Technical Updates

Technical Updates

BEST PRACTICES TO OPEN API DESIGN

API or Application Programming Interface, when I first heard of this term, I thought it to be some form of magical code that helps in fewer bugs and improves quality. However, after exploring, I got to know how deeply I was wrong.  API’s that are part of modern mobile and web application allows third-party apps to interact with your application. A well-designed API would help in providing a stable interface that aids to your API’s consumers better understand, improved developer experience,use and integrate with them while helping you maintain it adequately. But, what exactly means by a Good API? Our post would narrate a few of the best practices for designing an API. Lets first dive into few of the terminologies[indeed you might be aware] but to be on the same page – Terminologies Resource The fundamental unit of API. Resources is an object or a representation of something; it has data and a set of methods associated with it. Example – Company, School, Employees are the resources, while add, update, delete are the method to be performed on this resource. Collections A set of resources. Example – a companies is a collection of company resources URL [Uniform Resource Locator] As the name suggests it is an indication of a path using which the resource could be located and some actions could be performed on it. Best Practices of API Design Describe Resource as Nouns Resource the fundamental unit of an API, should always be described as a Noun. For example, we are trying to build an API for Society and Residents. So, Resources would be, [ Ideally, the resource should always be PLURAL] Societies Residents Describe HTTP Methods as Verbs and URL’s as sentences The paths should have the plural form of resources and the HTTP method used should describe the kind of action to be performed on the particular resource. As URL just talks about the noun, how do we tell the server about the actions that are to be performed on APIs,i.e., update, add or delete? That’s where HTTP methods come into the picture, have a look at different ways – Method Description GET Used to recover a representation of a resource. POST Used to form new resources and sub-resources PUT Used to update existing resources PATCH Used to update existing resources DELETE Used to delete existing resources Ideally, the resource should always be PLURAL, and as an API consumer, if someone is keen in accessing just one instance of a resource, you can try like this in the URL – method GET path /companies should get the list of all companies method GET path /companies/43 should get the detail of company 43 method DELETE path /companies/43 should delete company 43 And in cases where a resource is under a resource, so say Students under School then few of the examples of API endpoint would be GET /schools/5/students should get the list of all students from school 5 GET /schools/8/students/45 should get the details of student 45, which belongs to school 8 DELETE /schools/9/students/54 should delete students 54, which belongs to school 9 POST /schools should create a new school and return the details of the new school created Providing Meaningful feedback to Developer When an API consumer sends a request to the server via an API, the client should receive an acknowledgment whether it succeeded, failed or incorrect request was received. A bunch of standardized HTTP codes is available that helps in debugging a particular scenario. Make sure server is coded appropriately to return the right status code. Status Code Explanation 200 [Ok] The standard HTTP response narrating success for GET, PUT or POST 201 [Created] Used whenever a new instance is created. E.g., on creating a new instance, using POST method, should always return 201 status code. 204 [No Content] It narrates about a request that is successfully processed but has not returned any content. Eg: DELETE /school/54/students/2 This would delete student 2 of school 54 but as it does not have any data to return it would not return anything. 304 [Not Modified] When the processed query result is already present in the API consumers cache, it does not need to be reprocessed. 400 [Bad Request] When the call made to the server is not a valid query. 401 [Unauthorized] When the credentials do not match. Example – When a teacher record is being accessed by a student credentials 403 [Forbidden] It narrates that the query sent is valid, and the client is a valid user, but the client has restricted access to the page/resource for any reason. E.g.,if you are trying to edit a record but the credentials you are using is just having read permissions. 404 [Not Found] It indicates when the requested data is no longer existing. 410 [Gone] It indicates the requested data has been moved and not to be found at this path. 500 [Internal Server Error] It narrates that the query is valid, but the server is confused,and the server is asked for some additional information or to meet some unexpected condition. 503 [Service Unavailable] It narrates that the server is unavailable/down to receive and process the request. Example – when a website is under scheduled maintenance. Focus on Authorization and Authentication Each API call made to the server precedes with valid authorization and authentication of the API consumer. Securing the code and data is of utmost importance while designing an API. Just for example when a banking app is interacting with the HR payroll, they would need READ permissions and not necessarily EDIT/AMEND permissions. So such type of validations need to dictate while the user is redirecting to the third party app. Handling Complexity – searching, sorting and filtering Each API call returns a set of data to the API consumer, how the client searches data is not in your hands, but the way you can produce results is in yours. Hence handling complex search queries with filters and sorts need to be handled carefully. You may

Decentralized Network
Technical Updates

NEED OF THE HOUR – ADOPTION TO A DECENTRALIZED DISTRIBUTED NETWORK?

