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5 Challenges Of Digital Banking In India And How Indian Companies Are Overcoming Them

5 Challenges Of Digital Banking In India And How Indian Companies Are Overcoming Them

1. The ‘Smart’ Spirals

In 2019, India had over 560 million internet users across the country. After China (at 854 Million users) India ranks as the second largest online market worldwide. This could however, be misread as a flattering statistic. Because with 40.1% Internet penetration, India languishes far behind many of its South East Asian neighbours (South Korea – 95.1%, Japan – 93.5%, Malaysia – 80.1%, China – 58.4%, Bangladesh- 56.2%)

Compounding the country’s low internet penetration, Indian banks are confronted with poor penetration of smart phones as computing devices. In 2018, there were 290 Million smartphones being used in rural India. World bank developmental data categorises 860 Million as ‘Rural India’. Do the math.

Change however is not far behind. Spurred by the government’s Digital India campaign focussed on levelling this digital divide; higher availability of bandwidth, cheaper data plans and competitive pricing for smart phones; the subscriber base for digital transactions can only grow in 2020 and beyond.

In fact, the current numerical scenarios described above, do not deter Indian banks from augmenting their digital capabilities and offerings. Digitizing processes and reimagining digital technology is today’s topmost strategic banking agenda. Done well, these radical process-changes translate into cost reductions, higher employee productivity and stronger customer engagements.

All said, Smart phones will spiral Smarter banking. And Soon.

2. Dismantle to Evolve for the new ‘DISC’ consumer

Customers that are digitally native, intelligent, social and connected (DISC) seek engaging service designs that match the coolest Internet companies. This rising customer demand of ‘convenience without additional cost’ brings legacy banks under a constant subliminal threat. Not to be cowed down either, most conventional banks look to leverage their pre-existing customer data and trust. In addition to the process digitizing approach spoken earlier, traditional players incubate new ‘all – digital bank’ to stave off digital disruptors making serious dents to their market positions. Abundance of software talent in this country makes this ‘dismantling-for-evolution’ proposition easier.

3. Brick and Click; Not an ‘either-or’

Most of today’s digitally savvy customers check account balances on phones but want to speak for say enhancing their credit card limits and yet like to visit a physical branch for discussing home loan options. Different horses for different courses.

New age banking mindsets get this dynamic. They view the present reality as a persistent challenge and a creative opportunity. The situation is not an ‘either/or’ but, an ‘AND.

Unsurprisingly enough, the proliferation of digital banking technology has not diminished the number of (or significance that) clients place on transacting inside an actual bank.

In fact, per RBI data tracking data (below), the volume of transactions in digital banking throws up interesting trends: Customers visiting branches for activities continues to be on the higher side but for higher amounts. At the same time, small value transactions continue to flourish through digital wallets, internet banking etc.

Searching for ‘that’ elusive customer experience sweet-spot often guides these banks to fine-tune their customer loyalty strategies.

As illustrated by a Gartner study, another element at the core of Brick Vs Click debate are ‘chat bots’. By end 2020, it is estimated customers will manage 85% of their relationships with banks without directly interacting with a human (another study points out that chat bots save up to $0.70 per interaction).

The con of the argument however is that chat bots (yet) do not offer culturally nuanced and unique service touch that say, a rural banking customer is habituated at his retail branch counter. These gaps often raise unanswered privacy concerns and creates a wariness against digital transactions. That debate will be decided by how quickly banks can consciously contextualise their digital solutions.

4. The ‘why’ before the ‘what’

The sheer glut of digital transformation initiatives in the Indian banking industry (pegged at $24.5 Billion in 2018) does invite confusion – which digital transformation projects are ‘urgent’ and which are ‘important’? Decisive banks are the ones that separate quantum innovation from the incremental transformation efforts. Beyond experimenting for product costs and features, the focal point today is on ‘customer experience’. Competitive edge comes from designing superior customer experiences that drives higher adoption and eventually secures brand recognition and digital loyalty.

And often, the question at heart of such transformation journeys explores not the ‘how’ or ‘what’ but why?

5. Home Alone, Home Secure

Indian cyber security market – $ 2 Billion, 2019 – is estimated to grow to $3 Billion by 2022; a compound growth rate of 15.6% that is predicted at one and half times the global rate.

One of the largest challenges for digital banking transformation initiatives has and will remain the ability to solve security issues at scale.

Today’s banking environments heavily draw upon collaborative ecosystems – meaning, hundreds and thousands of networked computers and other connected devices. Add Social, Cloud, Mobile and other channels into the continuously evolving mix and we are talking about managing financial vulnerabilities on a never-before seen scale.

In fact, today it is the digital banking transformation that powers the Cyber Security Industry to continually create stronger security and compliance solutions capable to scale on demand. No matter how the cyber security and banking technologies commingle tomorrow, the number of digital transactions will be influenced by how secure (and how alone) we feel in our ‘digital homes’ today.

