Indian Banks Are Under New Threat From Tech Companies & Mobile Wallets – How Can Analytics Come To Rescue

With Narendra Modi-led Government’s cashless drive, there has been a boom in e-wallet companies such as Paytm, Mobikwik, PhonePe, Ola Money and others, thereby causing an increasing worry about the businesses of a bank being hampered. People walking into branches have dwindled as e-wallets and other payment mechanisms have made payments much easier with these cutting-edge technologies. Tech giants such as Apple, Google and Facebook have also entered the financial offering space.

“Today the risk is the disruption that is caused by the technology,” SBI chief Rajnish Kumar said in a report. “We have to be very alert to this challenge. Protecting the turf and meeting the challenges from all the new fintech companies is the priority. Even if it is a small player challenging you, you should not underestimate it, because it can become a big player.”


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Digitization has also given rise to payments like Paytm Payment Bank, Airtel Payment Bank, India Post Payments Bank that performs almost all banking operation but doesn’t engage in any credit providing service and functions on a smaller business scale compared to normal banks.

Banks Vs. Mobile Payment Wallets – AI Play A Key Role

While mobile wallet companies have made a steady adoption of chatbots and artificial intelligence in order to stay ahead in the race, with the likes of Shifu, Paytm’s personal assistant or integration of to PhonePe, the Indian banks aren’t left behind themselves.

Indian banks, too have been investing heavily in AI to boost their offerings and stay ahead in the technology adoption curve. AI has allowed banks to develop a genuine relationship with customers over the time, as they have ventured into avenues like a virtual assistant to understand customer queries of varying complexities and respond accordingly. For instance, banks like ICICI, HDFC, SBI, Yes Bank and others have already adopted chatbots to perform actions like carrying banking transactions, answering customer query, get fixed deposit details, transfer money and much more.

There are various banks experimenting with robots as customer assistants. Like Canara Bank’s 4.5 feet tall robot called Mitra answers to customers queries and offers guidance depending upon the questions. Mitra can also provide basic surveillance apart from being a bank assistant.

City Union Bank’s two feet tall humanoid Lakshmi can chat with customers on more than 125 subjects including current interest rates on loans, account balance and other transactional histories.  HDFC Bank’s robot IRA greets customers and takes them through the various services on offer. HDFC Bank plans to introduce over 20 such robots in two years.

While globally, banking bots have moved beyond answering transactional queries to full-service mode, Indian banks and insurance sector bound by regulatory norms is still in a nascent stage.

Not Just Mobile Payment Wallets, But Other Tech Companies Are Challenging Banks Too

While mobile payment wallets have taken a major portion of bank’s role in transacting money, these are also challenging banks in terms of an insurance business. Companies like Paytm, Mobikwik, PhonePe have now shifted their strategies to become a single point for financial services. Paytm for instance, aims to be a full-stack financial services company and is setting up an investment and wealth management division. Early this year, Phonepe also announced its plan to develop independent fintech solutions, particularly insurance and MF products.

Mobile wallet company Mobikwik is also planning to disrupt the financial space with the launch a lending product that will offer instant credit to customers directly from its app. It is in talks with two-three players, including partner Bajaj Finance, and also plans to roll out investment products like mutual funds.

Not just these mobile wallet companies but tech giants like Amazon too is planning to plunge into the insurance world.  According to a report, Amazon is in talks to create a credit card geared towards small business customers that could eventually offer business insurance. The report also claims that the e-commerce giant has been in discussion with banks including JPMorgan Chase & Co on a co-branded credit card for small business owners who shop on its website.

How Can Banks Stay Ahead – Analytics And AI Is The Key

To sum up, mobile wallet companies and financial companies are fast reaching out to underbanked people by leveraging disruptions to capitalize on new opportunities. After stepping into mobile payment and payment bank, they are now shifting their strategies to tap into the insurance business with new technologies. As India’s wealth management services market have so far mainly focused on the urban segments leaving a huge chunk of market untapped. Banks really need to up their ante to beat fintech companies at their own game. Just like the multi-faceted companies that are venturing into avenues like insurance, lending etc. banks need to give themselves a technological boost.

Though banks in India have become customer-friendly, service-oriented and is looking into digitization for most of its functionalities, it needs to speeden up. Though they have brought up chatbots, not all banks have these AI conversational bots and many of them are in beta testing phase. They also need to integrate data analytics more into areas like revenue productivity, customer retention, handing out loans and much more.

The real challenge for banks now is to set up an integrated internal data stream that can power the data-insight to action cycle. The banks need to have a state-of-the-art infrastructure in place for processing huge volumes of data, analyze real time information and take instant decisions. Operationalizing analytics in banking requires significant investment across technology and banks need to significantly beef up the CRM infrastructure to win the race.

Banks also need to digitally empower its workforce. With customer experience being the touchstone of success in the digital era, banks need to move its employees more closer to customers. The people on the front lines need to be vested with the knowledge and awareness of the digital strategy of the bank.  

And without just limiting itself to just providing basic banking services it’s high time that it should expand its avenue. Taking a cue from mobile payment companies like Paytm and MobikWik, it should now aim to become one stop shop for all financial services by eliminating the need for third party players. The bank should extensively use predictive analytics to reach last mile customers.  

The banks need to be aware that technology is about constant improvement and there are constantly new entrants in the financial services technology market, who are introducing new ideas and improvements. Most banks are relying on old school banking technologies that have not changed at all. It’s high time that they understand that they need to modernize the legacy system. The banks now need to have a more streamlined digital landscape to access and report back data in a more efficient manner. It should now focus on their work on driving innovation and disruption. It needs to understand that making the customer’s life easier and much more is personalised is a necessity to survive in today’s financial market.

More Great AIM Stories

Smita Sinha
I have over three-years of experience in editing, reporting. My career in journalism began with The Economic Times. When I am not busy, I read, I binge-watch web series.

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