Open Banking

Digital Banking, Finance, Financial Inclusion, FinTech, Internet Banking, Mobile Banking, Online Banking, Open Banking, Rural Banking

DIFFERENT WAYS TO BANKING – DIGITAL, ONLINE, INTERNET, MOBILE BANKING, NEO, E-BANKING

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Editor’s Note : This post was originally published in [January, 2019] and has been updated for freshness, accuracy and comprehensiveness. What is Online Banking Accessing Banking services via internet Also Called Internet Banking or Web Banking Conducting financial and non-financial transactions via web interface or a smartphone Ability to access all financial information of your bank on your computer or mobile What is Digital Banking Banking services delivered over internet Digitization of traditional banking activities and programs In technical terms, full digital transformation of front-end, back-end , data collection and everything What is Internet Banking Facility to a customer to transact/access financial data via a net banking account Internet banking is same as Online banking Manage your money online via internet. What is Mobile Banking Accessing banking services via Mobile phone Using of online banking from smartphone or cellphone What is Neo Banking Digital Only Digital Offers on the go Banking beyond walls “Financial Institutions must be able to deliver and easy to navigate, a seamless digital platform that goes beyond a miniaturized online banking platform.” -Jim Marous, Publisher –  Digital Banking Report How many of you have actually visited a bank in recent times? Do you remember the last time you visited a bank to transact money? Not sure, right? The reason for this can be understood better if you acknowledge the fact that you live in an era of digital banking. Your buying behavior and modes of payment have changed drastically over the last decade. Cheque and cash are old schools now, and it is more about online banking, mobile banking, and Internet banking. This cashless economy has not only made things easier for you but has also made it all instant and quick. You no longer have to carry wads of cash or wait for banking hours to receive and transact money.  While you do have quite an options when it comes to virtual banking, here, we would focus majorly on digital banking, mobile banking, open banking, and online banking. So here is the primer on different ways to bank. What is ONLINE BANKING | Define Online Banking You are using online banking service every time you log in to your online bank account. In other words, transactions conducted electronically using the internet as a gateway are called online banking.  “Online banking refers to banking services where depositors can manage more aspects of their accounts over the Internet, rather than visiting a branch or using the telephone. Online banking typically is comprised of a secure connection to banking information through the depositor’s home computer or another device.” – Techopedia. So Online Banking is – Accessing Banking services via internet Also Called Internet Banking or Web Banking Conducting financial and non-financial transactions via web interface or a smartphone Ability to access all financial information of your bank on your computer or mobile What are the Pros of Online Banking | Advantages of Online Banking HASSLE FREE BANKINGAlmost every financial institution nowadays gives this facility to its customer to reduce the hassle of visiting their physical branch. EASY AND CONVENIENT FEATURESSome banks even allow you to deposit cheque by simply taking a picture of it. BANKING ANYWHERENo more tedious process of banking with the long queue with restricted working hours and unpredictable weather conditions with equally unpredictable mood swings in hot, sweaty and humid conditions. BANKING ANYTIMEWith the advent of online banking, a person can virtually monitor and transact money 24/7 without having to wait for the banking hours. REAL-TIME ALERTS/NOTIFICATIONSAlso, the alert messages and emails allow you tomonitor your account anytime and detect any fraudulence well in advance. What are the Cons of Online Banking| Disadvantages of Online Banking COMPUTER/MOBILE CANNOT DISPENSE/DEPOSIT MONEYThe biggest drawback of this mode of banking is that it can’t be used to deposit and withdraw money. NO OFFLINE MODEAlso, your online banking experience is dependent on your internet connectivity. What is DIGITAL BANKING? | Define Digital Banking While there is a tendency among people to confuse this term with online banking, digital banking is definitely not the same as the former. While online banking literally limits you to the services provided by your banks like NEFT transfers, automatic payment reminders, and the likes, digital banking goes beyond this. Online banking focuses on digitizing the “core” aspects of banking, but digital banking encompasses digitizing every program and activity undertaken by financial institutions and their customers. Digital Banking is – Banking services delivered over internet Digitization of traditional banking activities and programs In technical terms, full digital transformation of front-end, back-end , data collection and everything What are the Pros of Digital Banking? | Advantages of Digital Banking ACCESS HIGH-END FEATURES VIA INTEGRATION WITH THIRD PARTY API’SWhen you talk about digital transactions, you think of mobility, feature-laden transactions, predictive and profile-oriented banking with functions like booking tickets online and purchasing a product/service online. SHOP FROM OFFICE, HOME, BUS OR ANYWHEREIt is also about using e-commerce businesses for doing your day-to-day transactions and your regular online banking without any hassle on-the-go. AVAIL INSTANT DISCOUNTS AND CASHBACKSDigital banking also means attractive cash-backs, discounts, and vouchers while transacting digitally. What are the Cons of Digital Banking? | Disadvantages of Digital Banking While the advantages outweigh the disadvantages, there are a few drawbacks involved in digital banking as well. RELUCTANCE TO CHANGEYou may not be very comfortable making large payments digitally. EXCESS SPENDING’SAlso, you may tend to get lured into unnecessary online shopping just to use the cash back and vouchers that you get whiletransacting digitally.  But who considers shopping a drawback ever, right? What is INTERNET BANKING? Define Internet Banking | What is e-banking? You may say that online banking and internet banking are the same.  Yes, agreed!  However, there is a new facet of online banking that goes over and beyond the understanding and scope of online banking.  Open Banking!  Ever wonder what that means to you?  Through this concept, people can share their transaction data with third parties to boost competition in the financial market. Sounds interesting, right? So, Internet Banking or e-banking is – Facility to a customer to transact/access financial data via a net banking account Internet banking is same as Online banking Manage

Digital Banking in US
Digital Banking, Financial Inclusion, FinTech, FinTech Europe, Industry Observation, Open Banking

