Tag: Digital Banking

Industry players welcome RBI Working Group report on digital lending

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Industry players have welcomed the report of the Working Group set up by the Reserve Bank of India (RBI) on digital lending and have said it would ensure higher standards of ethical behaviour and code of conduct for the digital lending platforms, and ensure consumer protection from unethical lenders.

“Self-regulatory organisation is the call of the hour in order to structure the industry and to set the rules for the fintech members and customers. Fintech Association for Consumer Empowerment (FACE) members have always abided with the disclosure of all relevant information including the interest rates, as it believes that transparency and proactive commitment to consumers builds brand trust. Data privacy is of utmost importance and should be strictly adhered to,” said FACE.

Recommendations

Gaurav Chopra, Founder and CEO, IndiaLends and founding member of Digital Lending Association of India, noted that recommendations such as auditable logs for every action that a user performs on the app will demolish many existing loan sharks and curb unfair practices.

Also read: RBI calls for public comments on digital lending

“Moreover, the recommendation for digital lenders to provide a key fact statement in a standardised format including the annual percentage rate will give a better perspective to borrowers about the high percentage rate they are willing to bear. Overall, the report seeks to safeguard consumers from unregulated digital lenders who have the potential to exploit borrowers with unfair or predatory terms,” he noted.

As a founding member of DLAI, IndiaLends abides by the strict code of conduct as implemented in May 2020, which is in alignment with the suggestions of the Working Group, he further said.

The RBI had on November 18 released the report of the Working Group on digital lending including lending through an online platform and mobile apps, which has called for legislation against illegal digital lending activities as well as a verification process for these lenders and a self-regulatory organisation (SRO). It has sought public comments by December 31, 2021.

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RBI calls for public comments on digital lending

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The Reserve Bank of India on Thursday released the report of the Working Group on Digital Lending, which has called for a legislation against illegal digital lending activities as well as a verification process for these lenders and a self-regulatory organisation.

“The thrust of the report has been on enhancing customer protection and making the digital lending ecosystem safe and sound while encouraging innovation,” the RBI said. It has sought public comments by December 31, 2021.

“As per the findings of the Working Group, there were approximately 1,100 lending apps available for Indian Android users across over 80 application stores (from January 1 to February 28),” the report said, adding that there were over 600 illegal loan apps.

Complaints against DLAs – Sachet, a portal established by the Reserve Bank received 2,562 complaints from January 2020 to March 2021, it further noted.

The much-awaited report has suggested three-pronged measures on a near to medium term basis, which can be implemented in a period of upt o one year to over one year.

In the near-term, it has suggested subjecting the digital lending apps to a verification process by a nodal agency to be setup in consultation with stakeholders. The nodal authority will also maintain a public register of the verified apps on its website.

It has also called for setting up of a self regulatory facility covering the participants in the digital lending ecosystem. The SRO would be expected to maintain a ‘negative list’ of lending service providers.

Code of conduct

A standardised code of conduct for recovery would be framed by the proposed SRO in consultation with RBI. Use of unsolicited commercial communications for digital loans would also be governed by the Code of Conduct.

The report has also recommended that balance sheet lending through DLAs should be restricted to entities regulated and authorised by RBI or entities registered under any other law for specifically undertaking lending business.

Further loan servicing, repayments should be executed directly in a bank account of the balancesheet lender and disbursements should be made into the bank account of the borrower.

In the medium term, “Central Government may consider bringing in a legislation to prevent illegal lending activities by introducing the ‘Banning of Unregulated Lending Activities Act’,” the working group report said.

Data collection

The RBI should develop a separate framework styled as Agency Financial Service Regulation (AFSR) for all customer-facing or fully outsourced activities of regulated entities including lending service providers, it has suggested. The working group has said data collection should be with prior and explicit consent of borrowers with verifiable audit trails. All data should be stored in servers located in India and algorithmic features should be used in digital lending to be documented to ensure necessary transparency.

The Working Group chaired by Jayant Kumar Dash, Executive Director, RBI was set up on January 13, 2021 in the backdrop of business conduct and customer protection concerns arising out of the spurt in digital lending activities.

 

“We welcome the report of the working group, which aims to safeguard consumers from unregulated digital lenders. It’s important to differentiate between lenders who already follow the law of the land and those who exploit consumers with unfair practices. DLAI has already set up a code of conduct for all members. DLAI will submit its suggestions on the report,” said Anuj Kacker, Vice President, Digital Lender’s Association of India and Co-founder, FREO.

