Page 39 - Banking Finance April 2021

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the same in my lighter sense it is all about being slim and proposition and serve client needs holistically, supported by
productive rather than being hefty and docile. data and analytics. Product innovations are expected to
focus on clients' financial well-being and closely connect
The increasing pressure from a low-yield environment and lending, payments, and wealth management services. And,
the potential economic slowdown could negatively impact of course, maintaining superior customer experience and
earnings, especially for smaller, less diversified and consumer seamless connectivity to an ecosystem of other apps/
lending-focused banks. Now the banks should continue to application program interfaces (APIs) could be the norm.
increase their fee-based income and increased focus on cost Offering advice should be a differentiating factor for banks
management and at the same time not to lose focus on their as it becomes contextual and real-time. Banks should rethink
digitization efforts and regulatory obligation which may cost and innovate pricing models accordingly. In an open data
heavily in the days to come. environment, privacy concerns will also be a big factor to
be looked into.
To enable insights-driven offerings to clients, attain a leaner
cost structure and ultimately unlock future success, core 3. How is the payments business
modernization of the digital ecosystem is the key. Banks
should digitize and transform across the entire value chain changing?
for all horizons of their products. Payments remain one of the most dynamic and exciting
businesses in banking. The breakneck pace of change and
Redesigning customer experience by removing friction, the unprecedented scale of innovation are inspiring and
enhancing value through rewards, access to other financial testing established orthodoxies of traditional payment
products and bolstering security is expected to remain top mechanisms.
priorities.
The proliferation of digital payment options and innovative
While large payment providers could continue to offer an platforms especially after the note ban are encroaching on
enhanced integrated experience, we are also likely to see traditional payment systems and forcing many to reassess
an acceleration in unbundling the payments value banks business models which is the need of the hour in the
proposition. This will comprise payment, credit, rewards, and angle of profitability as well.
security components but should also include the flexibility
to interact with different experience providers. The foremost challenge is to remain relevant and quickly
adapt to the new competitive environment. While fintechs
2. What will retail banking look like in are driving much of the disruption, incumbents are not far
behind. Take, for instance, the threat of foray of the IPPB
the next decade? through QR (quick response) technology can't be ignored,
By this decade end, fewer retail banks may exist although as they are also having a provision of cash delivery through
the degree of shrinkage could vary by region/country and their robust base of postmen spread across every nook and
will likely depend on the current level of banking capacity, corner of the country.
competition, and market demand. As a result, the nature
and degree of competition will likely change; the surviving Payments will be invisible, seamless, and real-time but will
fintechs should become mainstream players and traditional likely be about more than just transactions. A whole slew of
incumbents will have to recalibrate their strategies. new value-added services, such as identity protection, real-
Nevertheless, scale and efficiencies will be the dominant time cash management and new purchasing insights that
factors. customers and merchants alike would value should be the
norm. Increasingly, differentiation and premium pricing will
Also, in the next few years, banks could partner with others be driven by "payments+" services. Digital currencies will
in the ecosystem to become defacto platforms, offering likely become the norm, most likely with regulators' support.
countless services that will extend beyond banking. Banks New platforms would necessitate new payment
should still be best positioned to own the customer mechanisms-all digital, of course. Meanwhile, abundant
relationship, which would enable them to rethink their value customer data should enrich personalized experiences while

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