Watch Out The Sea Change In The Way Banking Is Done In India

Entrepreneur, bureaucrat and politician—the man who brought Aadhar in the life of billions of Indians making things simpler for them, Nandan Nilekani in this exclusive article for DSIJ shares his thoughts on the road ahead for banking sector.

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Indian banking is at the cusp of a paradigm shift when it comes to the future. There are as many as 12 trends which will shape the future of banking in the country. First would be the way we transact on a daily basis. Currently there are high value transactions which are really low in volume but high in cost. Transaction in today’s times take place through various modes namely, cheque, ECS, IMPS, card payments and also mobile wallets. If we see the average transaction sizes payment made through cheque is Rs. 75000, ECS Rs 7500, IMPS Rs 8000, card payment ranging from Rs 3000 to 1200, whereas transaction made through wallet platform is at Rs 300 and 500. In the recent years, we have seen a trend emerging where electronic clearing has surpassed paper clearing by a big amount. Electronic clearing (ECS, NACH, IMPS, etc.) is growing at 50 per cent per year. There has also been a trend noticed where IMPS volumes are recorded higher than debit cards in the last 12 quarters. In the times ahead, the move will certainly be from High Value Low Volume transactions to Low Value High Volume transactions and this will be accompanied by lower transactions costs, and will align market forces (customer acquisition) with social purposes (inclusion).

Credentials when it comes to customer authentication will move from ‘proprietary’ (card+ pin both managed by bank) to ‘public’ (mobile phone+ Aadhaar authentication) as phones will replace the card as an authentication factor.