Digital Banking – Initiatives, Use Cases, Examples, Opportunities in the US

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The year 2012 was a bit frustrating for Olympic tourist in London as VISA was the only card to be accepted. Banks in the US who have offered Mastercard to their customer were under pressure to issue new VISA cards to engage their loyal customer and earn revenue from international payments. For a developed nation like the USA that excels in technology adoption issuing new card may not be a significant task and that reflects in their growth and economy with flexible products, services, underbanked population dropping to 6.5%[ in 2017]. Indeed, U.S. is far ahead in innovation in the banking sector when compared to other countries. Our post of today would talk about these initiatives, opportunities, and examples of Digital Banking in the U.S. Examples of Fintech-Bank Collaboration to enable Digital Banking in the US   Legence Bank integrating their CBS Legence Bank in Eldorado, Illinois was looking for a tool that guides their customer on solid banking practices. They needed a tool that could integrate all customers’ accounts at one place and help them analyze their spending decisions. Collaborating with CSI, a fintech offering banking solutions that got integrated with their legacy banking system helped in educating young customers about making smart budgeting plans.   Live Oak Bank integrating with Plaid Another interesting collaboration happened when Live Oak Bank in the US collaborated with Plaid to serve the small businesses and personal customers with security and speed. Live Oak Bank was looking for speedy on boarding process so that the customer could use the online banking platform within hours if possible and should be secured validating and following all legal processes. Plaid offered their secured solutions that helped Live Oak Bank in expanding their services to different verticals, and they also started offering personal banking platform to other regions. Implementations / Examples of Digital Banking in the US Banks need to draft a “Digital Strategy” to move and align with the digital wave. Each Banking services be it in Corporate Banking or Cards and Payments now has a Digital Solution available. What Banks need to work on is analyzing all aspects of Digitization and evolving truly as Digital Institution. Let’s take a closer look at some of the banks in the US who followed banking trends and emerged victorious in serving tech-savvy millennials.   American Express AmEx or American Express is a brand that doesn’t need an introduction in the US. Popularly known as “premium brand” it has been one of the banks that understand “How customer and relationship need to be nurtured while offering comfort and convenience.” An article covered by The Financial Brand dictates some of the “good things” that make AmEx a top choice in customers, sample these –   Onboarding Simple and QuickAmEx bid goodbye to long paper forms, quick and easy onboarding process helps in saving customer’s valuable time. In fact the application for an American Express card is so simple that it takes ~30 seconds. Digitization Rocks! Compatible With All DevicesIs your Banking form only compatible with Desktop? How about opening it on Tab? AmEx made sure that all the screen sizes and device compatibility is applicable for the application form to avoid any inconvenience to the customer Integration of Third Party PluginsAmEx always shows its value to its customers by displaying the comparison chart and dictating the actual value customer would derive. Does your banking software allow the customer to integrate with other third-party plugins to compare and make informed decisions? Using Data effectivelyAmEx uses data points not only to mitigate risks but also to detect fraud. Are you using your data effectively? Above features may not be “newer innovations” but are making customer life more straightforward and that’s what distinguish you from your competitor. Wells Fargo Wells Fargo another leading bank in the US who led the Digital Banking initiative implemented Balance Scorecard [BSC] to track and measure the online financial services [OFS]. The case study that studies the implementation in the year 1997 and 1998 came up with the following conclusions – It’s worth to highlight the fact that even in those days when digitization was not end to end Wells Fargo was able to reduce its cost by 22%, imagine with modern technologies and innovation how much operational cost could be reduced for a bank leading to an increase in profit margins. History of Banking and adoption of Digital Channel in the US October 8 that is celebrated as National Online Bank Day triggers nostalgic feelings of banking to be a brick-and-mortar business. The simplefund’s transfer used to take 2-3 days and depositing a cheque on bank holiday was utterly forbidden. We have indeed come a long way of Banking …. Initiatives in the U.S to adapt to Digital Banking Stanford Federal Credit Union (or Stanford FCU) was one of the first to offer banking by telephone and conducting its first four internet transactions, introducing Online Banking to US residents. Wells Fargo was the first bank to provide secure credit card transactions on the internet. As they celebrated 20 years of internet banking on their website in 2015, they mentioned – people being reluctant to avail banking services online. An exciting story shared by early adopter is worth sharing – One of the major hurdles faced by Banks in the past while adopting digital channels is “assuring security” to the customers. With lack of regulation, Banks themselves managed compliance to assure best services to the customers. But with innovation in technology speeding up, there was a rise in adopting the Digital banking initiatives by the US residents. We now see tech-savvy millennials demanding IoT based banking services, easy acceptance to contactless payments and use of VR/AR in banking institutions. Opportunities for Digital Banking in the U.S Different modules of Banking have been digitized with Fintech and Bank collaboration, but as Banking is like the veins of any country’s economy, it has the potential to evolve further. Some of the innovative use cases being explored by enterprises in

