The Future Of Digital Payments In 2018

by Moumita Deb Choudhury    Dec 27, 2017

Fintech

Digital Payments in India will flourish in 2018 like never before. The demonetization drive last year has given a push to digital payments and advanced technologies is set to take the sector by storm. More so, the shift of the Indian banking sector to a cashless society is generating many opportunities for technology investments into digital payments infrastructure.

“The payment industry in India is clearly going through gigantic changes. Over the last few years, the tremendous growth in the digital payment space has elicited a passionate debate across the industry, but one thing is certain, the next several years will see a transformation of how consumers, businesses, and the government move money,” said Anuj Agrawal, Senior Research Manager, IDC Financial Insights.

Digital payments to increase in 2018:

The usage (number of transactions) of digital payment instruments has seen a tremendous improvement year over year versus traditional nondigital channels (excluding cash). The contribution of digital payment instruments (such as retail electronic clearing, mWallet, and mobile banking) means the volume of transactions has already doubled in 2016-17 and is expected to grow further by the end of FY17-18, from 32 percent in 2013-14 to 62 percent in 2017-18, shows a research by IDC.

“Indian banks are getting back on track after slower IT spending the last two quarters, which was prompted by demonetization,” said, Moutusi Sau, principal research analyst at Gartner. “However, as banks focus on enhancing the legacy infrastructure and making digital transformation the primary goals for the banks, we will see more investments flow into newer concepts like artificial intelligence (AI) and blockchain.”

Blockchain Technology Will Be Pertinent:

Originally developed as a means of securing cryptocurrency transactions, Blockchain is now seeing huge implementation as with technology, transactions can be permanently memorialized and immutable.

NITI Aayog is creating India’s largest blockchain network- ‘IndiaChain’, which will reduce fraud, speed up contract enforcement, and increase transparency. This initiative shows promise of this tech in the coming year.

Artificial Intelligence in Banking:

Artificial Intelligence has taken the world of banking and investment services by storm, according to Gartner. The suite of tools available in AI is creating products that reduce the time and increase the efficiency of organizations by their varied applications. Machine learning, deep neural networks, natural language processing are amongst the few of the tools that are part of the AI-toolkit.

With the decreasing cost of computing power, the wide availability of data and sophisticated algorithms, the popularity is not going to decrease anytime soon.

Expanding popularity of Chatbots:

To a large extent, customer interaction will be managed without humans by soon as chatbots will be deployed by businesses as most preferred consumer applications of AI.

This year several major banks in India including YES Bank, ICICI, HDFC were early adopters of chatbots.

As machines do not suffer from physical or learning fatigue, the evolution of a chatbot could be best described as more exponential than linear. So, in 2018, we could expect more chatbots to be deployed with improved quality of interactions, the speed of responses, and accuracy in decision making.

In 2018, we are sure to see more adopters of the technology in the BFSI sector.

Adoption of varied technologies:

Banks will use automated personalization which will put to use the power of FinTech to personalize the offerings that customers use on their devices.

APIs being exposed by banks more frequently; the process of payments and other banking transactions will be more shift and free from complexities.

“FinTech has made it possible for banks to reach customers who are data rich but credit poor. In a country like India, where so many people still don’t have access to banking facilities, FinTech works better by offering a ‘phygital’ (a combination of physical and digital) experience. The objective here is effective self-service that enables customers to walk into a branch and make use of basic automated services,” said S. Sundararajan, Executive Director, i-exceed Technology Solutions.