 

 

 

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RBI set to monitor digital banking and cyber security, asks banks to be vigilant too, BFSI News, ET BFSI

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RBI will soon launch a web-based supervisory system that will enable off-site and on-site monitoring of modern functions like digital banking, cyber security, said RBI deputy governor MK Jain. At the same time banks need to be careful in complying with rules and invest in technologies to meet the supervisory challenges as they experiment with new services in the post COVID world though ultimately its governance standards, business model, risk culture, and assurance functions will decide how well it fares in the long run, he said.

“For continuous engagement with supervised entities, a web-based and an end-to-end workflow automation system has been developed ( by RBI)” said Jain in a keynote address at a summit. It has various functionalities including inspection, compliance and incident reporting for cyber security, etc. with a built-in remediation workflow, time tracking, notifications and alerts, Management Information System reports and dashboards. “This is being launched shortly”.

With the proliferation of digital banking, cyber security has become an extremely important area of supervisory concern. To address this concern, the Reserve Bank has developed a model-based framework for assessing cyber risk in banks using various risk indicators, risk incidents. ” Cyber drills are conducted based on hypothetical scenarios”.

While a lot is being done in the cyber security space, these risks are continuously evolving in the dynamic environment we operate in, and hence there should be constant vigil and continuous enhancements of IT systems, warned Jain.

Globally, fintechs are challenging banks with more convenient offerings, better reach and lower cost to customers. Besides, developments in areas artificial intelligence, robotics and chat advisory, digitalisation, Distributed Ledger Technology, quantum computing, cloud arrangements, data analytics, new ways of remote, though have their benefits but are also generating new risks, Jain warned. Also, climate change, KYC / AML, cyber security, virtual currencies as well as increasing reliance on outsourcing are some of the other major challenges that will need to be addressed, he said.

Banks need to be agile and creative to stay ahead of the digital curve, but banks will have to align their products in compliance with existing laws and regulations. ” Financial institutions would need to experiment with new technologies and tailor their products and services in alignment with business strategy and in compliance with existing laws and regulations” Jain said. “Leveraging on technology will also require enhanced financial investments, building expertise and capacities, proper resource allocation and further strengthening of the operational capabilities”.



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Rajiv Anand elevated as Deputy Managing Director at Axis Bank

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Rajiv Anand, Executive Director, Wholesale Banking, Axis Bank, has been elevated as Deputy Managing Director.

Axis Bank on Wednesday said its board has approved the appointment of Anand as Deputy Managing Director (DMD) of the bank.

“In addition to leading wholesale banking, Rajiv Anand would work closely with the board in strengthening control and governance aspects,” Axis Bank said, adding that the appointment is subject to further approvals from the Reserve Bank of India and shareholders of the bank.

He would also be leading Axis Bank’s strategic digital banking agenda impacting all parts of the Axis franchise, along with wholesale banking, marketing and corporate communications.

In his more than 12 years of association with Axis group, Anand has held multiple leadership positions such as Managing Director and CEO of Axis AMC, ED – retail banking and the present role of ED – wholesale banking.

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Beyond cctv: Banking in the digital world

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Video analytics can help in reducing customers’ dependence on staff in banks. In fact, it is easily possible to create completely unstaffed branches by using the technology. (Representative image)

By Abhijit Shanbhag

We live in a digital world where AI and automation have entered every walk of professional life. You can pick any modern industry, and it won’t take long to identify how cutting-edge technologies such as AI, analytics, IoT and machine learning are playing an indispensable role in the growth of business organisations. One of the path-breaking AI innovations in recent times has been the evolution of video analytics, and this technology is extremely crucial for banking industry.

Indian banks can benefit by integrating a powerful AI platform which is supported by dashboards that are not cost exorbitant but capable of resolving various challenges for them. Today, there are advanced solutions available that can provide detailed data-driven insights to help the banks enhance their operations as well as the customer experience. This is enabled by the real time conversion of the visual feeds from CCTVs into analytics. There are multiple benefits that such video AI solutions offer.

Crowd management and safety inside banks
An advanced AI video analytics system can identify the density of people on the premises. In Covid-19 times, maintaining social distancing compliance and tracking of crowd behaviour through the existing CCTV systems is extremely beneficial. Further, the continuous monitoring and ability to smartly detect weapons, suspicious behaviour or unattended objects allows the system to raise an alert and provide crucial early response opportunity.

Monitoring customer experience

Video analytics can help in overcoming the challenge of enhancing customer experience. The intuitive video AI solutions can analyse various customer activities inside the premises. The system can create customer journey map in the branch to provide insights on things such as the average time spent by a customer on a specific counter, the high-density areas or the amount it takes on an average to withdraw cash from the ATM. By factoring in such things, the banks can improve overall performance and customer satisfaction levels.

Banks often carry out on-site promotional activities and AI video analytics will help them understand the impact of such activities on customer engagement. At the same time, activities such as vandalism, defacing of the premises, littering or attempts to manipulate the ATM machine, etc., can be detected and flagged in real-time.