We are seeing technology-driven networks replacing bureaucratically-driven hierarchies,” says VC and futurist Fred Wilson. It seems Big Data buzz has ended, the need of the hour is not on how to gather data but “how to protect it”? How to stop it from being hacked or access by unauthorized third parties. Millennials are maturing not to fall for 50$ free signup; they are looking for ways to still be connected in the virtual world but own their data. While Cloud computing offers benefits like Cost reduction, Scalability, flexibility one of the concern is Data Sovereignty. On similar lines, Open API that is the future of low-cost banking raises concern to customers on how to know who all are using your data? Once a customer authorizes a particular third-party to access their data, how can they be assured it stays with them and is not shared with other third parties? Do you think a decentralized distributed network could be an answer to Data Ownership? Let’s explore… The Need For Decentralization Since ages, we have been governed by centralized authorities and worked with intermediaries. Have you ever fathomed the idea of living without a central power? Be it your family with a head of family or office with a boss or a movement with a leader? On the contrary, we have an inbuilt trait of working with “mutual consensus.” If you do not believe me, imagine yourself driving/walking on the road – while driving you to make sure to follow the rules but there is a mutual trust with fellow drivers that they would follow the rules. A “trust” exists between you and drivers around you. Collaboration is built where all drivers are at the same level – be it if you drive BMW or Fiat. The roads are “open” no barriers no censorship could be applied. Working in a mutually, inclusive environment could help in building a transparent ecosystem. An infrastructure that is trustworthy, robust, dependable, open to development, and accessible from anywhere anytime. What is Decentralized and Distributed Network?   Distributed Network Decentralized Network No Data Storage, all nodes provide/exchange information No Central Storage All nodes are equal and have equal rights Few servers provide/exchange information with nodes/clients. All servers are connected to each other   A centralized network means it is controlled or run by a single company or individual just for example Facebook or Amazon. On the contrary, a decentralized network is operated by actors/individuals that no one has full control or ability to shut down. Or as Merriam-Webster defines decentralization as “the process of redistributing or dispersing functions, powers, people or things away from a central location or authority.” A Distributed network, on the other hand, as Techopedia says – A distributed network is a type of computer network that is spread over different networks.This provides a single data communication network, which can be managed jointly or separately by each network. While many people think distributed as a synonym to Blockchain technology, it’s partially correct. The blockchain is one of the technologies that use the concept of decentralization and distributed network. Now let’s look at the type of decentralization that exists – Types of Decentralization While every sector has categories, we are specifically talking about software decentralization-   Software Decentralization Definition Example Architectural Decentralization The conceptis applied to the machines or devices used in the network. Blockchain Political Decentralization The concept is applied to the governance, i.e., whether a set of individuals controls the network. Blockchain Logical Decentralization The concept is applied to the data structure or interfaces of the network. BitTorrent or Language like English   So, for a technology to be DECENTRALIZED and DISTRIBUTED it needs to be – Open and Transparent Accessible from anywhere anytime Trustworthy and secured No Single point of failure or resilient Lower Latency Scalability Can a network be both Distributed and Decentralized? Certainly Yes and a classic example is Bitcoin. Bitcoin a cryptocurrency is distributed because it is a timestamped public ledger and resides on multiple computers. However, it is also decentralized because if one node fails it could still operate,i.e.,any network that uses a blockchain alongside other peer-to-peer tools can be distributed and decentralized. Why Open API and Cloud Computing Need integration with Distributed and Decentralized Network Quite recently when Indian government was evaluating the need to force Chinese phone manufacturers to set up servers in India, it was a concern of Data breach or Data leaks. In another move,Apple Inc will store the keys for Chinese iCloud accounts in China itself. On the other hand, while Open Data/Open API helps in availing new business and product models, it also raises concerns about data privacy and data ownership. Integration of Open API or Cloud computing with Distributed and Decentralized database can help in resolving these issues and would be cost-effective. OpenAPI/PSD2 – Gateway to Decentralized and Distributed Network If you want your car to perform on the road, invest in road infrastructure.Road plays a vital role in improving the performance of the car. Similarly creating a decentralized, distributed network and offering Open APIs to perform would enhance the performance of the solutions/products provided by a firm. Just for example if you are keen to know your balance of bitcoin and transaction details or want to integrate it in your financial portfolio app, all you need to do is look for projects that offer Open APIs like BlockCypher or Bitgo or Blocktrail.  Build your JSON RPC that could support multiple API calls and get the data. Blockchain info also provides open API to get exchange data from across the bitcoin market, blockchain wallet or charts and statistics to analyze the spending’s. Quite recently Mastercard launched their Blockchain solutions with an offering of Open API for businesses to connect and communicate. The Blockchain solution that addresses the cross-border payments offers flexibility and scalability with open API that could be used by third parties to integrate with their solutions. Another artistic use case of distributed, decentralized network integrated with Open API is