Digital Banking Europe
FinTech, Industry Observation, Open Banking

Digital Banking: Use Cases and Opportunities in Europe

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When was the last time you stepped into a brick and mortar bank branch for financial transactions? It sure has become a rarity for many of us, maybe even unheard of for most millennials. Most banking operations are just a click away today. Welcome to Digital Banking! As advanced as it may seem now, banking has been among the oldest professions in the world. Did you know that some banking operations took place as early as 2000 B.C?  Facts aside, at present, the winds of technological change are sweeping over the mammoth banking industry not just as digital banking in Europe but even in the remotest corners of the world. It’s an exciting time for emerging innovative banks and financial institutions, while the big banks have no choice but to get a makeover into a new digital avatar. History of Banking Europe was at the center of banking activity even in its earliest crude form.   The word ‘bank’ comes from the French word ‘banque’, the Italian word ‘banco’, and the German word ‘banc’ which means a bench or a counter. Lenders would typically set up desks inside huge building structures or a market square. Italy was the hotbed for international trade and banking transactions. The Italian cities of Florence and Venice saw early banking activity with transactions through checks and bills of exchange as we know them today. The first bank was established in Venice in 1157 backed by the state. As civilization entered the 20th century, banks evolved and became more sophisticated.  Adoption of Digital Channel in Europe More recently, the roots of digital banking in Europe can be traced to the advent of ATM machines in 1950s-1960s. The humble cash-whirring ATM machine and its computer infrastructure turned out to be a game-changer in the present-day banking ecosystem.  With the ushering of the internet during the 1990s, banking got propelled to a different stratosphere. By 2000, the world was at our fingertips as every handheld mobile phone. Scandinavian countries and Europe welcomed the internet and digital banking as they enjoy one of the highest rates of internet penetration even today.  The huge user base in Europe has made it a natural breeding ground for FinTech companies who hold an edge over banks in software technical know-how. Some of them started inching into the banking space, sometimes without a banking license while some others in partnership with existing banks. Such firms came to be known as neo banks. They had the platform and offered banking products as a savings account and a credit card to customers. Also emerged are the challenger banks, those with a full banking license. However, it is not merely the internet penetration that has made FinTech companies a force to reckon with.  A Deloitte study shows increasing demands from customers for a better digital experience along with competitive pressure has resulted in digital banking champions.  Adapting to Digital Banking – Initiatives by FinTech Firms and Banks The global financial crisis in 2007 wiped out the trust that people had in big financial institutions. Neo banks in Europe and challenger banks cashed in on this mistrust by offering a refurbished banking experience to the common folk. Right from an innovative product line-up, more transparency, user-friendly facets, and a snazzier look, digital banks have managed to win people’s trust in Europe with their digital banking initiatives. While the grand old banks focused on regaining their assets after the crisis, the much smaller challenger banks have tapped into the largely ignored retail consumer base.   It took Berlin-based N26 less than a year to get to a million users when it started out in 2013.  Similarly FinTech start-up Revolut has two million customers as of today. These intuitions have depended largely on their innovation and ingenuity to rope in customers and remain visible even among the big banking names. Use Cases of Digital Banking In Europe Fidor: Munich-based Fidor group has been one of the torch-bearers when it comes to FinTech innovation. In 2017, it launched its own digital community-based marketplace for financial services ‘Fidor Finance Bay’ in partnership with US-based experience design studio: ‘Eight Inc’. Thus, unlike the cut-throat competition among banks, FinTech companies have turned aggregators, leading to a buzzing marketplace. Holvi: Another case in point is the Helsinki-based ‘Holvi’ that started with offering a current account and a debit card to customers. It partnered with a German Mobile Point of Sale provider ‘SumUp’ to lend to SMEs and retail clients for a headway into the country. What’s interesting is that at a time when companies are still struggling with the transition on to cloud platforms, Holvi’s software infrastructure is already hosted on a cloud with Amazon Web Services (AWS). Monzo: Four-year-old bank Monzo has taken banking to the next level. With no branches, customers can interact with this bank only through their mobile phones, helping the company cut some costs. A user-friendly app for a personal finance-distraught millennial generation has managed to widen its heir client base rapidly. N26: N26 already operates in 17 countries and plans to start operations in the US very soon. What’s unique about some of these companies is that they have used a particular component of banking services to build their operations and get a banking license thereafter. Be it hosting their database on cloud platforms or using third-party solutions on a front like the four-year-old London-based Starling Bank, or using Application Program Interface such as TrueLayer that provides updated account information and payment initiation services. The impressive technological infrastructure hosted by FinTech companies and Challenger banks makes it a natural engine for growth. The big banks that have embraced innovation in the banking sector have been rewarded. DBS Bank was named as the world’s best bank in 2018 by ‘Global Finance’ for its leadership in digital transformation. Euromoney has also conferred the Singapore-based bank as the best digital bank in 2018.  Digital Banking OPPORTUNITIES in Europe Artificial Intelligence and Machine Learning Artificial Intelligence and Machine Learning could be the next biggest

Financial Inclusion, FinTech, Open Banking

Different Ways to Bank – Digital Banking, Online Banking, Internet banking, Mobile Banking

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“Financial Institutions must be able to deliver and easy to navigate, a seamless digital platform that goes beyond a miniaturized online banking platform.” -Jim Marous, Publisher –  Digital Banking Report How many of you have actually visited a bank in recent times? Do you remember the last time you visited a bank to transact money? Not sure, right? The reason for this can be understood better if you acknowledge the fact that you live in an era of digital banking. Your buying behavior and modes of payment have changed drastically over the last decade. Cheque and cash are old schools now, and it is more about online banking, mobile banking, and Internet banking. This cashless economy has not only made things easier for you but has also made it all instant and quick. You no longer have to carry wads of cash or wait for banking hours to receive and transact money.  While you do have quite an options when it comes to virtual banking, here, we would focus majorly on digital banking, mobile banking, open banking, and online banking. So here is the primer on different ways to bank. Online Banking You are using online banking service every time you log in to your online bank account. In other words, transactions conducted electronically using the internet as a gateway are called online banking.  “Online banking refers to banking services where depositors can manage more aspects of their accounts over the Internet, rather than visiting a branch or using the telephone. Online banking typically is comprised of a secure connection to banking information through the depositor’s home computer or another device.” – Techopedia Pros of Online Banking Almost every financial institution nowadays gives this facility to its customer to reduce the hassle of visiting their physical branch. Some banks even allow you to deposit cheque by simply taking a picture of it. No more tedious process of banking with the long queue with restricted working hours and unpredictable weather conditions with equally unpredictable mood swings in hot, sweaty and humid conditions. With the advent of online banking, a person can virtually monitor and transact money 24/7 without having to wait for the banking hours. Also, the alert messages and emails allow you tomonitor your account anytime and detect any fraudulence well in advance. Cons of Online Banking The biggest drawback of this mode of banking is that it can’t be used to deposit and withdraw money. Also, your online banking experience is dependent on your internet connectivity. Digital Banking While there is a tendency among people to confuse this term with online banking, digital banking is definitely not the same as the former. While online banking literally limits you to the services provided by your banks like NEFT transfers, automatic payment reminders, and the likes, digital banking goes beyond this. Online banking focuses on digitizing the “core” aspects of banking, but digital banking encompasses digitizing every program and activity undertaken by financial institutions and their customers. Pros of Digital Banking When you talk about digital transactions, you think of mobility, feature-laden transactions, predictive and profile-oriented banking with functions like booking tickets online and purchasing a product/service online. It is also about using e-commerce businesses for doing your day-to-day transactions and your regular online banking without any hassle on-the-go. Digital banking also means attractive cash-backs, discounts, and vouchers while transacting digitally. Cons of Digital Banking While the advantages outweigh the disadvantages, there are a few drawbacks involved in digital banking as well. You may not be very comfortable making large payments digitally. Also, you may tend to get lured into unnecessary online shopping just to use the cash back and vouchers that you get whiletransacting digitally.  But who considers shopping a drawback ever, right? Internet Banking You may say that online banking and internet banking are the same.  Yes, agreed!  However, there is a new facet of online banking that goes over and beyond the understanding and scope of online banking.  Open Banking!  Ever wonder what that means to you?  Through this concept, people can share their transaction data with third parties to boost competition in the financial market. Sounds interesting, right? Pros of Internet Banking It allows you to initiate and make payments directly from your account as a bank transfer. It also enable you to keep a check on your finances in a better way. Through open banking, you are not only transacting, but you are also streamlining your finances andmanaging it more effectively. With this, you can also get more customized services as per your spending behavior, leading to a more responsible and systematic lending process. Cons of Internet Banking This concept is relatively new, and that literally translates to many trial-and-error instances and a general mistrust related to its security and authenticity. People who are not adept at digital technology might not be able to reap its full benefits. Mobile Banking You all have used this at some time or the other. Every financial transaction you undertake using your Smartphone applications is termed as mobile banking. Apart from the commercial apps, your financial service provider would also have a mobile app with which you can transfer cash and make bill payments conveniently on your mobile. This is by far the most trending among all the banking types, and the onus is that you would only need your Smartphone and an internet connection for this kind of banking! Pros of Mobile Banking Mobile banking has a lot of scope in the virtual banking space and encompasses transactions through mobile wallets, digital payment modes, UPI transfers (like the BHIM app), etc. There are many mobile apps which offer you safe and secure transactions and much more, ‘anywhere – anytime’ with just a click. For example, SBI has SBI Yono, SBI Anywhere; ICICI Bank has iMobile. HDFC has HDFC Mobile and Pay Zapp. Kotak Mahindra’s Banking app is Kotak 811, while Axis Mobile provides Axis Mobile. We also have Payment Banks committed to the inclusion and service to the last

