{"id":34947,"date":"2018-10-31T14:33:35","date_gmt":"2018-10-31T09:03:35","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=34947"},"modified":"2018-10-31T14:33:35","modified_gmt":"2018-10-31T09:03:35","slug":"how-financial-services-incumbents-can-keep-up","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/how-financial-services-incumbents-can-keep-up\/","title":{"rendered":"How financial services incumbents can keep up:\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.livemint.com\/Opinion\/MHwtFYmTfilxmekkI6KblJ\/How-financial-services-incumbents-can-keep-up.html\"><span style=\"font-weight: 400;\">How financial services incumbents can keep up<\/span><\/a><span style=\"font-weight: 400;\">:\u00a0<\/span><\/p>\n<p><b>Context<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Disruption in India\u2019s financial services business could follow a two-way path, gradually and suddenly.<\/span><\/li>\n<\/ul>\n<p><b>What is the best example of such disruptions?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Uber and Airbnb have disrupted the transportation and hotel industry; a union of factors is creating the opportunity to disrupt India\u2019s financial services. <\/span><\/li>\n<\/ul>\n<p><b>What are the main reasons?<\/b><\/p>\n<p><b>Rising customer expectations \u2013<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Consumers are getting used to product and service standards provided by modern internet companies in every aspect of daily life, and expect these experiences to extend to other business transactions.<\/span><\/li>\n<\/ul>\n<p><b>Dripping cost of Wireless data \u2013<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Falling costs of wireless data access and smartphones are unlocking access for millions of consumers every month.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">With over 200 million mobile data-subscribers in India, the smartphone is turning into a focal point for delivering a range of experiences while collecting granular information on user behaviour.<\/span><\/li>\n<\/ul>\n<p><b>Public digital infrastructure \u2013<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">India\u2019s new large-scale public digital infrastructure is another catalyst.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Platforms like Aadhaar, DigiLocker, the Unified Payment Interface (UPI) and Bharat Interface for Money (BHIM) have allowed earlier paper-based cumbersome processes like account opening to become digital and remotely executable.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Over 10 million Aadhaar identifications and four million eKYC verifications are being carried out daily. This sets the stage for the digital roll-out of more complex banking services like lending and wealth management.<\/span><\/li>\n<\/ul>\n<p><b>New Regulations by Reserve Bank of India<\/b><span style=\"font-weight: 400;\"> \u2013<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Regulations have broadly included all types of branches and bank correspondent (BC) outlets, now open full-time or part-time.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This can have wide-ranging implications; it is now possible for incumbents to deliver financial services by sharing the physical distribution networks of non-banking partners\u2014helping spare full-scale investments in distribution infrastructure.<\/span><\/li>\n<\/ul>\n<p><b>The blurring of boundaries between customer-facing businesses and network-driven ecosystems \u2013<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In today\u2019s networked era, customers can have a surplus of distinct services on a single platform, as part of a larger ecosystem.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">12 retail and institutional ecosystems are emerging in India, which are likely to address revenue pools of over Rs1-2 trillion by 2022. This is far higher than traditional (standalone) banking revenue pools.<\/span><\/li>\n<\/ul>\n<p><b>What are the challenges for India\u2019s banking sector incumbents?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The challenges get aggravated by their high-cost structures.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Fixed costs are built into sales and distribution networks and legacy technology stacks and these make it difficult to introduce new products and features rapidly.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The Fintech ecosystem, on the other hand, is evolving rapidly with over 400 start-ups in business. Some of these are attacking banking revenue streams in payments and unsecured lending.<\/span><\/li>\n<\/ul>\n<p><b>What are the changes required?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">A change in calculated posture and business models to account for the impact of the new ecosystems and platforms could be a good starting point.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Officials should assess how they can find the right ecosystems and push in their banking services, in order to acquire customers, and deliver relevant and convenient financial solutions seamlessly.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Once established, ecosystems can serve as entry barriers for competition, and promote good financial behaviour among customers as defaulter\u2019s risk being excluded from the ecosystem.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Creating such ecosystems would require officials to stitch together partnerships with different players with complementary capabilities, customers or distribution networks.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Digitization of banking journeys is acknowledged for enhancing customer satisfaction, generate back-office proficiencies and enhance reach and scale, especially in remote areas.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Building capabilities on analytics, technology and delivery is another key dimension for incumbents.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Taking on nimble attackers requires systems and processes that allow rapid experimentation and faster time-to-market for customer-facing services.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This would need adoption of modern technology stacks and development practices.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>How financial services incumbents can keep up:\u00a0 Context Disruption in India\u2019s financial services business could follow a two-way path, gradually and suddenly. What is the best example of such disruptions? Uber and Airbnb have disrupted the transportation and hotel industry; a union of factors is creating the opportunity to disrupt India\u2019s financial services. What are&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/how-financial-services-incumbents-can-keep-up\/\">Continue reading <span class=\"screen-reader-text\">How financial services incumbents can keep up:\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-34947","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704817170},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34947","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=34947"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/34947\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=34947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=34947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=34947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}