Indian Financial Sector Bats for Presence-Less Finance at BankBazaar’s Conclave
For the third consecutive year, BankBazaar brought together government and regulatory luminaries, eminent bankers, and Fintech influencers together on one single stage at the BankBazaar Paperless Finance Conclave to give a shot in the arm to presence-less, paperless finance. The highlight of the Conclave was a government perspective on changing norms in the financial sector, touched upon by Keynote speaker Mr. S. S. Mundra, Former Deputy Governor, RBI, and special speaker Mr. Amitabh Kant, CEO, NITI Aayog, in their talks. The focus was on the need for consensus between Fintechs, banks, insurers, regulators, and the government for a more paperless, presence-less approach to personal finance at the Conclave in Mumbai on 11 September, which was attended by more than 200 eminent players from the Indian financial sector.
Mr. Mundra said that time is now ripe for India to make a big leap in the field of digital finance instead of settling for incremental reforms and being hesitant, as we now have global examples of fully digitized banking systems working successfully in other countries. “We have the much-celebrated trinity of JAM – Jan Dhan, Aadhaar, and Mobile – and we also now have India Stack. There’s plethora of developments and facilitations available. We’re miles ahead in this area compared to the western block or even to our counterparts in the Asia Pacific region. In many of these countries, they’ve been able to successfully introduce full-range digital banks. If that is the reality and those are the examples available to us, I think we need to relook at our hesitation in crossing the full distance.”
During his special note, Mr. Kant commented that with growing internet and cellphone penetration, India presents a unique opportunity for paperless finance. “This is a tremendous opportunity to enable 100% paperless, presence-less finance in India. Mobile-based paperless access to financial products for every Indian will ensure financial inclusion, increase credit flow, further the growth of the insurance sector and increase participation in our securities markets”, Mr. Kant said.
BankBazaar has been the leading Fintech player which pioneered paperless access to financial products in India. In the inaugural talk, Adhil Shetty, CEO, BankBazaar, highlighted how 2018 has been the year of Paperless Finance, marked by a surging demand for it versus the prevalent physical KYC on-boarding processes. The focus now moves to presence-less finance, and it is all set to lead the next wave of Fintech innovation in India in 2019. Mr. Shetty said: “More consumers are adopting paperless financial products. Sixty percent of our customers – and we believe this number could go as high as 90% next year – are willing to submit and authenticate their documents online. Paperless penetration and usage are increasing dramatically also because our financial partners are adopting it. By going paperless, they have lower losses, higher activation, and more usage because they’re getting a very tech-savvy customer base that is e-authenticating. This is a tremendous opportunity for collaborative growth.”
The two panel discussions of the evening emphasized that the ability to authenticate identity on demand without a paper ID or physical presence was the real and most anticipated change for the near future, and deliberated on the challenges and opportunities ahead.
The first panel “Paperless, Presence-less Finance: An Impending Reality” saw panelists discuss the advantages of paperless, presence-less banking to consumers and banks alike. Taking this thought ahead, Puneet Nanda, Deputy Managing Director, ICICI Prudential Life Insurance, said: “The finance business is about underwriting, and for that you want consumers to give you honest, relevant, truthful data. We started realizing that when the consumer starts dealing with the manufacturer directly, the chances of consumers giving you this data goes up significantly. Ultimately, not only do things become more efficient for us, the value proposition for the customer also increases dramatically. ” Talking about the road ahead, Arvind Kapil, Group Head - Unsecured Loans, Home & Mortgage Loans, HDFC Bank, said: “One of the clear insights we got is that the customer clearly wants real-time consumption. In the financial sector, a massive disruption is very visible right now. A lot of innovation and listening to the customer is going to be key to the disruption. Technology is just an enabler. Process change is what will change the game.” The other panelists were Anup Bagchi, Executive Director, ICICI Bank; Ramakrishnan Seshan, Head, Retail Banking & Wealth Management, HSBC; Subrat Mohanty, COO, HDFC Life.
The second panel, “What Will It Take For 100% Paperless, Presence-less Finance & Greater Financial Inclusion To Become A Reality?” discussed current obstacles to the presence-less process and how support from regulators could help realizing this dream of frictionless finance. The panelists mentioned the significant work done by the government in creating and enabling an ecosystem that holds authenticated data such as the Digilocker, CKYC, and Aadhaar. Integrating the three would complete the cycle and take care of redundancies. Ashish Ahuja, Joint Managing Partner, Wadia Ghandy & Co., elaborated on the need for having similar standards across similar products: “Is there a logic to continuing the difference between eKYC of banks and credit cards? I don't think so because the risk analysis is being done by banks. A credit card should also be available through the EKYC and OTP rather than being limited to a term loan.”
Speaking about changes to look forward to, Rajiv Anand, Executive Director, Axis Bank spoke about the need to have a regulatory sandbox environment. “Authentication via cellphone app instead of other devices is something we could look at. Also the finalisation of the GST and consent infrastructure within that so that financial institutions can start to consume GST data with consumer consent for us to be able to lend”, he added. “The Centre of it all is are we making it easy for the consumers to avail of financial products? And in the process, how willing are we to give up the baggage of the past? It will take some courage and some experimentation to get it right. I don’t think we should wait for every piece of the puzzle to fall in place before we go to the next step. In a controlled way, we can make progress and take this to the next level”, concluded Shyamal Saxena, Head – Retail Banking, India, Standard Chartered Bank. The other panelists were Murlidhar Lakhara, Chief Compliance Officer, IndusInd Bank; Prasant Seth, General Manager, DBR, Reserve Bank of India, Sarita Kamath, Head - Legal & Compliance, Tata Capital; and Vineet Arora, MD & CEO, Aegon Life Insurance.
The writing is on the wall: It is incumbent on all the allies – government, regulators, financial institutions, and Fintechs to work together and move this industry forward to presence-less, paperless issuance of financial products.