OPEN BANKING
Technical Updates

OPEN BANKING – EXAMPLES, USE CASES, IMPLEMENTATION, OPPORTUNITIES

In olden days or even a decade back Banking as a service [BaaS] was only taken by trusted entities – BANKS. However, with the technology innovation Banks, Fintech and GAFA [Google, Apple, Facebook, and Amazon] are tapping onto the opportunity open up by the PSD2 directive to offer BaaS. While customers are still skeptical about data sharing and data security, the new segment of market players vouches on How Open Banking would change the face of Banking forever? If you are new to Open Banking – Please read our post Everything You Need To Know About – Openbanking, Openapi, Opendata to help you get started But are the firms and customer-ready? Well, some of the interesting surveys will help us in analyzing that. While Accenture survey highlights Nearly 20% Of Banks Have Already Invested In Open Banking-related Initiatives—77% Will Do So By 2019 – Accenture Ipsos survey talks about the consumer’s readiness –  63% of UK respondents [read it as Bank account Holders] see the forthcoming developments [read it as PSD2 directive] as ‘unique’ – Ipsos So what kind of potential does Open Banking/PSD2 talks about? What kind of services evolves with Open Banking? Would customer benefit from Open Banking? Would data sharing be at the cost of data security? Let’s explore to find out – Possible Examples of Open Banking OR Use Cases of Open Banking Our ABC of Open Banking infographic covers all the terminologies of Open Banking. Make sure to explore it here. Cash Management System/Money Management System How many bank accounts does a person have? An individual may start with a savings account during his school/college life, that then gets turned into a salary account. Pursuing higher education with education loan means a new bank account with the concerned bank, that could also extend to home loan account, car loan account and even personal loan account. But how do you keep track of the credit/debit of all of these accounts? If all of the bank accounts build an open API that let a third party read the transactions, all of this data could be exported into a mobile app. Taking a step further if the individual grants permission to the third party, they could also transfer funds to other accounts. Integration with Artificial Intelligence [AI] apps Would you like to turn any of your screens into a bank? Be it when you visit a branch that has an LED display or from your tablet/laptop? Coupling Open API and interactive screen with the help of voice and gestures could formulate a digital environment that is similar to visiting a bank branch. Paperless Cheque Deposits A possibility of scanning the cheque via an app or reader and converting them instantaneously into Digital Cheque. Sending it to the concerned person, where the person deposits it in a virtual drop box and processing is done. Cash Access Every time bank provides us with debit or credit card, they charge it. Then there is an issue always to carry it and most importantly stand in long queues at ATM to get cash. Could our mobile phone or watch be turned into a debit or credit card? An app or software when accessed ask for your pin and loads the card of your choice, you either directly use it at any of the shops or get cash dispersed from ATM by merely tapping it. Integration with IoTs With voice assisted payments adopted in real life, it would be fascinating to see Siri or Alexa making payments to DTH, electricity bills or at the weekly grocery store. While cables, routers, kitchen appliances and many other devices are getting smarter each day, Open API could let them communicate with each other, thereby offering better connectivity and choices to the consumer. I would be thrilled if my printer senses its cartridges is finished, browse the internet and orders the best deal available. Personal Finance Advisor or Chatbots Open API could help you balance your financial portfolio and even could be your financial advisor. Software powered by natural language processing offers you to communicate with your advisor via a mobile app. It would not only help in analyzing your spending’s and investments but also answer all your queries. Who says – hiring a personal advisor is just for wealthy! FX Conversion The physical boundaries of countries are shrinking, individuals now communicate, explore, shop and work globally. How could then we restrict ourselves to one currency? We need quick money USD and in EUR and may be in INR and SGD, and all this needs to be done now. Open API could be a savior in such situation. While a free, simple, and lightweight API could help in providing current and historical foreign exchange rates, based on users permission, it could even get the best conversion rates. With Open API the possibilities are limitless, I might not be surprised if my umbrella has a built-in the weather app and warns me of probable rains in the coming week? Or even if it has been damaged, suggest me the best possible deal before the rainy season starts. Open API lets the network to expand and communicate with each other, each device like to share, it is helping us to create a Social network of machines. If you are keen to know whether OpenBanking is comforting to customer or not – read our post Open Banking – Is It Comforting To Customers Or Not? Open Banking Opportunities Banks have been trusted entity by customers for years because of regulation and that helped them earn a good and loyal customer base. On the other hand fintech the new entity that has captured eyeballs but is yet to earn the trust, and government and fintech start-ups are working closely to make it happen. PSD2 brings firms that want to offer account information or payment initiation services under the regulatory umbrella. While Banks can use this opportunity to offer new services to its customer, fintech start-ups could collaborate and help banks and financial

Finance, Financial Inclusion, FinTech, TechFin, Technical Updates

TechFin or FinTech

Sometimes you need to look at things….from another point of view. This is exactly what you need to do when you have to decide between Fintech and TechFin as there is a very thin line which differentiates them from each other. It’s your pick between the innovator v/s the reigning. While, the Innovator is ‘Taking process to technology’, coined as term FinTech, the Incumbent is ‘Taking technology to process’, coined as term TechFin.   So, What’s so technical about FinTech and TechFin? Technically speaking, Fintech is a space where financial services are delivered through a better user experience using cutting edge technology. TechFin on the other hand is where a firm that has been delivering technology solutions, launches a new way to deliver Financial services. You need to comprehend  both to decide on your pick. The technology and finance are common between the two; the difference lays in the way you apply it.   This difference is much higher than just spelling them or writing them in two different ways: Fin-Tech or Tech-Fin   TechFin When the banks plan on utilizing technology to improvise or enhance existing financial processes and operations, their focus remains on how to use technology to bring superior efficiency and productivity from existing financial processes and operations. The same is done with the objective to magnify the existing experience and capabilities in financial services domain. The aspirations of transformation or disrupting the process are eliminated. The reason behind TechFin companies not looking towards disruption is the fact that their customers demand- Safety Reliability Stability Legacy No risk and minimal change Therefore, large retail commercial banks seldom make changes in their mobile apps, as a slight change in the app invites customer complaints and inconvenience. For their customer, change implies exposure to risk and any change is interpreted as offensive. Such banks avoid changes to skip the negative publicity from these incidents.         TechFin companies, therefore, stick to what Jack Ma coined them as – “Rebuilding system with technology”.         Jack Ma during the China Conference organized by the South China Morning Post emphasized and I quote, “Fintech takes the original financial system and improves its technology, TechFin is to rebuild the system with technology. What we want to do is to solve the problem of a lack of inclusiveness.” The best example of a TechFin company Ant Financial Services Group, an Alibaba affiliate company, in June 2017, launched “Fortune Accounts”, a new feature on its wealth management app- Ant Fortune. The platform which allows consumers to buy a huge range of investment products will now allow third-party financial institutions to set up an “Account Page” of their own. By doing so, they will directly reach consumers without the traditional way of competing on online supermarket format, and help customers get financial advice or promote their products. This is a classic case where the process of investing in financial products has been improvised using technology, helping financial institutions receive backend data of users to receive traffic on their company’s stores. Firms like Amazon (US), Apple (US), Facebook (US), Google (US), Microsoft (US), Samsung (Korea), Baidu and Tencent (China), Vodafone (UK, India and Africa), and Uber (US) all offer various forms of payment, lending and/or other financial services. The entry of these firms signals a shift from financial intermediary (FinTech) to data intermediary (TechFin). FinTech  FinTech, on the other hand, takes the financial process and transforms it utilizing technology to make its mark. Generally, start-ups use FinTech to create Apps, APIs, and analytics, grab diversity, to disrupt and evolve. For example, the existing products or services like – loans, savings, investments, payments or trading are redefined to profitability, speed, and prudence. They prefer transforming the process using technology, usually eliminating the middleman and intermediaries.     Taking the example of traditional and P2P lending, traditional lending will allow an investor to deposit funds and earn interest. A borrower can borrow money from banks, following a cumbersome documentation and approval process, which takes time and at times may face rejections. The approvals are based on pre-historic financial transactions.           A FinTech P2P platform allows the lender to directly lend money to the borrower and earn interest, while the borrower uses an online platform to receive instant approval and funds.   FinTech Vs TechFin FinTechs take the risk and have been welcomed by millennial and customers who are ready to explore and experience innovation. People who are ‘on the go’ and use the mobile platform embrace transformation. FinTechs are ready to disrupt existing processes and financial services ecosystems with use of emerging technology. The limitations of FinTechs are different as compared to TechFins. Unlike TechFins, who have the limitation of huge credit risk, FinTechs face the challenge of regulators. The global economic ecosystem has still not completely accepted the way FinTechs work. There are rules and regulations which they need to adhere to remain operational. Another most critical hazard which they are greatly exposed to is Safety. The chances of privacy risk and hacking always haunt them. To summarize the difference between the two, checkpoints are: TechFin Process first approach. The incumbent, usually large banks participate. Improvise the existing process Do not take the risk Customers prefer legacy and trust Enhance the proficiency of staff for the betterment of process using technology Huge credit risks   FinTech Technology first is the approach. Start-ups, usually participate Follow transformation in the process Do not hesitate in disrupting the existing process. Youngsters, millennial and professionals appreciate them. Eliminate the middleman for faster and superior experience. Limitations of privacy, safety, and regulators.   Closure There is no better way to summarize, the difference between the two, by quoting Jack Ma, the father who coined the term TechFin: “There are two big opportunities in the future financial industry. One is online banking, where all the financial institutions go online; the other is internet finance, which is purely led by outsiders.”   Though a lot of

