have already paved the
way for cashless transactions. This research paper undertakes the study of Digital Innovations
in Banking industry in India. This paper is descriptive in nature. Secondary data are collected
from various websites, reports and journals.
I.Introduction
Banking industry is going through a phase of commoditization. In today’s scenario,
differentiated and delightful customer experience has become more important than just
providing financial services. Each and every day, new devices / technologies are providing
various customer touch points. Every time customers touch a computer or a screen, they are
providing an information trail and it's banks’ responsibility to understand how they use this
trail to move their bottom line upwards. Traditionally, banks spent most of their efforts, time
and money on transaction execution, which is nothing but has become a very basic feature of
their overall service.

II. Objectives
 To study the Digital Innovations in Banking industry in India

III. Scope
The study covers the technological developments in Indian banking sector only.

IV. Methodology

The study is descriptive in nature and is based on secondary data. The data are collected from
various reports, journals, news articles, various bank portals, RBI portal and internet sources.

V. Digital Innovations in Banking industry in India

5.1 Innovation in retail financial services

The form of Retail Financial Services is completely dictated by consumers and as they evolve
so will retail financial services. Hence innovation is not a luxury anymore, it's a necessity.
More importantly we are also seeing the advent of nimble startups, which are slowly and
steadily changing how retail financial services are delivered to the consumers and hence
putting pressure on traditional banks to take notice and align their functioning accordingly. It
is therefore extremely important for banks to innovate in the retail financial services space in
tune with the changing times or else there is a grave risk of their becoming less relevant to
existing customers.

5.2 Innovation in Mobile Banking Services

Mobile banking companies have come a long way. Innovation in mobile banking has grown
in sophistication, using advanced technologies such as touch and voice capabilities and
machine learning algorithms. Mobile banking innovators focus on enabling customers to
bank the way they want to with minimum limitations, using mobile banking apps.

5.3 Innovation in Financial Services though Digital Banking

5.3.1 Customers are rapidly adopting technology in their daily lives driven by the growth in
internet and mobile penetration, availability of low cost data plans and shift from offline to
online commerce. Banks are keeping abreast of their evolving needs and behavior and have
enabled access to a wide range of banking and financial services through different digital
platforms. Banks in India are putting in place robust foundations for digital infrastructure and
are innovating using digital technologies across all channels to deliver the power of speed and
convenience to all customer segments across urban and rural markets.

5.3.2 Banks thus need to have dedicated resources, both people as well as infrastructure, to
form an agile innovation unit, with a view to position themselves at the forefront of digital
innovations amidst changing customer expectations and sea-change in the competitive
landscape.

5.3.3 Now that digital innovation practice has reached a critical mass, banks are shifting gears
to create a stronger innovation culture via the Internal Social Collaboration platform and
adopting cutting edge technologies like Artificial Intelligence, Block Chain and Internet of
Things (IOT), among others. Customers are taken into a new world of multi-channel banking,
where they can access services from home, at the office, or on-the-go through Mobile
Banking, SMS Banking, Phone Banking, ATMs and Net Banking.

5.3.4 Managing investments for Private Banking clients is now simpler and faster. Clients can
now easily access research reports both online and on mobile via the apps, capitalize on
investment opportunities quickly through Net Banking and Mobile Banking, and track
investments using investment tracking apps. The focus on making customers accomplish
more comes with the assurance that the services are secure and protected. Banks have set up a
Digital Security infrastructure which works with other teams to monitor and set up new
security enhancements.

5.3.5 Some banks in India are proposing to form a block chain consortium along with other
global banks such as SBI, Citi, Deutsche, JP Morgan, Nomura, HSBC, UBS, Barclays, Bank
of America, BNP, RBS, Macquarie, Westpac, etc.

5.3.6 Some of the banks are also collaborating with Indian IT service providers in areas of
voice enabled system for the customers to open new accounts on the basis of Aadhaar
authentication.
5.3.7 Banks are also collaborating with IT service providers for e-Sign(digital signature)
facility to help digitally signing the loan documents. This will help in faster approval process,
lesser paper work and lesser paper storage space.

5.3.8 Some of the innovations and related initiatives taken by Indian banks in collaboration
with FinTech start-ups/academia and other service providers in the recent past are SBI
FinTech IPDaaS Software Developed with IIT-KGP; Zing HR using Microsoft AI; Digital
Village; cross border remittances, etc.

5.4 Innovations in branch banking through Intelligent Robotic Assistant

AI and robotics have the potential to transform data analytics and customer experience in
banking. Until recently, application of robotics was unheard of in banking and was
considered for application primarily in the manufacturing & medical sectors. With use of
Intelligent Robotic Assistant (IRA), robotics are being brought into the mainstream of
customer service and support. IRA is designed to assist branch staff in large branches, which
have high footfalls, by guiding customers to carry out their banking transactions. AI is
becoming an integral part of the banking system, functions, processes and customer
interactions. Both Robotics and AI will help banks manage both internal and external
customers much more effectively and help reduce operational costs exponentially in the
future. The potential of AI and Robotics based solutions is enormous and will revolutionize
the way people do banking.

Digital transformation and innovation in the BFSI space will ride on three pillars – Block
Chain, Artificial Intelligence and Internet of Things. It is said that 'technology becomes truly
useful when it becomes invisible'. With the onset of interconnected devices riding on a self-
learning and evolving AI and Block Chain keeping a track of each and every transaction,
banking will no longer be just apps, websites or physical branches. Widespread adoption of
biometric authentication and AI based voice enabled financial services and advisory may
make banking relatively 'invisible'.

5.5 Innovation in Investment services

Technology plays an important role and brings efficiency in terms of cost, reduction in
turnaround time, increasing the reach, anytime availability to the clients, etc. Towards this the
mutual funds industry has adopted technology and the use of same is increasing day by day.
Product manufacturers, i.e. individual mutual funds/asset management companies (AMCs)
are providing online facilities by which investors can subscribe, redeem and monitor their
portfolio by logging onto their websites. AMCs have integrated the online processes with
payment systems which enable investors to make seamless payment. Some of the AMCs have
also developed mobile applications for investors to access their portfolio through smart
phones.

Further, Mutual Fund Distributors (MFDs) have also adopted technology in distribution of
mutual funds. There are distributors such as Scripbox, FundsIndia, MyUniverse,
ArthaYantra, etc, who operate only in the online space and cater to the tech savvy investors.
The processes like onboarding of investors, risk profiling, analysis of their portfolio,
recommendation of schemes, asset allocation, rebalancing of portfolio etc. are online and
driven by technology.
Conclusion

The innovations in Indian banking sector highlighted in this study which indicates that the
banks are ready and equipped to take a leap and offer modern banking services. The current
trends in banking are building blocks of the “Cashless Economy‟. Though there are few
challenges, technology will keep evolving and with collaborative efforts of Banks,
Government and end users, overcoming these challenges will certainly be possible. The
initiative of Government of India will very soon achieve its mission and rural India too would
be “digitally literate‟. Banks will have to develop a strategy to bridge the gap of technology
in rural banks and urban banks.

References

1. M. Bhuvana, P. G. Thirumagal and S .Vasantha, Big Data Analytics - A Leveraging