Innovative Banking Tech To Connect the Unbanked

by Sohini Bagchi    Mar 09, 2014


From providing plain vanilla banking services to customers, Public sector banks (PSBs) in India have gradually transformed themselves into universal banks. ATMs, Internet banking, mobile banking and social banking have made “anytime anywhere banking” the norm now. In an exclusive interaction with CXOtoday, R. K. Chhattani, DGM ( IT and Business Practices) UCO Bank explains how new technologies and channels are helping banks become innovative and reach out to the unbanked segment.

What are the major opportunities you see in the banking sector in the next one year with regard to technology adoption?

Banks will look for opportunities to reach out to the unbanked segment with the help of innovative channels. In this regard, mobile banking is unarguably the front-runner. Owing to their reach, ease and capabilities, mobile devices are set to outperform even the online banking space. This is coupled by the growth of ATMs and internet that also offers a huge opportunity for banks to reach out to the unbanked segment.

Secondly, Banking institutions can also stand to benefit a lot from cloud computing, as they are looking to reduce operational expenses. However, there are still areas of concern when it comes to a public cloud adoption which may take some time.

Thirdly, banks will focus on big data analytics to develop new uses cases to improve customer experience, managing risk, and optimizing operations. However, despite its potential, banks especially PSBs will take some time to realize the actual growth potential big data. fourthly, social banking is an area that will start to evolve with the changing needs of new-age customers. Finally, more banks will shed off their expensive and inefficient legacy in their IT environment and will embrace progressive modernization to drive profitability and stay competitive.

 Currently the number of branches per billion in India is very low. At the same time the unbanked population is very high. How do you foresee technology to bridge the seemingly complementary phenomenon particularly when globally the trend is towards m-banking?

Banks around the world are investing in mobile banking in order to stay relevant to their customers and India is not an exception to the rule. In fact, mobile banking has tremendous power as mobile revolution is taking place at a rapid pace in the country. People have a mobile phone even in the remotest areas of the country. Going forward, it will be the key tool for banks to not only to connect to their customers, but also retain existing customers, create brand differentiation and generate revenues.

Even though PSBs such as UCO Bank sees sustained growth coming from branches in non-metro, semi-urban locations, along with rural and remote areas, branches are still low in number in India. However, the number of ATMs and ultra small banks in rural and remote areas has gone up. Moreover, channels such as mobile banking are helping banks in tapping the huge potential of these unbanked areas.

Given that technology is always a step ahead, how do you see the current regulatory environment catching up? Is that going to jeopardize the induction of latest technology in the overall systems and processes?

Today, banks are operating in a new banking environment, where they are striving to outperform their competitors while grappling with unprecedented regulatory challenge. The current regulatory environment will make it more challenging for banks to increase revenues and maintain profitability unless they formulate new strategies. In such a scenario, banking leaders need to quickly and decisively adopt new technologies approaches or risk being left behind. For example, the explosive growth of mobile or smartphones demand that banks should have a mobile strategy. Similar to internet banking, mobile banking transactions also go through different levels of online security checks before a transaction is fulfilled. This includes one-time password, two-factor authentication of image as well as SSL encryption. Banks should also revisit their architecture and security mechanisms as the mobile phenomenon will only increase with time.

How do you use technology for better and faster compliance of the existing KYC norms?

We are using technologies such as data mining and warehousing, analytics and mobile banking to enrich and simplify customer experience. These technologies in turn are helping better and faster compliance of the existing KYC norms. Technology has helped us leverage innovative channels to deliver products and services to customers in every segment of the country. A strong backend system helps us reach out to our existing and potential customers efficiently and offer high quality service. Moreover, new channels can help banks in improving quality of customer services, engage customers to deliver products and services to every segment of the country and increase employee productivity.

At the recent event on the banking industry - ‘Brett King Talks’ on the ‘Future of Banking,’ banking evangelist Brett King highlighted that mobile will continue to be a big game changer for the industry. What are your thoughts on the same?

Brett King is absolutely right when he said mobile will continue to be a big game changer for banking. I too believe that financial inclusion in India will be driven by mobile banking, and not by opening more branches. It is cheaper for regulators, customers and for the banks as well, though the realization may take a while. From that perspective and being a part of the event, I believe it was a very rational take on the future of banking.