banking-is-necessary-banks-are-not
Financial Inclusion, FinTech, FinTech Trends, Open Banking, Technical Updates

Open Banking – Is it comforting to customers or not?

Big changes are on the horizon. You may have seen or heard about Open Banking, PSD2, and CMA in the news over the past year. Or, you may be hearing about them for the first time right now. Fortunately, Open Banking is right here and it is going to stay. In the banking sector, the concept of “open” can seem contradictory. Banks traditionally have a “duty of care” to protect their assets rigorously, as required by regulators and customers. Traditional Banking is been the same for…just about forever. For the most part, the power dynamic between banks and their customers has stayed about the same. Whether you bank in person, over the phone, online or mobile, the relationship with banks hasn’t changed much alongside the technological advancements. You set up an account with your bank, they facilitate the ebb and flow of your money, and, as a result, they hold the data around that money. All of the histories around your purchases, loans, payments, debits, and credits rests with them. Now banking is about to undergo a major shift. With the ‘Open Banking’, (the outcome of the beautiful blending of Financial and Technology sectors), all of that is going to change. With…… Improving overall customer experience by engaging them and to attend to customer needs in a secure, agile, and future-proof method. New Revenue streams by increasing digital revenue from new channels. As rightly said by Kristin Moyer, Vice President of Research and Distinguished Analyst at Gartner and I quote……“Open Banking is about making everything for sale. It provides a new way to increase digital revenue for the banks that are willing to think differently about what it means to be a bank.” Sustainable service model for underserved markets. ………… open banking is definitely a welcoming change. BANKING: THEN & NOW In 1872, when first wire transfer happened nobody would have imagined how the entire scenario will change from wire transfer to ATM’s in the 1960s to telephone banking in 1980s.  1997 saw the rise of internet banking which paved the way to contactless payment in 2007 and mobile banking in 2010, but still, the traditional ways of banking continued. But NOW  Human-Centered Fintech is making way for personalization and open banking. What is Open banking? Open Banking is a financial services term as part of 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. How does Open Banking work? 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. Source: by Wikimedia Commons 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 at its best. HOW BIG IS OPEN BANKING?? ….. well the picture says it all Source: https://goo.gl/VmjhSy WHO’S WHO ……ZOOMING ON OPEN BANKING Source: https://goo.gl/VmjhSy So, how does it help, and why does it matter to you? To answer these questions, let’s take a look at what open-banking brings to the digital market and on your FinTech plate.                                                      Source: europa Transparency of Data Companies connect with third-party APIs by developing apps which provide financial services for their customers and connect with banking sectors/firms for access to customer data and personal info. This transparency of data leads to the establishment of improved customer relations. Through open-banking services, you’ll be able to invest in financial products manage your money get detailed financial statements generated pay from one platform to the other (like how you use Paytm for paying your BESCOM bills or the Simpl/LazyPay wallet to pay for other services). Think open-banking, think big-picture. No back and forth dialogs, no payment hassles or dealings with banks. Direct peer-to-peer payments and transactions between customers and businesses. Period. Image Source: Medium.com Safety Benefits If safety wasn’t a priority, we’d all be worried. Open-banking doesn’t compromise on security and leverages Fintech services to adapt to growing security needs. With Agile technologies operating on robust platforms, open-banking is built on a platform of secure systems which means your personal data doesn’t leak to anonymous parties or get hijacked. Banks share personal data through APIs and intermediaries and connects developers with payment networks like VISA and MasterCard for the seamless exchange of money balances and financial information. Cybersecurity measures and anti-intrusion technologies come integrated with APIs, thus building upon layers of transactional security. Image Source: Zanders.EU Consumer-Centric Approach At the end of the day, we love our services and open-banking matches consumer expectations. From Uber’s APIs integrating Google Maps and payment gateways to companies using Big Data, Analytics, and FinTech services to leverage creative products and services, open-banking gives users total control over their financial exchanges. Customer engagement as is (left) and after PSD2 (right) Source: europa Data sharing in financial services tend to be the risk- and permission-based, with required audit trails, and subject to regulation and risk management. If done well, however, it can deliver increased security through enhanced know-your-customer capabilities, identity validation, and fraud detection. The current

