[ad_1]
By Manish Jain
In a fast-moving world, technology is at the heart of driving innovation across all industries. Companies must innovate to keep up with customer expectations. Given the current scenario, most or all industries are working their way to adopt technology in a way that brings them closer to their target audience.
One of the key areas that can cause a huge difference in its operation and in connection with customers is the banking and financial services sector. The next wave of innovation is expected to redefine the industry and make profound changes in how corporate strategies will be defined. According to the KPMG India report entitled "Fintech in India: Powering a digital economy", the change would be largely driven by consolidation, collaboration and convergence with fintech.
Although the financial sector has already piloted the initial phase of the adoption of basic forms of technology, it is now time to devise a comprehensive framework that firmly holds together all the key elements essential for scaling the companies in the next phase. One of these strategies is the simultaneous adoption of open banking, IA and blockchain. While these themes add substantial value when implemented in silos, the simultaneous adoption of the triad of themes presents a compelling case for building next-generation open frameworks. After all, it has the potential not only to create the next wave of innovation, but also to allow financial institutions to redefine their business strategy, to achieve a deeper level of personalization and disintermediate industry.
Another reason for this strategy is to help meet the current challenge the industry is facing, to keep pace with customers' ever-changing expectations. Mostly looking for holistic solutions, what new-age customers demand are personalized, omni-channel services and products effectively.
Data is the key to a technology-driven business world, especially from the point of view of conducting analyzes that help make effective and efficient decisions. In addition, the adoption of open banking standards and API-based technology models has enabled the collection of relevant data. This wealth of information is therefore widely used to create platforms that allow interaction between consumers and suppliers to create business value.
A key opportunity that financial services institutions forge into the open platform business can leverage is the vast non-financial ecosystem and develop alternative income streams, designing sustainable business models around the open digital economy. Companies in this sector are adopting a two-pronged approach: acting as a platform provider and bringing the ecosystem together or participating as a service provider to the existing platform and adding value.
Going forward, with abundant data and the simultaneous development of AI-based operational and operational models, banking and financial institutions can reap huge benefits. While the practice of sales services based on customer behavioral models could allow greater cross selling and reduced operational costs, advanced AI solutions like chatbot, natural language processing and predictive analytics use can develop an algorithm to provide suggestions on products.
The adoption of blockchain is essential to exploit the power of its key features. The technology behind all cryptocurrencies is that it is a secure, transparent and decentralized database that drives efficiency and immutability and leads to unanimity in organizations' data records. Since then, the financial services industry has seen greater traction in blockchain applications such as know-your-customer (KYC), anti-money laundering (AML), commercial surveillance, liquidation and clearing, smart business and collateral management.
The good news here is that blockchain development in Indian financial services is in line with its global counterparts. Many industry-specific consortia are creating blockchain prototypes for numerous use cases. Players are also joining international consortia to gain visibility. In fact, within the next five years, the blockchain has potential to create value for the sum of 5 billion dollars in India in all sectors.
The merging of these three forms of technology could bring about a radical change in the industry leading to a "financial superstore" that will act as a single solution for all financial products and services. It would serve two fundamental objectives to match the buyer with the seller and facilitate an exchange of goods and services. With the availability of Internet-enabled smartphones and the convenience of options close at hand, a financial superstore will gain a lot of importance in the current ecosystem.
However, to configure these superstore, the three basic decisions that need to be taken into consideration are the selection of the segments of the value chain to be used, the product / service mix to be offered and the onboarding of the right suppliers of products / services. . In addition, the superstore would be integrated with links to government platforms such as GSTIN, ITR and government-led electronic markets. These superstore will represent an excellent source of authentic data and would constitute a progressive force for the collaboration between financial institutions and government to develop open frameworks such as the "Public Register of Credits".
With the increase of financial institutions to introduce a new wave of innovation, the road ahead will probably be related to customer-oriented use cases defined in the competitive framework of open banking, IA and blockchain. If India manages to create an open digital economy, the cooperation of financial institutions and their leadership will be crucial. They have to welcome this new wave of change with humility and gradually undertake the journey of unlearning the traditionally accepted methodologies and slowly moving towards accepting change and linking points with renewed vigor and agility.
The author is Partner, Digital and Fintech – Management Consulting at KPMG in India.
DECLARATION OF NON-RESPONSIBILITY: the opinions expressed are exclusively of the author and ETCIO.com does not necessarily subscribe to it. ETCIO.com will not be responsible for any damage caused to any person / organization directly or indirectly.