Financial Inclusion, FinTech, FinTech Trends, Open Banking

Digital Banking: The Talk of the Town

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Digital Banking is all about the transformation, where the consumer rather than the technology, is in the driver’s seat, and this MATTERS. It’s about digital money deposits, withdrawals and transfer of money from one account to another. It’s also about Account Management to loan management to paying all your bills digitally. Digital Banking essentially entails the leveraging of technology, where banking services are delivered over the internet, by involving high levels of process automation and web-based services. What Is Digital Banking? Digital banking, in simple words, is emulating 90% of the services provided by a conventional bank branch digitally, via a mobile app or through net banking in your computer browser. Welcome ‘Digital Banking’. Welcome to the virtual world of  banking services! Channels of Digital Banking Just as the word “virtual” is put up, you might wonder about the channels existent to avail such services. Let’s take a look at a few. Today, the main channels of digital banking are the Android and iOS apps of the respective banks and their browser-based websites. These apps are easily available in different app stores like Amazon Appstore, SlideME, Samsung Galaxy Apps, Mobile9 and so on. For example, SBI has SBI Yono, SBI Anywhere; ICICI Bank has iMobile. HDFC has HDFC Mobile and Pay Zapp. Kotak Mahindra’s Banking app is Kotak 811, while Axis Mobile provides Axis Mobile. We also have Payment Banks committed to the inclusion and service to the last mile like PayTM, Vodafone m Pesa, Airtel, Fino, Indian Post, Jio and so on. Babies on the block: Neo banks & Challenger banks In this race, we are also joined by Neo banks and Challenger banks (Read ‘Tomorrow’s Bank’)  like Revolut, N26, Monzo, Atom, Yolt, WeBank, Moven, Fidor, and MYBank to name a few. These banks are an important part of the emerging cohort of  FinTechs which puts customers at the center of everything. They are the banks which are reinventing the practices and processes associated with the traditional banking. A new type of digital bank (often working solely through a mobile app) which exists without branches. These are 100% digital banks. Neo banks don’t have the license and they rely on a partner bank to operate. On the other hand, Challenger banks have the full banking license and offer full suite of banking products. They compete independently and on equal terms with traditional banks or digitally manifested traditional banks.  They offer: Reduced costs Advanced features User friendly interfaces Customized reports Fast account openings ( between 3 to 10 minutes) International ‘Multi Currency’ Payments Instant ‘Multi Currency’ Payments 24/7 support Vaults and Expenses Analytics All these to ensure simple, secured and seamless transactions! Digital Banking Features Listing some of its many features: You can apply online for opening a savings or current account from your desktop or mobile. A manual call from a bank representative follows, who then completes verification from a remote branch.  OTP, video authentication and upload of scanned documents are proceeded with. This enables low cost zero balance account. 24/7 query solutions by chatbots are available in your app or net banking facility. Provides a highly secured, encrypted money transfer. Enables 24/7 money transfers at minimum or no extra fees, and displays their records whenever necessary. Electronic payment of bills to the pre-registered payees. Offering customized pre-approved all-purpose loans to the customer via a digital channel. Advantages of Banking Digitally Some of its many advantages will surely help you in forming a fair view of digital banking and its multi-faceted applications: Visiting a branch and spending precious work time is eliminated. Paying your bills online, keeping track of your transactions and tab on your spending has become easier. Customized approval for a loan via Artificial Intelligence using CIBIL in minutes for a customer. Avail discounts on your favorite activities right there from your banking app. Digital Banking provides with a virtual debit card, whenever you wish to generate one. Without a permanent CVV and duration of 24-48 hours, these are much safer. Real-time interbank payment is now the norm through IMPS while BHIM (Bharat Interface for Money) and UPI (United Payment Interface) enhance the interbank payment security. Multiple money applications can be synced together. Online budgeting was never so easy. Real-time figures, anytime, anywhere. Multiple sources of revenue for the bank. Cost of providing digital banking services is a fraction of branch bank services. Cons of Digital Banking Like any other novelty, digital banking also comes with its own set of disadvantages: Not possible without a stable internet connection. With scraping of Aadhaar for authentication, the model of digital verification that’s the cornerstone of digital banks is at risk. Chatbots and Robo advisors are not always the best option for the query. Unless they have the algorithm to learn from new questions, sometimes they loop back to the same answer for different queries. When products like FD, which are linked to the performance assessment of a bank employee, are done online, no particular back employee gets its credit. This leads to disinterest in that product in the bank employees of that branch where it’s registered. Few Dos and Don’ts in Digital Banking (Source: TribuneIndia.com) While banks and FinTechs take all precautions to ensure security, it’s always advisable to know the dos and don’ts of digital and online banking. Here are some of them: Always keep them password protected. Change your passwords and security settings regularly. Always visit your bank’s secure Internet Banking site directly. Always verify your domain name. Log out of your Internet Banking account the minute you complete transactions. Use dedicated/secured  WI-FI networks only. Always use, and update Antivirus software to keep your information safe. Safety tips while using a mobile app for banking transactions: Never save your mobile banking log-in and password on the phone. Never leave your handset unattended. Always lock your phone to prevent unauthorized use. Notify your bank as soon as your mobile is lost or stolen. Update the apps regularly. Keep an eye on your account balance and transaction history regularly. How FinTech