FinTech Products Market Survey, Technical Updates

Technology Needs of a Payment Bank and Small Finance Banks, Fintech firms and Their Banking Solutions

Banks and Technology In Part One of our Bank and Technology series we spoke about the technologies needed by Public Sector Banks, Private Sector Banks, and Foreign Banks and in Part two we narrated technologies desirable by Regional Rural Banks [RRB’s] and Cooperative Banks [ State and Urban Cooperative Banks]. Now in the final and concluding part of our Bank and Technology series would talk about the technology needs of Payment Banks and Small Finance Banks. We would also discuss the fintech firms in India, their product offerings and the banks they are helping to enable Digital Banking for their customers. Technologies Needed by Payment Banks Although the Payments Banks in India are newly launched[in principle in 2015 and first payment bank was Airtel started in 2016] and the need of the hour, yet they need to adapt to some of the latest technologies to stand tall against their competitors. Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Payment Banks 1.Airtel Payment Bank 2. Paytm Payment Bank 3. Vodafone M-Pesa They came into existence to serve – 1. Small businesses 2.Unorganized sector 3.Low-income households 4.Farmers and migrant workforce 1. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe. 2. e-KYC acceptance Reducing carbon footprints would help the mother earth but also would speed up the process of essential services like Opening Account or Loan Reimbursements 3. Use of Biometrics Biometrics would help in reducing fraud and identifying potential security threats. 4. Digital Wallets/e-wallets Paying for monthly bills or shopping online, e-wallets could be handy for quick money needs to the customer. Technologies Needed by Small Finance Banks Small Finance banks that were launched to support the small business units, farmers and most importantly the unorganized sector of the economy for their empowerment and financial inclusion. Some of the essential technologies that could help Small Finance banks in attaching these individuals to Bank System are – Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Small Finance Banks 1.Janalakshmi Small Finance Bank 2.Capital Lab Small Finance Bank 3.Disha Small Finance Bank They are not allowed to lend but would eagerly accept the deposits. Hence the target audience for them is 1.Small farmers 2.Unorganised workers 3.Small business units 1. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe 2. e-KYC acceptance Reducing carbon footprints would help the mother earth but also would speed up the process of essential services like Opening Account or Loan Reimbursements 3. Use of Biometrics Biometrics would assist in reducing fraud and identifying potential security threats 4. Agent Banking Solutions With remote areas/rural areas not having enough bank branches services like Agent Banking, ATM, PoS or e-corners could add to get more customer satisfaction and business to banks FinTech Firms Helping Different Banks as Technology Partners We had a glimpse of different banks and their technology needs, let’s also look at the fintech firms in India that are trying to build a comprehensive banking solution to support the digital wave in India. While the list here mainly focuses on firms offering products to banks of rural areas, it also has firms providing crime surveillance solutions for fraud and thefts. Fintech Firms What They Offer Partners Novopay Mobile Payment App to set up bank account and structure finances RBL Bank, Bank of India, IDFC Bank VAYA Finserv Offers core banking to rural areas. Loans to women and self-help groups. YES Bank, The Ratnakar Bank Vortex Engineering Private Limited Offers the lowest power consuming ATM’s Set up 545 ATM’s that includes 300 solar powered ATM’s for State Bank of India Eko India Financial Services Offers no-frills bank accounts and deposit, withdrawals and remittance services to unbanked migrants via a mobile device State Bank of India, Yes Bank, ICICI Bank Finacus Offers Core banking solutions, aadhaar based solutions, Payments via Mobile, Tablet, Agent Banking, etc Bharat bank, Apna Sahkari Bank, Mahesh bank SesameIndia Offers Core banking, Agent banking, Mobile Banking, Business Intelligence, Different modes of payment solutions and Risk and Recovery Management KUC Bank, Thenjipalam Cooperative Urban Bank, Malapurram Service Cooperative Bank InfrasoftTech Offers Core banking, AML compliance and financial crime surveillance, Lending management, and microfinance solution 450 clients across 36 countries over 300 banks Sarvatra Offers cloud-based Mobile Banking, IMPS services, and switch, Aadhar enabled payment eKYC, etc Nilambur Urban cooperative bank Teknospire Offers Agent Banking and Payment Solution, Mobile Money Suite and Payment Switch . They also have solutions to Health tech for the rural population. Oakfin Finance, Ebazara, Mannapuram, Mandeshi Bank References: Payments BankList of banks in India Grameen_BankWhat are Payment Banks? Why India Needs Payment Banks? All you need to know about small finance banks What are small finance banks and payment banks? How are they different from commercial banks? Here’s how top 5 Indian banks use technology Banks collaborate with new age fintech companies for rural banking Impact of financial inclusion drive through co-operative banks – a study with special reference to chavara block Performance Evaluation of Regional Rural Banks in India

FinTech Products Market Survey, Technical Updates

Which Technologies Should Be Adopted By Regional Rural Bank And Cooperative Banks ?

