The Indian banking sector is growing at a rapid clip. According to a KPMG-CII report, it is expected to become the fifth largest banking industry in the world by 2020, and third largest by 2025. To sustain this rate of growth, banks will need to re-imagine their business continuously, while meeting rising customer expectations and creating a transparent and efficient banking system.
Progressive banks such as ICICI, State Bank of India, HDFC and Kotak Mahindra are leveraging cloud computing to create innovative applications that enable near real-time cross-border reconciliation and peer-to-peer transfer systems with automated reconciliation.
Here are more ways in which leading banks are tapping into the top three finance trends for success in 2018 and beyond:
Cognitive analytics – the new approach to decision making
87% of banks in India believe Artificial Intelligence (AI) will revolutionise the way banks interact with their customers. HDFC is already leveraging the capabilities of AI-based chatbot EVA (Electronic Virtual Assistant)to track and analyse customer issues, and gain a deeper understanding of customer behaviour patterns.
Cognitive capabilities are key to offering more personalised experiences to customers through contextual insights and learning. Cognitive capabilities also make it easy for banks to customise business processes and align policies, procedures and standards to meet regulatory norms.
Blockchain – the foundation for shared digital database entries
The Reserve Bank of India plans to launch a model platform for blockchain technology to help banks maintain immutable records of their digital transactions. For banks looking to transform back-end operations while reducing fraud, blockchain technology is the way forward.
Axis Bank is leveraging blockchain to initiate cross border payments and State Bank of India is using it to enhance the management of its Know Your Customer (KYC) system. Using blockchain as one of the key enablers to reduce human intervention, expedite money transfers and track documentation in real-time, is a great way for banks to create an efficient and transparent banking system.
Robotic Process Automation (RPA) –the key to speeding up critical business processes
According to a Morgan Stanley report, RPA investments can result in employee cost savings of 10% to 25%. This could go up to as much as 30% to 50% savings in the case of RPA with cognitive abilities. As digital technologies disrupt the banking industry, RPA helps enhance efficiency and accuracy by automating repetitive and manually intensive processes. Bank of NY Mellon Corp, one of America’s top banks, is turning to RPA to improve operational efficiency and reduce costs.
In late 2016, ICICI automated 200 processes with software robotics to reduce response time to customers, making it the first bank in India and the third globally to install business automation in its back-end systems. In essence, RPA has the potential to help banks enhance data quality and security, achieve operational resilience, and meet high demands for auditability.
Major initiatives such as Unified Payments Interface (UPI) and Aadhaar Enabled Payment System (AEPS) are poised to simplify as well as transform payments and other banking transactions in India. Banks that take advantage of emerging technologies will be better placed to provide state-of–the-art offerings and enhanced payment flexibility to customers.