Financial Inclusion is the key
Agency Banking, Digital Financial Services Platform, Financial Inclusion, FinTech, FinTech Trends, Inclusive Banking, Open Banking, Rural Banking Solutions and Financial Inclusion

Financial Inclusion: What will it be like for years to come?

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Financial Inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society. – Sri Mulyani Indrawati, Indonesian economist, Minister of Finance of Indonesia since 2016 Economic growth of a country depends on factors like national income, per capita income & per capita consumption, technological advancement and even its political structure. An equilibrium between savings and consumptions is another factor which decides economic growth. Walter Bagehot, the famous classical economist, stated long ago that a strong financial system is crucial for economic growth and that the lending should be “quickly, freely and readily”. Translated to suit modern day scenario, to strengthen financial systems you need to encourage economic activities like Financial Inclusion, Digital Banking & Fintech. Let’s explore what and how Financial Inclusion can do and what it holds in the future for developing countries like India, Nepal, Bangladesh, and other African and Asian economies. Defining Financial Inclusion Financial inclusion can be broadly defined as the process of making financial services available to people, especially the weaker sections and low-income groups of the society. It includes the timely and adequate availability of a wide range of financial products and services like:   Bank accounts for saving & transactional purpose   Equity products   Insurance   Saving products   Loans For economic growth in developing countries, this aim is furthermore towards ensuring financial inclusion to the unbanked and the underprivileged community who are either unaware of or unable to affordable financial services and products. Penetration of financial services to all sections of society at a swift pace can be achieved through Digital Banking and FinTech. Goals to achieve Financial Inclusion are: To maximize the use of the latest technologies to transform the existing traditional financial or banking service models. To better the existing products or services of the financial sector. Financial Inclusion – Impacting Economies of Developing Countries Impact of Financial Inclusion, especially via Digital Banking or FinTech, can be exponential. A survey report by McKinsey Global Institute, which has been endorsed by the World Economic Forum also, states that there are more than 2 billion individuals and 200 million businesses (small, medium and micro) with no formal access to financial services like savings or credit. Those who have access are often required to pay heavy fees or charges. It goes on to state that if through Digital Banking, financial inclusion is ensured then the following impacts are expected:   GDPs of developing countries like, India, Ethiopia, Nigeria, and similar Asian economies will increase by 6%. The absolute value of such increase may reach a whopping $3.7trillion by 2025.   This incremental GDP thus created will generate an additional 95 million new jobs across industries.   Addition of 1.6 billion unbanked individuals will create a big pool of loan borrowers. Around $2.1 trillion of the loan amount to these individuals or small sized businesses is expected.   Governments can bring down tax collection leakages and gain up to $110 billion per year.   Governments stand to gain up to $400billion every year when they convert traditional accounts to digital accounts as they can now save 80-90% of cost on managing traditional accounts.   Increase in customer base will result in an incremental revenue generation of $4.2 trillion. All these predictions sound exciting, right? Read on to know some of the many concrete benefits of financial inclusion. Concrete Benefits of Financial Inclusion The few of the many,  main benefits of financial inclusion are:   Better Penetration of Services With financial inclusion in place, reaching the rural populace will be made possible providing them easy access to bank accounts, cash payments, cash receipts, and account statements. The authentication and fulfillment of services can be done by fingerprint and online receipts respectively.   Boosting Economic Growth The banking ecosystem will be strengthened as the cash economy will be reduced and the habit of saving will be inculcated in rural masses.   Direct Subsidy Transfer The government subsidies will be directly deposited to the bank accounts of beneficiaries. The funds will thus reach the intended recipients instead of middlemen forestalling leakages and corruption.   Encourages Entrepreneurship Financial inclusion will motivate formal banking and transparent credit availability which will release people from the clutches of unofficial money lenders. Adequate credit will prompt entrepreneur initiatives which will further enhance economic outputs and prosperity of the country. Financial Inclusion – Headway The progress of financial inclusion in the context of emerging economies like India has been substantial. The same has been highlighted in the Department of Financial Services GOI reports as:   35.5% of households availed banking services in 2001 which grew to 58.7% in 2011. This growth is significant in rural India –from 30.1% in 2001 to 54.4% in 2011.   The CRISIL- Inclusix which includes branch penetration, deposit penetration, and credit penetration was 35.4 in 2009 and has grown to 40.1 in 2011 to 58.0 in 2016.   IMF ‘Financial Access Survey 2018’ reported the following- Low-income countries like- Bangladesh, Myanmar, Guyana and many African countries have successfully used mobile payments for Financial Inclusion. These countries have more than twice the number of bank accounts per 1000 adults than the developed economies. What a sky-high improvement! Additionally, the IMF Financial Access Survey 2018 also reported an increase in the number of ATMs per 100,000 adults, branches of commercial banks per 100,000 adults, deposit and loan accounts with commercial banks per 1000 adults. Mobile money transactions number per 1000 adults was the most attention-gainer with a significant rise! Financial Inclusion does not mean only access to services but how those services are useful for the user. One of the parameters which are considered by various organizations while mapping FI is the safety and convenience of the financial service or product. A survey done by the World Bank Group, measuring the Financial Inclusion and Fintech revolution, reported that globally the percentage of adults using digital payments for receiving and making payments increased by 11% between 2014-2017. In developing countries, it is higher by 1% i.e. 12%.