Banks and Technology In our Part One of the Banks and Technology Series we spoke about the technologies needed by Public Sector Banks, Private Sector Banks, and Foreign Banks. This post is part 2 of the same series, and we would continue our discussion on technologies desirable by Regional Rural Banks [RRB’s] and Cooperative Banks [ State and Urban Cooperative Banks] Technologies to Be adopted by Regional Rural Banks[RRBs] As per a report the RRB’s with their formation on October 2, 1975, have attained a unique place in providing agricultural rural credit. With their initiatives, they have managed to provide banking services to the unbanked population Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Regional Rural banks 1.Chhattisgarh Rajya Gramin Bank 2.Karnataka Vikas Grameena Bank 3.Vidarbha Kokan Gramin Bank Started with a simple motive to help the rural/BPL individuals, they mainly target – 1.People living in rural/remote areas 2. In need of loans without collateral 1. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe. 2. e-KYC acceptance Reducing carbon footprints would assist the mother earth but also would speed up the process of essential services like Opening Account or Loan Reimbursements 3. e-banking Enabling Banking services via the internet would help customers accessing banking from anywhere anytime. 4. Use of Biometrics Biometrics would assist in reducing fraud and identifying potential security threats 5. Branchless Banking DIY Banking corners like e-corners launched by SBI or e-hut by IDBI bank to access banking anytime. 6. Agent Banking Solution With remote areas/rural areas not having enough bank branches services like Agent Banking, ATM, PoS or e-corners could add to get more customer satisfaction and business to banks Technologies to Be adopted by State Cooperative Banks[SSBs] As stated by Academia in a study – The state cooperative bank is a federation of the central cooperative bank and acts as a watchdog of the co-operative banking structure in the state. Its funds are obtained from share capital, deposits, loans and overdrafts from the Reserve Bank of India. The state co-operative banks lend money to central co-operative banks and primary societies and not directly to the farmers. Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks State Cooperative Banks 1.Andhra Pradesh State Co-operative Bank 2.Karnataka State Co-operative Apex Bank 3.Delhi State Co-operative Bank Owned by State, its open to all individuals residing in a particular state. It usually targets – -People at state/district level like small scale industries or local businessmen 1. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe 2. e-KYC acceptance Reducing carbon footprints would help the mother earth but also would speed up the process of essential services like Opening Account or Loan Reimbursements 3. e-banking Enabling Banking services via the internet would help customers accessing banking from anywhere anytime. 4. Use of Biometrics Biometrics would assist in reducing fraud and identifying potential security threats 5. Branchless Banking DIY Banking corners like e-corners launched by SBI or e-hut by IDBI bank to access banking anytime. Technologies to Be adopted by Urban Cooperative Banks[UCBs] As stated by Academia in a study – The term Urban Co-operative Banks (UCBs), though not formally defined, refers to primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. This distinction does not hold today. These banks were traditionally centered on communities, localities, workplace groups. They primarily lend to small borrowers and businesses. Today, their scope of operations has widened considerably. Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Urban Cooperative Banks 1.Apna Sahakari Co-Op Bank Ltd. 2.Ahmedabad Mercantile Co-Op Bank. 3.Kalupur Commercial Coop. Bank Owned by State is open to all individuals but is a preferred choice by – -Small scale sectors – Local people in business operating within state or semi-urban area 1. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe 2. e-KYC acceptance Reducing carbon footprints would assist the mother earth but also would speed up the process of essential services like Opening Account or Loan Reimbursements 3. e-banking Enabling Banking services via the internet would help customers accessing banking from anywhere anytime. 4. Use of Biometrics Biometrics would assist in reducing fraud and identifying potential security threats 5. Branchless Banking DIY Banking corners like e-corners launched by SBI or e-hut by IDBI bank to access banking anytime. This post is an effort to streamline the efforts put in by Banks, Fintech firms and NGO’s to make Banking accessible to one an all. If the RRBs and Cooperative banks adapt to these technologies, it would not only help the providers in maintaining transparency but also would make banking reachable to remote and rural areas. This post is part 2 of banks, and their technology needs series, in case you have missed our part one. Here is the link to part One Article – Which Technology Do Public Private Sector And Foreign Bank Need to Adopt The next part of the series would talk about technologies to be adopted by Payments Banks, Small Finance Banks and the fintech providers in India with their banking solutions. Stay Tuned! References: Payments Bank List of banks in India Grameen_Bank What are Payment Banks? Why India Needs Payment Banks? All you need to know about small finance banks What are small finance banks and payment banks? How are they different from commercial banks? Here’s how top 5 Indian banks use technology Banks collaborate with new age fintech companies for rural banking Impact of financial inclusion drive through co-operative banks – a study with special reference

BanksandTech
FinTech Products Market Survey, Technical Updates

Which Technologies Do Public, Private Sector and Foreign Banks Need to Adopt ?

