New analysis by Digital Fifth, an Indian fintech consulting and advisory firm, shows that the Indian banking industry is poised to see significant investment in digital infrastructure and innovation by both established banks and new fintech entrants. It is undergoing a transformation. say.
This dynamic ecosystem, supported by regulatory advances and collaborative partnerships, is expected to continue to drive innovation and growth in the sector.
Banks are going digital
According to the report, large banks are at the forefront of digital transformation in this sector. These established companies are expanding their digital operations and strengthening their technological capabilities. According to Digital Fifth, core banking is at the heart of this change, with many financial institutions exploring “dual-core technology” and this trend reinforcing the industry’s desire to become fully digital within the next decade. It is said that it is emphasizing.
Dual core technology in digital banking refers to the use of two different but interrelated systems to manage and provide banking services. These cores typically serve different purposes within the architecture of a digital banking platform, enabling greater flexibility, scalability, and agility.
Additionally, banks are beginning to digitize traditionally complex areas. For example, Indian Bank Digital Infrastructure Company (IBDIC). teeth A consortium launched by 18 banks to digitize letters of credit and other manual processes using blockchain technology. this movement the purpose Increase efficiency, reduce costs, and improve security of trade finance transactions.
Meanwhile, leading banks such as HDFC Bank and Yes Bank are modernizing and digitizing their treasury operations to enhance efficiency, accuracy and security. For example, HDFC Bank adopted In 2022, Bloomberg’s MARS Valuations solution will provide a comprehensive valuation system for a wide range of financial products, from physical instruments to complex derivatives. In the same year, Yes Bank teamed We partnered with IBSFINtech, a leading financial technology provider, to digitize corporate treasury and provide automated workflows and bank connectivity for corporate treasury.
Indian banks are also investing in technology to enhance digital customer acquisition, increasing the demand for customer relationship management (CRM) platforms to handle leads from various channels. In line with this, there is increasing attention to strengthening API (application programming interface) infrastructure that enables collaboration with fintech startups.
For example, ICICI Bank launched In 2020, an API banking portal with 250 APIs will be launched, allowing fintech companies to integrate various banking services into their platforms. axis bank We also introduced Broad range of open API solutions, including over 200 retail APIs and 51 enterprise APIs.
Fintech startups emerge as strong candidates
In addition to banks increasing their digital capabilities, fintech companies are also rapidly growing and becoming strong competitors in the digital banking space, pushing traditional banks to further innovate.
YouGov Survey 2023 revealed Familiar with neobanks 52% of urban Indians use neobanks, and fintech new entrants like RazorpayX, Fi Money, Jupiter, and Niyo enjoy high awareness and usage among Indian consumers The company is said to be leading the market in terms of market share.
On sale now In 2018, RazorpayX is a digital banking platform designed to streamline and automate banking for businesses. It provides a set of financial management tools that integrate with a company’s existing systems to simplify tasks such as payroll, vendor payments, and tax payments. claim Over 45,000 business customers.
Phi money, established In 2019, we’re targeting tech-savvy individuals looking for a smarter way to manage their finances. Through our mobile app, we offer a variety of financial services including savings accounts, spending tracking, goal-based savings, and investment options. in partnership In partnership with licensed banks, claim Over 3 million users.
Jupiter is a neobanking startup established In 2019, we offer financial services such as debit cards, mutual funds, personal savings options, expense management, and real-time payments. startup had Approximately 2 million customers in 2022.
Finally, Niyo provides digital banking solutions focused on simplifying personal finance and improving the banking experience for users. Founded in 2015, the company partners with traditional banks to offer products such as multicurrency travel cards, digital savings accounts, and payroll accounts. serve Over 6 million customers.
Regulatory support facilitates digital banking
This dynamic ecosystem is supported by regulatory advances. According to the Reserve Bank of India (RBI) guidelines, allow Banks’ use of video-based customer identification process (V-CIP) for know-your-customer (KYC) requirements has revolutionized digital customer acquisition and onboarding, especially in the retail sector.
Additionally, the RBI supports mergers between banks and fintechs like Slice. merger The partnership with North East Small Finance Bank is expected to have a positive impact on how technology is integrated into banking operations.
Finally, the standards set by Sahamati regarding data, analytics and user experience. Fast tracking Growth of the account aggregator ecosystem. This improves the security, efficiency and reliability of digital banking services.
Government initiatives such as india stackhas also supported the development of digital banking in the country. India Stack is a set of APIs that enables governments, enterprises, startups, and developers to build apps and services. This includes digital ID, real-time payments, electronic signatures, and more.
India Stack is the foundational infrastructure that enables various digital services such as financial inclusion, seamless transactions, and efficient banking processes and drives the growth of digital banking.
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