Open Banking Enabling Financial Inclusion
Financial Inclusion, Open Banking, Open Banking API

How Open Banking can Help in Financial Inclusion

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Jonathan a villager who supplies vegetables to the branded supermarket in the city needs to submit monthly invoices [physical copy] to get the payment.He has a bank account but still has to maintain a physical copy of the number of vegetables supplied with the offer price. Recently he got to know about a software that could do the maths, generate an invoice and submit it to the concerned vendor. Vendor on receiving the invoice can release the payment directly to his bank account, that is accessible to Jonathan on the software/app via open banking. Welcome to the World of Open Banking that is enabling Financial Inclusion. How Open Banking can Enable Financial Inclusion Financial inclusion a concept that ensures all households and businesses, irrespective of income level, have access to and can efficiently use the suitable financial services they need to enhance their living. On the other hand, Open Banking initiative assures customers get a secure, agile and rich customer experience. The two initiatives are to benefit “THE CUSTOMER” then why not let them collaborate and access manifold advantages. The Problems Faced by Individuals/Businesses in rural/remote areas Access to Banks and Banking is tough and costly Even though individuals have a bank account, they are not in an operational state or dormant as operating the bank account is like traveling to a distant town. Lack of Financial Education High-interest rates for businesses who are in need of loans Lack of transparency leads to broker/dealers conning individuals and enterprises The absence of proper banking services limits their capability while collaborating with urban clients.   Could Open Banking Help in Solving the problems? Let’s pick each case and analyze if Open Banking could resolve these problems. Accessing Banks and avoiding DORMANT status Fintech, Banking technology and government initiatives are helping individuals to open a bank account with the help of technology. With banks now equipped with digital channels, opening a bank account could be done via Bank Agents or Agent Banking. These foot soldiers’ are authenticated by respective banks to be the middlemen between the bank and the customer. With the digitization and availability of smartphone, banking apps are installed on the phone and all the services availed by the customer have a track record providing transparency to the process. Open Banking helps users to access the bank account via authorized third-party apps, assist in bill payments, funds transfer thereby keeping the account in ACTIVE status. Access to Financial Literacy Thanks to innovative fintech models and open API that you can download an app on your mobile hook it to your bank account and learn about different terminologies like what is savings account? What interest rates mean? How are interest rates calculated? Etc. All of this could be accessed in your native languages, thanks again to open API and open data. Interest Rates Offered as per Regulatory Orders If an individual applies for a personal loan to the bank, with digitization in a place, he would be offered the interest rates as approved by the regulatory authority of the country. In cases where an individual is served by different banks, he/she can use a third party app using Open API model to compare which bank/fintech firms offer the lowest interest rate? Access to Growth and Opportunity The same example of Jonathan would be the most apt here as with Open API module, and Open Banking concept applied, Jonathan now could reach out to more urban clients without the need to leave his native place. Teknospire enabling Financial Inclusion with Open Banking Teknospire growth has been a structured one, each module evolving in a planned manner, approaching digitization one at a time. With an Open API design, the salary automation platform designed for civil servants of Zimbabwe was seamlessly connected to government payrolls and corporate ERPs. Next move was to offer a platform that helps the customer to pay bills, recharge and funds transfer and Bill Automation platform or micropayments digitization birthed. Next module was to help solopreneurs or banking agents and we launched Agency and Payment Module for individuals to access the digital platform and help in last mile banking. With a stable ecosystem, rich customer base, and tested platform the small and cooperative banks saw an advantage to extend their reach. With a lean banking layer or Agent Banking solution as a new addition to our offerings. Banks trusted us as the technology provider, and started collaborating with us where they get Merchant Banking, Agent Banking, Automatic Reconciliation, Micropayments as solutions. The beauty of all these modules has been the standalone working, enabled with Open API architecture. The Banks or NBFCs or microfinance firms could either sign in for all modules as one suite or could get one module of their choice. With Open API it helps firms to integrate with their systems smoothly.

Open Banking
Digital Banking, Financial Inclusion, FinTech Trends, Open Banking, Open Banking API

Open Banking: End of Card Payments?