Branch automation through AI video analytics
The automated or self-service branches are not exactly a novel idea, but their need has become much more pronounced today. Video analytics can help in reducing customers’ dependence on staff in banks. In fact, it is easily possible to create completely unstaffed branches by using the technology.

The advanced video analytics solutions offer the option of following set parameters, and sending automatic alerts. In unstaffed branches, the video AI solutions can ensure that the safety measures are followed and customer satisfaction KPIs are met. Facial recognition tools can be used at the ATM kiosks to facilitate card less transactions.

Almost all the bank branches nowadays use CCTVs for surveillance. However, these are used in a very passive manner. Deploying video analytics technology can help banks convert their existing CCTV systems into a smart tool to enhance their operational efficiency and customer delight. The technology is now available and it is only a matter of time before the banking sector adopts it across India.

The writer is president and CEO, Graymatics

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Wells Fargo report, BFSI News, ET BFSI

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The financial sector accounts for 19% of the country’s GDP, up from 13% in 2000.

As banks bet more on digital banking, nearly 100,000 positions in US banks are at stake and could vanish over the next five years, a report by Wells Fargo said.

Large US banks are investing more in digital banking and other technologies, which could vanish roles of branch managers, call center employees and tellers, leading to massive job cuts in the sector.

Disappearance of such jobs could be drawn parallel with the massive contraction in manufacturing work in the 1980s and ’90s, according to the report.

“Our conclusion is still that this will be the biggest reduction in US bank headcount in history,” the analysts wrote, with job cuts accelerating once the economy fully recovers from the COVID-19 pandemic.

These roles are predicted to be replaced by artificial intelligence, cloud computing and robots. These technological advances are set to perform daily banking functions like taking payments, approving loans and detecting fraud, the report said.

“Branches will likely show a decline, especially given greater digital banking adoption during the pandemic. Many branches that were closed during the pandemic will likely remain closed permanently [and] new future mergers will likely reduce branches, too,” the report said.

The financial sector accounts for 19% of the country’s GDP, up from 13% in 2000. Since the 2008 financial crisis, big banks have continued to witness larger growth. However, between 2007 and 2018, rapid automation in the sector led the country’s four largest banks to reduce staff by a combined 3,00,000 positions.



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Axis Bank unveils open APIs to help customers use integrated services

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Axis Bank has launched open APIs (Application Programming Interface) to facilitate its retail and corporate customers/ partners to use banking services integrated across partner platforms.

The API Banking portal has a suite of API products covering 200 plus retail APIs across cards, deposits, accounts, loans, 51 corporate APIs across payments, trade, collections, bill payments as well as cross-cutting APIs, India’s third largest private sector bank said in a statement.

Also read: Axis Bank appoints Munish Sharda as Group Executive and Head, Bharat Banking

The corporate API product suite will allow companies across e-commerce, food delivery, payment solutions and other businesses to offer financial settlements and other secure financial transactions from their own ERP platforms, it added.

The bank underscored that APIs, which are in line with its open banking philosophy, cover banking transactions that corporates do with their partners and customers on a daily basis pertaining to payments, refunds, payout reconciliation & account management and trade finance, besides other transactions.

Embedded digital systems

Further, the APIs will allow Axis Bank’s banking solutions to get embedded via direct integration with the customers’ digital systems, without the need for a net banking interface.

Sameer Shetty, President and Head – Digital Business & Transformation, Axis Bank, said: “With these latest API banking offerings, we look forward to collaborate and co-create with partners, to offer an enhanced user experience and simplify their day-to-day operations.”

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Bharatpe enters ‘Buy Now Pay Later’ segment

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BharatPe on Wednesday announced its entry into the Buy Now Pay Later (BNPL) category with the launch of ‘postpe’.

“Customers can download the postpe app from Play Store and avail interest-free credit limit of up to ₹10 lakh,” it said in a statement, adding that postpe is not limited to big-ticket purchases, but can also be used for micro-purchases. BharatPe aims to facilitate a loan book of $300 million on postpe in the first 12 months, for its lending partners.

Also read: Leading companies come together to set up Merchants Payments Alliance of India

Ashneer Grover, Co-Founder and Managing Director, BharatPe said, “postpe is a product built on three simple principles: Consumer should be able to pay using credit everywhere – QRs, Card Machine or Online; consumer should be able to convert into EMI at ease – not inconvenienced at point of sale and merchant should not be charged for accepting payments through BNPL.”

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Emerging Asia-Pacific markets incline towards cashless payments, shows McKinsey survey, BFSI News, ET BFSI

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The number of users in emerging markets in Asia-Pacific, which includes India, has increased from 65% in 2017 to 88% in 2021, according to a survey by consultancy firm McKinsey.