What could be the list of financial services for a child? Well, hypothetically he could use all, but necessarily he just needs a bank account/fixed deposits for his savings. Hence, most of the banks offer a minor account that allows parents to open in the same bank. Well, this may be a marketing strategy for a bank but it needs to offer what customers need. In a similar fashion could we be optimistic for rural banks that are struggling to lure customers to offer AI or IoT solutions? Indeed not, hence @Teknospire we bring to you specific innovations that are needed by a bank based on their categorization. Types of Banks in India During my adolescent days, I assumed any word that has “bank” suffixed to it, is a bank with similar features. Until recently my perception about them changed. Do you guys know we have seven different types of banks operating in India. Well, take a look – Banks and Technology Technologies Needed by Public Sector Banks Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Public Sector Banks 1. State Bank of India 2. Punjab National Bank 3. Bank of Baroda Open to all, varies from urban to rural people Tech-savvy to technotard HNI to BPL individuals 1. Branchless Banking DIY Banking corners like e-corners launched by SBI or e-hut by IDBI bank to access banking anytime. 2. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe 3. Data Analytics and Business Intelligence Structuring and organizing the data with intelligent algorithms could help customers in planning their financial portfolio or could get a better picture of their spending’s. 4. e-KYC acceptance Reducing carbon footprints would help the mother earth but also would speed up the process of basic services like Opening Account or Loan Reimbursements 5. Quick Funds Transfer via IMPS, NEFT, RTGS With technology advancement like UPI based payments or IMPS, funds transfer is instantaneous and could be accessed from anywhere anytime. 6. Use of Biometrics Biometrics would help in reducing fraud and identifying potential security threats. 7. Cloud Technology With data increasing at an exponential rate, physical servers may not be enough to handle them. Hence cloud technology could help users in providing flexibility with no compromise in security. 8. Robotics to enable DIY banking/Improved Customer Service How about Robotics helping in mundane jobs like segregating and assign numbers to customer who come to banks? Could help in basic queries like My account balance? Or mini-statements? 9. e-banking Enabling Banking services via internet would help customers accessing banking from anywhere anytime. 10. Plastic Money Issuing of credit cards/debits cards could enhance digitization and a way to go cashless. 11. Remote Banking With remote areas/rural areas not having enough bank branches services like Agent Banking, ATM, PoS or e-corners could add to get more customer satisfaction and business to banks Technologies Needed by Private Sector Banks Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Private Sector Banks 1.ICICI Bank 2. HDFC Bank 3.Axis Bank Open to all but is a preferred choice to individuals – – From corporate sector – Looking for customer oriented services 1. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe 2. Video Conferencing Enabling Video conferencing to your customer could help in building trust and they could get quick query resolution. 3. Data Analytics and Business Intelligence Structuring and organizing the data with intelligent algorithms could help customers in planning their financial portfolio or could get a better picture of their spending’s. 4. e-KYC acceptance Reducing carbon footprints would help the mother earth but also would speed up the process of basic services like Opening Account or Loan Reimbursements 5. Quick Funds Transfer via IMPS, NEFT, RTGS With technology advancement like UPI based payments or IMPS, funds transfer is instantaneous and could be accessed from anywhere anytime. 6. Use of Biometrics Biometrics would help in reducing fraud and identifying potential security threats. 7. Cloud Technology With data increasing at an exponential rate, physical servers may not be enough to handle them. Hence cloud technology could help users in providing flexibility with no compromise in security. 8. Robotics to enable DIY banking/Improved Customer Service How about Robotics helping in mundane jobs like segregating and assign numbers to customer who come to banks? Could help in basic queries like My account balance? Or mini-statements? 9. Plastic Money Enabling Banking services via internet would help customers accessing banking from anywhere anytime. Issuing of credit cards/debits cards could enhance digitization and a way to go cashless. Technologies Needed by Foreign Banks Banks Examples of Bank Who is the Target Audience What Technology They Should Adopt to How a Technology Would Help the Banks Foreign Banks 1.HSBC Bank 2.Citibank 3.Commerzbank The Target audience for these banks are – 1. Corporate Firms 2. HNI individuals having operation overseas 3. NRI individuals 1. Wearable Devices With a wearable device, banks could get information in real-time. Just for example if you went to a car dealer, the banks could help you in choosing the best financing options. 2. Mobile App Launch of banking services via Mobile App and Internet helps customers in availing services anytime from anywhere across the globe 3. Video Conferencing Intelligence Enabling Video conferencing to your customer could help in building trust and they could get quick query resolution. 4. Data Analytics and Business Intelligence Structuring and organizing the data with intelligent algorithms could help customers in planning their financial portfolio or could get a better picture of their spending’s. 5. Cloud Technology With data increasing at an exponential rate, physical servers may not be enough to handle them. Hence cloud technology could help users in providing flexibility with no compromise in security.

CBIInsights
FinTech Products Market Survey, Technical Updates

Artificial Intelligence in Fintech and Payments – The Impact and Challenges

Artificial Intelligence [AI] storm is here, enterprises working hard to deliver the best of the solutions. Fintech firms are strategizing their approach and research firms calculating the impact and its reach. No one is spared. Be it the big investment banks like Wells Fargo or Morgan Stanley or the fintech start-ups like Numerai and Alphasense . But do we have a clear path for our sail? Is there a need? Or is it just a bubble? To answer all these questions, please read on – Impact of AI on Fintech and Payments Artificial Intelligence is all about capturing data, recognizing behaviors and patterns and acting accordingly. Just for example when someone knocks at the door the predictive behavior is to open it. Or as soon as you receive a call you either lift it or hung it based on the caller name & number. Thanks to data storing capacity, data is abundant. What researchers and technical team are now focussing is making sense of behavior. Quite recently, one of my acquaintance while communicating with Google Home told him – You are useless to which the machine replied – I will convey this to my engineer so that they could refine me and make me more useful. My acquaintance and I were shocked by such a meaningful reply from a machine. So talking about the impact of AI in fintech sector is all about making sense of the data. To answer all such questions as – Could my spending patterns provide me my credit rating on my mobile app? Could closing this debt fund balance my portfolio? Could I get loan processed based on balance of digital wallet? Could opening a Fixed Deposit help me save for my kids’ education? What payment option suits me when I online shop for ABC product? How could I get best deals from Agents via Agent banking solution? When they need insurance? How much? On what basis? Could a machine detect fraud? Could it serve as a regulatory authority? What affects my credit score? What effects my firm’s rating? In fact, as per CBInsights report , AI has made an enormous impact on the fintech world. There are firms under different categories trying to deliver an intelligent solution. Take a look in above diagram. With each vertical of Finance and Banking under development with AI, we could probably witness a hurricane of products in the market. But it’s not the AI that would drive people towards it, it’s the enhanced accessibility to various banking products, convenience ,customized services, speed and above all security that would make an impact in the fintech world. Challenges of AI in Fintech and Payments World There is no linear path growth; experts believe we are at a tipping point of the technology breach. So, either it gets sink-in or would burst depending on how we process the data. Another aspect that would decide the AI growth chart in fintech world is the access, as pointed out by Linden Tibbets , the CEO of IFTTT. With an abundance of data how do we access it and how do we make sense of it? These are the two-vital question that needs to be answered and would see a breakthrough in future to decide fintech growth with AI. Sample this – For AI to work it needs to study pattern and know the behaviour of humans to make a predictive guess on what action should be performed. But how to we conduct the study unless we have the data to access? Agent Banking solution, Digital Wallets or Analytics they cannot make an informed decision unless we program them to do it. A rural person is facing short of cash, he needs to get his roof repaired as rains are approaching, but also need to pay for his kid’s college fees. He has following options – Take a loan Divide the surplus into half for repair and fees Pay the fees and make temporary arrangements to the roof Pay for roof and make temporary arrangements to the fees The answer suggested by AI would need a through reality check before making an informed decision. The above example was quite straight forward, but the point is that the information is scattered and to make sense of that information we need access to it. Lastly, comes another challenge to let people adopt it. Money matters are close to people’s heart. So, could the fintech firms and payment channels with their innovations in Artificial Intelligence domain make clients use their technology? An interconnected network that has studied my spending patterns advise me to stop buying that costly attire or process a personal loan from ABC options. Would I listen to it? While fintech firms focus area is to adopt AI into digital banking, they could leverage the technology to aid in decision making, offering customized products and building end-to-end data products. Welcome to the future! References: AI is About Access, Not Interface Artificial Intelligence and You: Demystifying the Technology Landscape The impact of AI on fintech’s future 5 ways how Artificial Intelligence (AI) is impacting consumer FinTech Human-Level Intelligence or Animal-Like Abilities?

