Paperless banking is not an exciting notion for many people yet. Many would say it just translates to online or mobile access to existing banking services and nothing more.
Until recently, the three most common paperless banking activities among customers have been:
• Checking account balances or recent transactions, either through email/SMS on their digital devices or by logging into their bank’s website. Being the most popular activity, 90% of transactions belonged to this category.
• Transferring money to different accounts of the same per-
son or to different individuals.
• Receiving communication
from banks through their digital channels such as email/SMS.
Earlier, banks in India did not see the need for implementing anything beyond these traditional services on a digital platform. The basic idea was to provide digital access to some of the most popular services that were already rendered via other traditional channels.
Until around 2011, the internet penetration in India was quite abysmal and the market was not deep enough for any institution to invest in building significant digital banking solutions. While smartphone penetration was already on a meteoric rise, access to affordable data plans wasn’t quite there yet.
Online security and privacy of personal information continued to be common talking points at that time and people were generally wary of conducting financial transactions on their smartphones or desktops.
Fast forward a few years, and we are seeing a massive penetration of digital services on the mobile and desktop platforms. We now have a few hundred million e-wallet users in the country, several hundred million smartphone users who have access to affordable data plans while many banks have launched interesting digital initiatives.
Today, paperless banking is gaining momentum thus:
• Payments: a quick sign up on a mobile or handheld device and is for the sole use case of making online payments.
• Identification and authentication: to access multiple banking services, for instance, opening a new bank account using Aadhaar.
• Eliminate the need for presence: no need to walk into a bank branch or meet a banking representative. If you have a piece of hardware that is biometric-enabled, then you can self-authenticate. This one is still not mainstream but the assisted model is omnipresent, wherein, an agent carrying a biometric-enabled device could come to your premises and swiftly complete authentication services.
Top banks have launched UPI-enabled mobile apps, digital wallets, payment gateways and other easy payment services. For example, DigiBank from DBS is intended to be a completely digital banking service, PhonePe is a popular payment service and the BHIM app, now universally accepted, is powering digital payments like never before.
Paperless banking offers several obvious benefits:
• Low cost: there is no need to travel to branches, stand in long queues, deal with paper-statements etc.
• Convenience and independence: anytime, anywhere access is enabled via smartphones with Internet connection, better speed and security. This is becoming the default platform for accessing online services.
• Interoperability: take from anywhere and spend anywhere. Since we move onto a data layer (away from closed networks or switches) it allows transactions to transcend network and technology barriers.
• Scale of access: 24 million credit cards versus 250 million smartphones. A person in a remote village can order for services and goods from anywhere in the country. Last mile logistics are not in place yet, but it’s being worked on rapidly.
• Low-cost digital branches: consumers can access new banking services without the need for a physical branch. Payments banks are a great example of this. They can come up fast and in remote corners of the country without brick and mortar hassles.
• Competitive and improved services: services become more transparent and thereby more cost competitive with a better experience. The consumer ultimately wins, as it’s a level playing field for small and big service providers on a digital platform.
With the ubiquity of smartphones with Internet, the first major step in paperless banking was to make current services available digitally. India is now making several giant leaps in this digital wave. No matter through which lens you look at the paperless banking revolution, one thing is clear — the smartphone-bearing Indian consumer will ultimately win.
(The writer is co-founder, MoneyTap)