10 July 2024 | By INDIE
The past few years have seen a massive shift towards digital banking in India. As smartphone and internet penetration has increased, more and more individuals have embraced conducting their banking needs online or via mobile apps. The COVID-19 pandemic further accelerated this adoption of digital banking channels. Banks too have invested heavily in their digital capabilities to meet this demand. They have rolled out new features in their mobile and internet banking platforms and increased use of data analytics, AI, and automation. The Indian banking sector stands at an inflexion point, on the cusp of a digital revolution.
2024 promises to be a pivotal year for this transformation. Here are some key digital banking trends that are likely to shape the industry:
Artificial Intelligence (AI) and machine learning will move from playing a supporting role to shaping products, services, and consumer interactions. Banks have already begun using AI for functions like chatbots, fraud prevention, and risk management.
In 2024, expect AI to feature more prominently in customer-facing applications. Banks will use data analytics and AI to hyper-personalise offerings and communication for each customer. The level of personalisation will go beyond traditional segmentation based on demographics or income. Banks will analyse individual behaviour and preferences to curate personalised product suggestions, pricing, credit limits and more. For instance, by combining AI with location data from mobile apps, banks can provide customised offers to customers near certain merchant outlets.
Reducing friction in customer interactions will be a key priority. Top private banks aim to achieve under-three-minute loan disbursals through improved straight-through digital processing eKYC using Aadhaar and video verifications will replace physical paperwork.
Banks are also looking to introduce ‘zero touch’ account opening using mobile apps, biometrics, and eKYC. In 2024, expect instant digital account opening to become the norm rather than the exception.
India has made significant strides in financial inclusion over the past decade. But there are still gaps, especially in rural areas. Financial inclusion 2.0 will focus strongly on using technology to extend the reach of banking. Banks are experimenting with ‘phygital’ models like micro ATMs and mobile branches run by banking correspondents to serve remote villages. The JAM Trinity – Jan Dhan accounts, Aadhaar, and Mobile will continue empowering the unbanked. We could also see dedicated digital banking platforms targeted at the bottom of the pyramid.
India is yet to introduce a formal open banking framework. However, partnerships between fintechs and banks are already enabling open banking in a limited way. Expect deeper collaboration in 2024, with banks opening up APIs across products to fintechs.
Top banks will also try to make their banking platforms a one-stop marketplace for financial services as well as non-financial offerings. By integrating with e-commerce players and digital service providers, banks can become the hub for accessing a range of digital offerings.
Environmental, Social and Governance (ESG) considerations will become integral to banks’ business and risk strategies. Top banks have already committed to achieving net-zero emissions by 2030-2040. In 2024, expect more banks to limit lending to polluting industries and integrate climate risk assessment into credit appraisal processes. Many public sector banks also intend to launch dedicated sustainable finance products, like green home loans and ESG-linked corporate loans.
INDIE by IndusInd Bank is a perfect example of the growth of new-age banking in India. INDIE is a new digital savings account super app launched by IndusInd Bank in 2023 that aims to reinvent digital banking in India by providing customers with an intuitive and flexible experience across savings, investments, credit, and other financial services.
You can open savings account instantly with INDIE. Key features of INDIE are attractive interest rates of up to 6.75% on savings accounts and 7.75% on fixed deposits. It also offers instant access to a digital credit line with flexible repayment options and expense tracking and budgeting tools through MoneyMate.
India’s digital banking transformation still has a long runway ahead. But 2024 promises to be a pivotal year where many emerging trends enter the mainstream. Both incumbent and new-age banks will ramp up investments in technology and talent.
Banks must also temper this rapid digital push with efforts to educate and protect consumers in the digital era. If banks can balance these priorities, India’s consumers can look forward to world-class digital banking experiences in the near future.
Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