While more can be discussed about challenges and opportunities applicable to digital era banking, but banks – that prepare to seize the globe’s second largest digital market (yet maturing) stabilized by the current popular government and a stable regulator invested in capitalizing the global digital economy – will eventually succeed.

Disclaimer: The views expressed in the article above are those of the authors’ and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

This was originally published on Business World website and is being reproduced here.


The Significance of an AI enabled Continuous Quality Engineering Platform

The Significance of an AI enabled Continuous Quality Engineering Platform

The great debate between Quality Assurance (QA) and Quality Engineering (QE) has always been an intriguing subject. In comparison to QA, QE drives the fundamentals of engineering a product or service right from its conceptualisation stage.  With digital transformation picking its pace on a regular basis, the need for QE led business innovation is significantly rising. It propels continuous delivery through a constant feedback mechanism across the entire software development life cycle (SDLC), engineered with speed at a supreme scale.

So, a successful quality engineering (QE) business philosophy centers on continuous quality built on the twin premise – engineered4speed and powering QE at scale.

It is pertinent to ask what are the constituents of Continuous Quality? 

Quality journeys embedded with early age testing, predictive analytics, optimization tactics, rapid continuous feedback are a few constituents of Continuous quality. These constituents are sharply focused on elevating the levels of customer experience. Test designs are crafted in alignment to product/service journeys with 95% automation promise. Continuous testing is initiated across the SDLC for empanelling agile and devops led culture.

The operating themes in today’s business growth narrative are quality, speed, scale and innovation. This article endeavours to examine Continuous quality (its historical trends) and the role of AI in reinventing the continuous quality pipeline with speed and scale.

At the outset, the elephant in the room needs to be addressed.

When it comes to digital transformation, most enterprises focus on customer experience, operational efficiency, agility and profitability through process and technology modernization. Quality Engineering is an afterthought. If businesses are to realize the benefits of continuous quality and the AI enabled automation philosophy, this mind-set needs to change.

Before we dwell further into this topic, let us first understand the heart-of-the-engine: AI enabled Platform.

What does an AI enabled Platform do?

AI enabled platforms combine intelligent decision-making algorithms with data, which enables to arrive an apt business solution.

These platforms offer pre-built algorithms and simplistic workflows such as sentiment analysis, image recognition, data scraping, natural language processing (NLP), voice recognition, recommendation systems, and predictive / prescriptive / cognitive analytics, in addition to other machine learning (ML) capabilities.

Let us change gears, and explore the history of testing, particularly the way its trends have influenced the industry?

The evolution of Automation in QA/QE

Automation in QA has existed for years.

  • In the first generation of automation, the focus was largely UI-based and centered on regression. The goal was to build a framework that could accelerate automation using commercial tools. Automation evolved to include keyword-driven, data-driven and later, business process-driven frameworks that brought significant savings to clients
  • The next wave of automation included the functional side of business in the form of API / middleware automation, test data automation and more. This truly brought the value of automation into testing activities, particularly test executions.
  • Third wave of automation evolved further with an increased focus on continuous testing. Test Driven Design (TDD) and Behaviour Driven Design (BDD) forced integrated automation solutions to join the mainstream and were not limited to testers alone.
  • Today, automation in the test execution phase is further evolving with wide adoption of open source and no-code / low-code automation solutions with in-built optimization, agile led continuous testing, plug n play third party system integrations and pointed solutions around digital / mobile testing. It is in this scenario that, AI-enabled cognitive automation solutions combine the best of automation approaches thereby enabling superior results.

The focus of an AI-enabled continuous quality platform is three dimensional as show below in the figure:

Three Dimension

Figure- Three dimensional AI enabled continuous quality platform

Finally, if we were to summarise the world class features of an AI-enabled continuous quality platform, we invariably have to ask these 4 broad questions:

  1. Is the system delivering analytics powered Insights / integrated dashboard for informed decisions through Test logs, defect logs, incidents?
  2. Does the platform seize defects early through predictive failure hotspot identification through continuous feedback and monitoring?
  3. Does the system perform comprehensive levels of test automation and optimization through no-code / low-code intelligent automation?
  4. And finally, does the platform reduce overall costs, improve agility and achieves higher customer satisfaction by incorporating these following key inputs?
    1. Voice of Process
    2. Voice of Customer
    3. Voice of Machines (logs, incidents, CRM data etc)

Maveric’s AI enabled QE platform answers most of the aforesaid questions. The platform helps in rapidly accelerating your continuous quality pipeline through a combination of domain-driven and cognitive solutions for the banking business. With a substantial record of supporting more than 65 banking transformations and the vast banking domain heritage, Maveric Systems has been innovating the QE roadmap for customer success.

This was originally published on Business Live Middle East website and is being reproduced here.


