Technology in Banking-Insight and Foresight for BTA_2011 ... - IDRBT
Technology in Banking-Insight and Foresight for BTA_2011 ... - IDRBT
Technology in Banking-Insight and Foresight for BTA_2011 ... - IDRBT
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<strong>Technology</strong> <strong>in</strong> Bank<strong>in</strong>g – <strong>Insight</strong> & <strong>Foresight</strong> 32<br />
3.3.12. Rise of Prepaid Instruments<br />
Banks have seen the opportunity served by prepaid <strong>in</strong> address<strong>in</strong>g the gap left between the debit <strong>and</strong><br />
credit customer base. Over 14 non-bank<strong>in</strong>g corporate entities have been granted permissions to<br />
issue prepaid cards <strong>in</strong> card-based, paper-based <strong>and</strong> other electronic <strong>for</strong>mats, <strong>in</strong>clud<strong>in</strong>g virtual/mobile<br />
wallets to date. One of India’s lead<strong>in</strong>g mobile operators has been granted permission with several<br />
others <strong>in</strong> the fray.<br />
3.3.13. New Credit Bureaus<br />
With two new credit bureaus be<strong>in</strong>g set up, <strong>in</strong> addition to the exist<strong>in</strong>g CIBIL, the quality <strong>and</strong> depth of<br />
the credit history <strong>and</strong> analysis is expected to grow multifold <strong>in</strong> the com<strong>in</strong>g years, result<strong>in</strong>g <strong>in</strong> the<br />
enhanced quality of credit scor<strong>in</strong>g <strong>and</strong> recoveries. The remarkable trans<strong>for</strong>mation has been the<br />
<strong>in</strong>creased consumer awareness of the importance <strong>and</strong> impact of their credit histories.<br />
3.3.14. IMPS: Mobile-based Payment System<br />
NPCI has <strong>in</strong>troduced the Interbank Mobile Payment Service (IMPS) enabl<strong>in</strong>g seamless mobile-based<br />
transfers between bank account holders. The cornerstone of <strong>in</strong>teroperability has been established<br />
with this measure.<br />
The <strong>in</strong>novation spree cont<strong>in</strong>ues with a wide array of breakthrough bus<strong>in</strong>ess models, consumer<br />
propositions <strong>and</strong> technology solutions be<strong>in</strong>g implemented, driv<strong>in</strong>g the adoption of electronic<br />
payments.<br />
3.3.15. Future Trends<br />
Chang<strong>in</strong>g customer preferences, mobile <strong>and</strong> <strong>in</strong>ternet penetration, ris<strong>in</strong>g cards, growth <strong>in</strong> disposable<br />
<strong>in</strong>come <strong>and</strong> spend, as well as new technology <strong>in</strong>itiatives have bolstered the payments l<strong>and</strong>scape <strong>in</strong><br />
India. It is evident that electronic payments will become <strong>in</strong>creas<strong>in</strong>gly popular as a delivery<br />
mechanism. However, there will always be customer segments, which will prefer to transact through<br />
a cheque or go to a branch to withdraw money. As such, banks will need to decide on the product<br />
strategy <strong>and</strong> create a mapp<strong>in</strong>g of their payment portfolio with their customer segments. Banks will<br />
need to <strong>in</strong>crease their ef<strong>for</strong>ts <strong>in</strong> migrat<strong>in</strong>g customers from paper-based payments to electronic<br />
payments if they want to reap their benefits of cost advantages. However, this will require a<br />
fundamental change <strong>in</strong> consumer behavior, which can happen only if the banks <strong>and</strong> the regulator<br />
offer a secure, robust <strong>and</strong> efficient network, <strong>in</strong> addition to <strong>in</strong>centives <strong>in</strong> terms of convenience <strong>and</strong><br />
benefits to customers.<br />
Bus<strong>in</strong>ess leaders of tomorrow would need to build on technologies foundations to deliver electronic<br />
payment systems. A robust architectural framework should be built by all banks to enable flexibility<br />
<strong>in</strong> ga<strong>in</strong><strong>in</strong>g market share <strong>and</strong> <strong>in</strong>creas<strong>in</strong>g profitability from a more dem<strong>and</strong><strong>in</strong>g customer base. Further,<br />
the technology framework needs to be developed, ensur<strong>in</strong>g security to protect the reputation <strong>and</strong><br />
support effective risk management. A framework that will reduce costs, br<strong>in</strong>g about superior<br />
KYC/AML checks, help banks gauge customer behavior better <strong>and</strong> give an overall perspective on the<br />
profitability of their payments bus<strong>in</strong>ess would be most befitt<strong>in</strong>g. To achieve this, the <strong>in</strong>creased<br />
acceptance of electronic payments by consumers across India is important. RBI has already extended<br />
Institute <strong>for</strong> Development & Research<br />
<strong>in</strong> Bank<strong>in</strong>g <strong>Technology</strong>