India, March 31, 2023 /thepeoplemanagement.com/ If decades of business growth and industry commercialization has shown us anything, it is the fact that human resource is the most crucial asset of any organization. Any business’s profitability and scaling depend on how...
The Volatile and Dynamic Payments Landscape in India
India, October 30, 2022 /timesofindia.indiatimes.com/ The payment ecosystem in India has flourished enormously in the past decade. The popularity of digital payments has soared in both volume and value while the usage of paper-based payment methods has plunged significantly. The government of India & RBI have rolled out various schemes in a constant endeavour to foster the reach of digital payments to the remotest quarters, thus enabling people to leverage the benefits offered by the government’s digital initiatives.
Initiatives like JAM trinity (Jan Dhan, Aadhaar and Mobile) have pioneered the financial inclusion journey and facilitated banking services to the unbanked community, thus accelerating India’s social and economic progress. Demonetization further helped boosting the usage of digital modes of payments and moving towards a cashless economy.
The pandemic has had a profound impact on how individuals perceive their finances. While the pandemic was at its peak, it gave the world a new impetus for innovations. There arose a need to use contactless payments for safe & secure transactions. Although most customers were still reliant on cash for transactions, they now had a wide range of alternatives to choose from, owing to the numerous digital payment methods that were available. Substantial growth was seen with the adoption of digital payments. The volatile nature of payments can thus be ascertained, as the onset of digital payments resulted in the decline of cash and cheque usage. As this sector thrived remarkably with people using digital modes of payment more often than not, this invariably augmented the transaction volume for all clearings.
It is crucial to understand the current challenges financial institutions face in pursuit of addressing the ever-evolving payment market. As businesses grow, so does their operational complexities and liquidity risks. Financial institutions need to modernize their existing infrastructure and technologies to suffice the dynamic changes in the payment sector. Currently, financial institutions have fragmented payment processes with lesser flexibility to deal with the rapidly changing payments landscape. Furthermore, the soaring transaction volumes result in slow performance and other bottlenecks. Regulatory changes add to the challenges, with banks having to alter their existing workflow to accommodate requirements/ mandates of the central banking institutions. There exist business silos to perform various functions, making these individual units expensive to maintain and difficult to integrate. To keep pace with the dynamic changes, new product rollouts are often an elongated process owing to the disparate systems and their integration. The processes carried out are manual with no single view of payments across the entire system. Financial institutions also need to get an omniscient view of liquidity to handle complexities and risks alongside the implications of current market conditions. Owing to the business need, financial institutions need round-the-clock availability with zero downtime.
The major driver to address the agility of the ever-changing payment market is robust banking systems with seamless functions that can change, enhance and expedite operations while surpassing customer expectations and scaling up, as needed. Solutions that have not only a far-sighted vision but are equipped with the latest technology to address current issues is the need of the hour. Financial institutions are in the process of strengthening their core systems and financial mechanisms to accelerate India’s economic progress. They are collaborating with payment system providers and utilizing advanced technology to address the growing needs of the market. These solutions and technologies are propelling digital transformation across the payments landscape. Encompassing various key features of consolidation, Straight-Through-Processing, MIS, process automation, unified architecture and overlay services, these systems create a unified banking platform and ensure a seamless and secure transacting experience for financial businesses. These payment applications also cover the liquidity management objectives of businesses, from banks and financial institutions to corporate customers and finance divisions. Tracking an enterprise’s global cash position becomes relatively seamless through virtual account management facilities.
Institutions in the BFSI sector such as, central and commercial banks, co-operative banks and NBFCs, have been at the frontline to implement and adopt digitalisation of financial services. Their collaboration with payment system providers have helped upgrade their existing business functions and systems. With various key features of scalability, security and latest technology, these solution providers empower financial institutions to provide an end-to-end payments solution to people.
Along with feature and technology enhancements, user experience and personalisation is an aspect that has become imperative for institutions and users likewise. Businesses are expected to adopt strategies to deliver personalised customer experience service to their users. Financial businesses are no longer limited to payment services; they are assimilating customer preferences and leveraging customer patterns to provide them with a seamless and enriching banking experience.