Cashless economy upsurge in Middle East

Cashless economy upsurge in Middle East

Economies that are more cash intensive tend to grow slowly and miss out on significant financial benefits. Conversely, economies that switch to digital are more successful. The digital switch can boost annual GDP by as much as 3% as predicted below in the analysis done by Boston Consulting Group (BCG)

Potential economic benefits of a move to Cashless Economy

World Bank Global

 World bank global data; BCG analysis

  1. 1.3% of non-oil GDP
  2. Based on Dubai

But, surprisingly, the global ratio of cash to GDP rose to 9.6% in 2018, compared with 8.1% in 2011. The situation is fast changing post Covid 19 crisis and economies are fast moving to cashless through various means.

Digital is an attractive alternative where the cost of cash is high (transport, ATM servicing, security, labor), where technology uptake is accelerating, or where the government struggles to collect sales tax. Numerous countries meet one or more of these criteria, according to an analysis in Harvard Business Review.

World Bank

 World bank global data; BCG analysis

Having said that, Middle-East region seems to be showing many positive signs of digital progression as you read the article further.

Encouraging and Notable changes in the Middle-East

While the Middle East has traditionally been slow to move away from cash when compared with the rest of the world, a new wave of technology alongside strong government initiatives are starting to change habits across the region.

In recent years, more convenient payment options like tap-to-pay, mobile wallets, and online payment platforms have been eroding the popularity of cash.

In the Middle East, both Saudi Arabia and Egypt have taken large steps to bring their citizens access to many of the latest cashless technologies through their Mada debit card and Meeza debit card schemes.

Mobile payments start-up Ziina launched in its first market, the UAE and unveiled plans to expand into Saudi Arabia in 2021, as it seeks to take advantage of initiatives to encourage cashless payments in the Middle East.

Becoming a cashless society is one of the key aims included in the UAE’s Vision 2021 strategy, which also includes goals around refocusing of the economy, and enhancements to healthcare and education facilities.

Ziina’s next target market of Saudi Arabia also has goals around reducing cash transaction numbers to 30 percent of all payments as part of its Vision 2030 initiative.

Cashless Revolution

Number of non-cash transactions world-wide from 2016 to 2022 (in billions)

* Estimates from World Payments Report 2019

The EIU report entitled ‘A Whole New World: How technology is driving the evolution of intelligent banking in the Middle East and Africa’ indicates that MEA retail banks are highly conscious of the threats financial exclusion and delaying digitalization pose to their business models.

The survey reveals that the Middle East, in particular, is poised to encourage digital financial inclusion, with young populations and smartphone use predicted to hit 74% by 2025.

Role of Fintech players

The initial synergies between Banks and Fintechs started way back in 2018, which progressed the payment trend with more new innovative ways of payments. We can infer from the data published by Visa that the card payments in the UAE were noted at 70% rise with a substantial indication on the importance of e-commerce which also witnessed an increase of 48% in 2018.

Saudi Arabia is aggressively promoting digitization across financial services in line with Kingdom’s 2030 Financial Sector Development Program by welcoming 30 fintechs regulatory sandbox through the SAMA arm. These fintechs will also focus on currency exchange, micro-lending, financial information aggregation, crowd funding, international processing and digital savings apart from digital payments. Through the regulation, this sandbox will act as a safe space in which financial services firms can test new digital solutions under a set of conditions and limitations designed to protect consumers and relax normal regulatory obligations. The testing on new digital solutions will be an outcome by building partnership with the fintechs. As a sample of this note, Financial Software & Systems and Arab Financial Services entered into an agreement to bring omni-channel payment acceptance solutions to banks in December 2019. Both the firms had successfully launched services in Oman and Bahrain, with a future plan of expansion into other markets. This underlines the strong necessity of Fintech to maintain the momentum of digital readiness across the region.

COVID – 19 crisis acts as a catalyst

According to 2019 GSMA report, 30% of the Middle East region’s population belongs to youth who have a mobile penetration rate of 64% as they are tech-savvy in encouraging digital payments. With these factors, COVID- 19 crisis acts as a catalyst for adopting and promoting cashless payment methods for contactless experience.

The global mobile wallet market is expected to reach $3.1 billion by the end of 2022, as per Zion market research report. Gradually, the dependence on mobile wallets and secured payment gateway will be high and this will streamline the launch of new digital services from banks. To capitalize the digitization, Saudi Arabia’s Riyad bank collaborated with CCAvenue to expand its payment platform in Saudi Arabia when there was an upsurge in the country’s e-commerce market.

Vision 2030 & so on

The upsurge is highly commendable but the Middle East region could take at least two decades to achieve cashless society which only reaches 46% by 2030 in its digitization. Though the advancements in blockchain and AI are progressing in good pace, the regional regulatory guidelines are far behind when compare to other global regions. This may be the reason on the delay on achieving the cashless economy, but it definitely completes its notion in 2050.

This was originally published on Business Live Middle East  website and is being reproduced here.


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