The banking industry has been evolving at a rapid speed. Growing customer expectation and deman...
The present health crisis due to the Covid-19 pandemic has caused a faster rate of adoption of contactless payments. With the social distancing norms being followed across the country, people have restricted their physical contact. In this unprecedented situation, people are looking at Digital banking.
Restricted movement means people have started doing the majority of their work from home. It includes banking as well. People who were earlier unwilling to accept Digital mode of banking, have found no other way but to accept this as the new normal.
The Digital mode of banking and payment solutions has witnessed a surge, and its importance has never been realized more than what it is today. If we look around people, have limited their visitations to bank branches owing to health and safety concerns and have started to rely on online purchases and contactless payments.
If we were to look at the numbers, then it makes the picture much clearer. As per Mastercard, India witnessed an increase of 200% in the contactless payments during the month of May. A consulting analyst firm forecasts the annual global contactless transactions to reach close to 6 trillion dollars in 2024, a significant increase from the present 2 trillion dollars in 2020.
Read our article:Reasons for implementing the Digital Banking
If we consider the digital payments domain, biometric contactless cards are one of the safest technologies. This can be the new reality of restricted physical contact. A solution such as a fingerprint verification can be an alternative to using a PIN or a signature, and it can also be a safe and secure verification method.
The innovative card works with its inbuilt biometric sensor, which verifies the fingerprint of the person and then validates the transaction. It doesn’t require you to give your card to the retailer or to touch the payment terminal’s keypad.
Another similar solution of digitized cards is provided through the mobile wallets. It requires the customer to use a device to interact with payments terminal, and the authentication is done on their mobile devices, thus eliminating the requirement for entering the PIN of the card on keypad for amounts more than the established limit.
Another significant digital on boarding solution that proves to be vital and relevant for times such as these is e-KYC (Know Your Customer). Banks require verifying their customers at regular intervals as per the regulations set by the Reserve Bank. For this, asking customers to visit the bank branch can be challenging because neither the customers nor the bank employees would want to put their health at stake. It may put added pressure on the infrastructure of the bank branch and may also eat up the time required for completing other important transactions.
Therefore digital on-boarding solutions such as e-KYC allow people to do online KYC process in a matter of few minutes and also allows them to get access to banking services without stepping out of their homes.
Considering the fact that many people would have started using Digital or contactless banking due to the Covid-19 situation and such other related reasons, it would be immature of us to think this is a temporary change.
Its benefits may cause people to stay for a longer period. Such benefits are as follows:
Digital Banking solutions allow customers to make faster payments. Speed is a critical factor that has caught the attention of banking consumers. This is faster than any other method and even much quicker than using cash.
For users, contactless payments present a convenient form of banking, especially with smartphones or wearable devices that allow the users to pay in the same way in any country that accepts such payment. Consumers’ expectation is to bank with convenience, and with this mode of banking, they experience it greatly.
The layers of security of biometrics and secure authentication along with other emerging technology, ensure the security of the highest standards. Security is the key, and to win customer trust, it is vital to provide a foolproof security system.
The fact that consumers don’t have to wait for the opening of the banks and can bank anytime is one of the greatest advantages with the digital mode of banking. Customer can access their accounts, check their balances, transact, and access many other banking services anytime.
As stated earlier, with social distancing norms being strictly followed and considering the safety of customers and bank employees, banks are encouraging the use of digital mode of banking as it reduces or to say that it eliminates the need for customers to visit brick and mortar bank branches.
Government and RBI have to play a significant role at a time when there is a definite paradigm shift to digital banking. They are required to balance regulations where they are not burdening the financial institutions with one regulation after the other, but they must also ensure that the rules and regulations are not relaxed in a way that disrupts the competitive environment within the banking sector.
The government must also ensure that awareness is also made to the public while using Digitized banking. RBI had recently released a notification on the importance of making safe and secure contactless payments considering the rise of fraud in these times.
Read our article:Central KYC Registry: A Concept Study