The shift to digital banking was likely accelerated by existing trends such as increasing use of digital channels, including banking, broader use of video calls in place of face-to-face meetings, etc. These trends have intensified during the COVID-19 pandemic, and high levels of digital adoption are likely to hold even as the pandemic subsides, the survey suggests.

In emerging markets, FinTech apps and e-wallet penetration reached 54% in 2021, compared with 43% in developed Asia–Pacific. In 2017, the penetration was just 38% in emerging markets.

More than half of the respondents in most Asia–Pacific markets report that cash is used for less than 30% of weekly spending, the survey said.

The survey results indicate that banks can expand their digital offering, by leveraging existing assets. According to McKinskey, banks will need to reinvent its business and delivery models by focusing on three key areas – value of branches, customer engagement, and overall competitive positioning.

Approximately 97% of all Asia–Pacific consumers favour mobile and online banking, and 2% of consumers in developed Asia–Pacific and 3% in emerging Asia–Pacific continue to conduct most of their bank business at the branch.

With digital banking becoming more and more popular, the question of functionalities of bank branches arises. However, despite these numbers, McKinsey says that bank branches will continue to be consumers’ primary partner in managing money. Banks can make sure that branch staff have time to concentrate on activities like advising on loans, insurance, or investments to customers, and digitise other processes, it said.

To further engage customers in digital banking, McKinsey’s research suggests that banks should urge customers to buy banking products online. Even though 70% of respondents expressed openness for using digital channels for services beyond transactions, only 20-30% said they were comfortable to buy online banking products like savings accounts, loans, or credit cards.

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Bankers back to college to learn data analytics, BFSI News, ET BFSI

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– By Nidhi Chugh and Ishwari Chavan

The COVID-19 pandemic has pushed lenders to digitise their banking services, which has resulted in a rise in demand for employees to have a data science skill set.

Currently, 2.5 billion users across the world use banking services digitally, and 53% of the global population will opt for digital banking by 2026, a study by UK-based research firm Juniper Research had said.

Data driven banking – bankers are reskilling themselves

When Dinesh Khara took over as the chairman of State Bank of India a year ago, he said, his focus will be on analytics.

The demand for data science and data analytics professionals is possibly going to double, more than 2,00,000 as mentioned officially, mostly because of the emergence of neobanks, said Robin Bhowmik, chief business officer of Manipal Global Academy of BFSI, in an interaction with ETBFSI.

Manipal Global, started in 2008, offers various programmes to reskill banking employees, or train budding ones.

On an average, Manipal Global has trained one out of five bankers in the country, with over 2,50,000 bankers opting for various courses, Bhowmik said.

A total 15,000-20,000 bankers are trained every year by the academy.

This month, the academy launched its school of data science, where they will teach data engineering, data handling, impact analysis, python courses, in partnership with Axis Bank.

“The whole area of impact analysis within a banking setup is very fundamental to any data science field. We are also training them in a lot of simulations using tools like Python for example, which is one of the more popular open source tools, essentially used in this area,” Bhowmik said.

Apart from partnership with Axis Bank, Bhowmik said that he is in talks with another bank to further expand the course’s reach. The name of the bank was not mentioned during the interview.

Manipal Global also offers short term courses, remote courses, and other full-time courses, such as courses on FinTech.

Bankers back to college to learn data analytics
Surging demand for data science courses – what’s on the table

Prior to the official launch of the data science school, Bhowmik said that the course has already gathered interest from 500 candidates, and there is an application backlog of around 6,000 students.

“The intention is to have a batch of about 35 to 40 every alternate month. So Axis bank alone, I think wants about 120 people through this channel by March,” Bhowmik said.

After completion of the course, the candidate will be evaluated and hired by Axis Bank.

“The bank’s digital strategy is heavily focused towards adopting various data and analytics programs. Hyper personalisation is one such program – data science will be one of the key enablers, starting to identify different customer persona, anticipate their needs and recommend accordingly,” Balaji N, president and head of the Business Intelligence Unit at Axis Bank, said via email responses to ETBFSI.

How will candidates use these skills

After the course, the employee will be able to deploy business intelligence as a function, use data analytics in KYC processes, help in data hygiene – building databases for customer behaviour and customer segmentation.

“Other than simplification of customer journeys on our platform, we are also focusing on building future-ready capabilities, such as integrating alternate unconventional data for risk-moderated business expansion and greater usage of cloud for data engineering and data science workload,” Balaji said.

India’s “youth bulge” is expected to benefit sectors across the board, and even more so for BFSI with the rising importance of data in digital payments.

India’s “youth bulge” is expected to benefit sectors across the board, and even more so for BFSI with the rising importance of data in digital payments.



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