‘Public credit registry to speed up digitisation’

‘Public credit registry to speed up digitisation’

Context

• The introduction of a public credit registry will further speed up digitisation that has already changed the way banking is done in the country.

What is digitalisation?

• Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.
• What has been the significance of digitalization in Indian banking system?
• Indian Government is aggressively promoting digital transactions.
• The launch of United Payments Interface (UPI) and Bharat Interface for Money (BHIM) by National Payments Corporation of India (NPCI) are significant steps for innovation in the Payment Systems domain.
• UPI is a mobile interface where people can make instant funds transfer between accounts in different banks on the basis of virtual address without mentioning the bank account.

What are the challenges in adopting digitisation?

• Security Risks – External threats such as hacking, sniffing and spoofing expose banks to security risks. Banks are also exposed to internal risks especially frauds by employees / employees in collusion with customers
• Financial Literacy / Customer Awareness – Lack of knowledge amongst people to use e-banking facilities is the major constraint in India.
• Fear factor – One of the biggest hurdle in online banking is preference to conventional banking method by older generation and mostly people from the rural areas. The fear of losing money in the online transaction is a barrier to usage of e-banking.
• Training – Lack of adequate knowledge and skills is a major deterrent for employees to deal with the innovative and changing technologies in banks. Training at all levels on the changing trends in IT is the requirement of the day for the banks.

What is the way ahead?

• Business Analytics and Artificial Intelligence (AI) has a potential to bring a major change. Robotics, enabled by AI, is expected to be the future game changer in the banks.
• Many private banks are planning to deploy Robots for customer service, investment advisory and credit-approval process to improve the services and be cost effective in the long run.
• Digital Banking will be the most preferred form of banking in the coming years.