Country wise Mobile banking penetration for the period ending Jan2017
FinTech Products Market Survey, Technical Updates

10 Desirable Wallet Features Post UPI

Countries across the world especially India have envisioned digitalization across all its sectors including the BFSI sector. Accomplishing this mission would involve a series of transformations especially in the banking sector. However, in the last decade, the BFSI sector has taken long strides towards digitization. Online banking started the chain of banking transformations and was soon followed by mobile banking, digital wallets, UPI apps. Though Online banking paved way for digitization, it failed to become as popular as mobile banking due to non -friendly payment experiences. Picture Courtesy: Google Growth of mobile bankingPicture Courtesy: Google The world- wide mobile banking penetration and apps launched figures have been moving upwards year on year. The above statistics are a clear indication of mobile banking’s popularity in the last decade. With startups entering the fintech arena, digital wallets soon followed mobile banking. Digital wallets being user-friendly and easy to use, customers have taken a liking to it in a short period. Digital wallets Picture Courtesy: Google Though wallets are a popular choice when compared to the traditional lengthier forms of banking, they have a few painstaking activities associated with it. Some of the activities are :- Setting up a wallet Providing account details such as IFSC, Card No, CVV no, Account no for carrying out transaction Transferring of amount from an account to the wallet KYC validation for set cap of Rs 10000-1lakhs Now to overcome these barriers and make mobile banking hassle free and more secured UPI was launched by the NPCI in India. UPI is a payment platform that allows instant money transfer without providing account details. UPIPicture Courtesy: readaddict.com With the likes of UPI making an appearance in the payments space, mobile wallets usage has taken a dip. However, in my view, the implementation of the below factors could still boost wallet usage post -UPI launch. Providing an optional provision to link wallets to a bank account. Excluding few of redundant steps before transacting. For eg instead of making KYC validation must make it mandatory to provide the Aadhar no KYC validation would be taken care of. Wallets being a tool, currently, it is not mandatory for them to provide interest on the money transferred however if wallet companies provide interest it would improve user stickiness. Presently wallets users mostly rely on the phone lock for their security. Also, as per RBI rules, wallet transactions require only one-factor authentication. Only some wallets provide two-factor authentication and hence security is a matter of concern when there is a loss or theft of the phone. However, if two-factor or multifactor authentication is made mandatory wallet can be made more secure and user shift can be decreased. Making inter wallet transactions, regulating explicit inter wallet transactions, inter wallet usage of the generated QR codes feasible. Increasing the per transaction limit as currently wallets per transaction limit is Rs5000. Providing facilities such as reminders for collecting cash and making payment, checking account balance where account has been linked, transfer of cashback to account. Scrapping of the service charge of 1-4% currently being applied for a wallet to bank transfer. Conversion of wallet companies to payment banks which would be UPI enabled like Paytm. Moving towards UPI system and interconnection of wallets using National Financial Switch (as in the case of present- day Indian Banking context ) The financial sector has moved from online banking to wallets to UPI. Wallets are a stop gap arrangement till India achieves complete digitalization. Being a better way to access accounts, UPI has no doubt become “go to app” within the short period after its launch but however, wallets score some points in below aspects. When it comes to unbanked and the rural people not using bank accounts. Wallets being a tool wallet users as well as a third party can top it up. This is a big advantage for the students and the poor who do not have a bank account. Where technological costs are lower. For eg, the technological costs are lower while doing grants and donations transactions through wallets rather than doing over a banking infra. Where companies giving loans or micro loans can dispense this money into their stand alone wallets for the gains on float within their own bank accounts for eg Manapurram dispensing loans to MAkash wallet. With or without the desirable features being implemented (few of them depending on RBI) Wallets will continue to be in India’s financial arena and contribute to the financial inclusion. As in the case of Teknospire’s MAkash. Having helped Valapad village to become an e-wallet-literate village, it has become a source of inspiration to other wallets and represents the existence of stand alone wallet post-UPI launch. References: Mobile wallets beware, UPI is here Is there a similar system in the world such as Unified Payment Interface launched in India? Can we transfer the cash back earned in a Paytm wallet back to a bank?Which wallets do not charge for wallet to bank transfer? The Cyber-frauds: How secure are Aadhar, UPI, mobile wallets? 11 Benefits of UPI | How UPI is Better Method of Fund Transfer ! How safe are your mobile wallets? How is BHIM app different from mobile wallets? Going cashless after demonetisation? Compare eWallets and UPI apps for what suits you bestBHIM app vs Paytm: Which is a better payment app? How different is the Unified Payment Interface(UPI) from mobile wallets?

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