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Any new technology or innovation always opens up the debate about the relevance of such models in the first place. When it comes to the Open Banking APIs (Application Programming Interfaces), the newest offering of FinTech, there are ongoing discussions on how it can bring about a revolutionary banking experience which is beneficial to the end users. The basic idea behind all these innovations remain to offer a better experience to consumers and leverage the choice of integrated systems that are widely available today. However, one of the most intriguing questions around the Open Banking model is about the potential it holds to change the payment ecosystem entirely. How Open Banking works? Taking one of its many applications, to provide assistance to you, so that you get the best of the deals available and can manage your finances efficiently, Open Banking will enable companies to give more accurate personal financial guidance, tailored to your particular circumstances and delivered securely and confidentially. To provide tailored advice, companies need to know how you use your account. At the moment, to get personal financial guidance, you have to hand over your confidential banking information to price comparison websites. Open Banking will use APIs (Application Programming Interfaces) to share customer information securely. Companies will be able to use open banking APIs to see your transaction information to tell you what you might save when considering the current account best suited to you. Or if you run a small business you could find the best deals for your business accounts and loans. No in-betweens, no interruptions, just pure and simple direct customer-to-service relations. Open Banking: End of Card Payments in Future? That’s certainly a possibility! Fundamentally, Open Banking is a concept that is all about the free flow of data. It allows third-party service providers to access financial information of the customers securely (with their consent) and in real time. An excellent example of this could be the banking payment mechanism which requires each transaction to be done manually using the payment cards. However, in an Open Banking platform, the API/app could download consumers’ transaction data directly from their accounts to process payments thus enabling cardless transactions. Although the concept is still in its nascent stage and will take some time to shape up, it will allow the third party organizations to initiate payments between the bank accounts of customers. What will probably happen, as a result, is this: Banks will no longer be required for processing the transactions/ card payments. An authorized third-party organization will be able to make payments on behalf of its customers. Customers won’t have to wait in long queues to make purchases using physical cards at stores. They will be able to easily make payments using digital wallets on their SmartPhones or Smart watches using emerging technologies such as Samsung Pay, Apple Pay, etc. Can Open Banking Change The Entire Payment Ecosystem? To be able to understand this significant shift towards cardless payments powered by Open Banking, it is important to have clarity on the working of the payment cards first. The payment card, essentially, is a token backed with a unique PIN or customer’s signature as authentication, which helps in identifying both the payer and the source to process any payment. Enter Open Banking into the picture! Open Banking replaces the payment card with the actual bank details of the customer without requiring any physical validation. By ensuring a robust authentication system in place (such as phone verification), the model can be easily used to process transactions directly. There are several benefits of saying ‘Bye-Bye’ to the cards and using Open Banking APIs to process payments. Benefits of Using Open Banking APIs for Transactions Over Cards a. Cost Saving This is perhaps one of the primary benefits of using Open Banking APIs to process payments instead of using cards. The open banking model is such that it requires no physical token leading to cost savings for card processors and savings on the infrastructure cost for managing expired/fraudulent cards. b. Ease of Setting Up The ease in setting up Open Banking products as compared to the card payment mode is another reason that makes the possibility of this phenomenal shift stronger. The open banking services are designed thoughtfully to offer solutions collaboratively with payment transfers such as allowing easy linking of the credit cards or bank details of the end-users. c. Convenience Convenience and ease of doing transactions is another attraction of the Open Banking model as a whole. Furthermore, storing bank details of customers is much easier as compared to the cumbersome credit card data, considering security & compliance as essential factors while making payment transactions. Instant purchase history, remote deactivation, and biometrics enabled virtual card provisioning are just a few of the features of cardless payments worth mentioning. Open APIs just make it easier for bank customers to transfer their bank accounts, manage payments, and perform transactions through third parties: both banks and non-banks. The concept creates new opportunities for Service Aggregators to offer better customer service from multiple service providers on a single platform. Does Open Banking Model Translate To the Cardless Payments? If you are still wondering about the Pros of moving to Cardless Payments, here is a list of some of the pros of this new way to pay for your everyday purchases using Open Banking API’s: Convenient as you don’t need your card for making payments and can do transactions without keying in a PIN or signing a receipt. Lessens the threat of hacking where the card might be scanned for stealing valuable information. Cardless payment means no reading of magnetic data strip. The verification token (OTP) is for single use only, making it perfectly safe for ‘Use and Forget’. Convenient and quick payments, which mean no hassle of queues and lining up. Cost and time-efficient without any worrying about remembering multiple cards and account details. Taking Stock of Future Possibilities As rightly said by Kristin Moyer, Vice President of Research and Distinguished Analyst at Gartner and I quote, “Open

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Digital Banking, Financial Inclusion, FinTech, Open Banking, Open Banking API

Open Banking: Who will really get benefitted?

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Banking, as a domain, has always been a competitive one. To keep up with the pace of the dynamic nature of this sector, banks & financial institutions are gradually making the shift to experiment with newer technologies, like Open Banking and innovative concepts like FinTech, designed specifically for the banking sector. The basic idea behind all these innovations remain to offer a better experience to consumers and leverage the choice of integrated systems that are widely available today. Are you OPEN to Open Banking? The impact of technology in making our lives better and smoother can’t be overemphasized enough. FinTech (an excellent combination of finance and technology!) is one such area making the traditional banking system seem redundant with each passing day. The rise of Fintech sector has been exponential in the last few years with Fintech adoption seeing a sharp rise globally from 16% in 2015 to 33% in 2017 on an average. Open Banking API (Exclusively covered as Open Banking API: A Journey, 1st part of this series of 3) is the newest offering of FinTech that holds immense potential to bring about a transformational banking experience to its end users. However, before making the switch to Open Banking, it is essential to understand what the concept is trying to achieve and who will it really benefit? So What’s the Buzz called ‘Open Banking’ All About? With Open Banking, banks are moving to Agile technologies, building strong partner networks, and creating robust mobile platforms which cater to consumer’s needs, thus enabling direct financial transactions between customers and businesses and making cross-platform payments a reality. It works as a systematically designed collaborative model. Here the customer’s banking and other financial information/data is shared to trusted third parties (with the customers’ consent, of course!) through APIs with the aim of offering enhanced capabilities to the users. Thus, Open Banking is a financial services term as part of the financial technology that refers to: The use of Open APIs that enable third-party developers to build applications and services around the financial institution. Greater financial transparency options for account holders ranging from Open Data to private data. The use of Open Source technology to achieve the above. In short, “Open Banking is the possibility of creating new digital business and ecosystems through APIs provided by the banks. This allows customers: To have a greater control over their data Have a better experience in a secure, agile, and future-proof method To generate new revenue streams, and to create a long-term sustainable service model for the industry as a whole. Who will ‘Open Banking’ Really Benefit? The benefits of an Open Banking model aren’t just limited to consumers but extend to service providers as well. It benefits, one and all, associated with it. Benefitting Consumers Among the many benefits of Open Banking to consumers, the most important include:Giving the Benefit of Choice to Customers As a service provider, banks generally offer limited options and the same services to all their customers. Open banking, on the other hand,  gives the benefit of choice to customers as they now have the freedom to select from multiple service providers available. It also empowers customers to take charge of their finances and make informed decisions to manage their accounts. Easing Payments with Smart Devices With Open Banking APIs, customers won’t have to wait in long queues to make purchases using physical wallets at stores. The concept will allow emerging technology applications such as Google Pay, Samsung Pay, Apple Pay, PayTM etc. to make payments using digital wallets using your Smartphone or smartwatch. Ease of Remittance and Currency Exchange Increased number of migrants across the globe for better economic opportunities means an increased amount of money to be sent back to their families. Banks have always found international money transfer and remittances to be a painful and expensive process.Instead of paying a large transfer fee to the ‘money transfer businesses’ or facing the lack of proper setup, especially in rural areas, FinTech companies like NDASENDA, have made this entire process extremely simple, smooth, less expensive, and much faster. Thanks to Open API, the money can be transferred, services can be bought and bills can be paid seamlessly by using one single mobile App at the comfort of your home. Various service providers such as We Swap, World Remit, mPesa etc. are offering ‘currency exchange services’, by using Open Banking, in a very secure and seamless way to transfer even minuscule amounts of money overseas. Customized Product Offerings Open banking holds the potential to offer customized and relevant product & service options to the consumers which most banking apps fail to do. Open banking APIs introduce the concept of service personalization in banking to benefit customers immensely. Customers can now have access to multiple accounts in one place. The customers will be able to enjoy the best deals available with greater transparency. An opportunity is here to see your current financial position in a single application on your Smartphone. It is just a matter of ‘single click’. All the financial data at one place gives the consumer the leverage to take quick credit decisions and avail the best deals possible. Open to better offers by credit providers and instant credit and remittance of the same. With all the accounts linked together by an app and available on a single platform, the consumer is ‘all-powerful’ to make a choice in how to pay. This will also bring in some innovative offers by the banks and the financial institutions to make new customers and retain the old ones. It’s raining Profits! Benefitting Banks and Financial Institutions Collaborative Advantage Open Banking gives an opportunity for banks to stay ahead of the competition by letting them explore data-sharing agreements with fintech and other non-financial service institutions. Allows Banks to Be Futuristic The model allows banks to be futuristic by letting them understand both data privacy mandates that exist as well as the likely changes they need to adapt for a better customer experience. Thus making decision-making foresighted and insightful.

FinTech, FinTech Trends, Open Banking, Open Banking API

Open Banking API: A Journey

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Data sharing and Big Data have become the trending topics in the financial world of late. With the advent of many Fintech start-ups, traditional banks are undergoing a major shift. They, now, are looking forward to modifying the way they operate, to survive the cut-throat competition from their peers. This is when the idea of Open Banking started doing rounds in the banking arena. What Is Open Banking API? In short, it is an Outbound Trade – Stretching beyond the 4 walls of the bank for better services to the customers. The concept relies on connecting computing systems through a common digital language shared among them with the aid of an Application Program Interface (API). Open Banking is a financial services term as part of the financial technology that refers to: The use of Open APIs that enable third-party developers to build applications and services around the financial institution. Greater financial transparency options for account holders ranging from Open Data to private data. The use of open source technology to achieve the above. Thus, “Open Banking is the possibility of creating new digital business and ecosystems through APIs provided by the banks.” This would increase the level of transparency with respect to data accessibility for end customers. It would also help Fintech firms and other third parties to develop and build financial applications. This, in turn, would help banks and other financial institutions to look beyond their businesses and make innovatory advancement in services for the end users. How Did ‘Open Banking’ Concept Take Flight? Open banking was developed based on an idea of Open Innovation coined by Henry Chesbrough who was the head of Open Innovation, Haas School of Business. He came up with the idea that an information or knowledge doesn’t belong to a singular entity and needs to be shared. This concept was later taken up by the banking sector as ‘Open Banking’ to innovate the way they operate and give a holistic banking experience to its customers. Data Sharing – The Journey so Far Until recent times, your financial history was closely guarded and protected by your bank. Your data could only be accessed when you use your debit or credit card for certain transactions through the payment processors. Hence unless you are officially validated, you can’t access an individual’s banking history. However, your banking data still found a way to get to other companies who could use it for their business promotion. How was that even possible, you may ask! Screen Scraping The only way one could get hold of your financial history was through screen scraping.  This was possible by getting your login credentials and using that to access your account for the required data. This was not only unsafe and risky but also highly inconvenient as it gives the said company access to your most confidential information (that could also be misused) and might even lead to frequent blocking of your account (in case of suspicious activity). Hence this needed fixing! The most important part here is the need to control the data that you are willing to share and also the power to revoke it whenever you feel the need to. Open Banking API to the Rescue! To give a control over their data to the customers, banking institutions adopted a newer and updated technology which shared the banking data between the third parties through APIs. This is a sustainable model which is not only reliable but also secure. However, on the flip-side, such advancements may lead to conflicts and need strict governance and policies to control the technicalities associated with such an arrangement. Also, such data sharing systems need high-grade security controls and infrastructural barriers to contain the data privacy. The All-New PSD2 Standards for Data Security! The revised Payment Services Directive or the PSD2 is an upgrade of the existing directive to regulate and control the payment services and service providers in the EU. The main aim for this revision was to minimize conflicts between two or more third parties involved in data sharing and to ensure consumer protection and data privacy. In fact ‘PSD2 + Open Banking and APIs’ is considered as an Engine for Innovation and meaningful change. This directive is said to be of monumental importance in the legacy of data sharing in the retail banking sector. It would control the way the APIs behave and are controlled. They would dictate how third parties connect, share information and the scope of information that can be accessed. By this, the Third Party Providers (TPPs) registered across the participating states can communicate with any bank provided they clear the SCA (Strong Customer Authentication) norms and the data exchange also conforms with the SCA norms. This would mean that every third party involved in data sharing would have to go through diligent scrutiny to verify their authenticity. Open Banking: Inbound trade @ Teknospire Well, it’s not only about the Outbound Trade, Open Banking is also about Inbound Trade. It is also about trading the right products and service features seamlessly from Third Party Partners (TPPs) into their own offerings. Importing the full breadth of these products and features enhances personalized customer experience, build customer loyalty and it also lowers bank’s operational costs. With Open Banking, by adding ‘Banking and Non-Banking’ products and features, banks are able to extend their services beyond the ‘traditional zone’ and broaden their approach beyond financial services to complement further as ‘Complete Customer Banking Journey’. Teknospire, a FinTech Company, has helped multiple banks and financial institutions in multiple countries in Africa (Zimbabwe, Mozambique, Zambia, South-Africa), India, Nepal, and Bangladesh. The core mission and vision are to serve the Bottom 2 billion population, who are not on the digital payments platforms yet. Teknospire enables the banks / financial institutions to build a digital ecosystem with Omni channels interface, along with all possible digital services dispensation at the last mile. The services can be disbursed via B2C interfaces or through the assisted channels (digital touch points/agent network). To be able to digitally evolve the banks

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