Future of Indian Banks & Mobile Apps
If you open an application like Paytm, you will come across a bundle of services like Paytm Payments, Paytm Mall, Paytm Smart Retail, etc. The company is on a mission to collaborate on a bouquet of services across the country that cater to the mainstream economy from commerce, banking, payments, investments, and financial services. With the Covid-19 wreaking its havoc across all Indian sectors, applications like Paytm have emerged as the super-apps. These super-apps function as a one-stop-shop for all your worries. Even though the rise in these fintech companies is a matter of great pride, it leaves us with an important question about the validity of traditional banking structures.
Traditional Banks have operated for a long period of time, with their brick and mortar operational systems. While web2 took a while to seep into a modern consumers’ daily needs segment, with web3 and cryptocurrency rising at an unprecedented rate, it is no less than an alarm for banks. Even though many banks have their NetBanking solutions along with applications, catering to the needs of the consumers, they are lagging behind. Banking decision-makers need to understand that changes are constant in the ever-growing economy. What started as the digitization of the system is now a fully optimized infrastructure in itself.
In simple terms, for banks, it means that users across digital financial services and especially super applications are bypassing the bank applications. There are super apps with digital wallets that further reduce a user’s dependence on cash and credit/debit cards. Even though a few banks like HDFC Bank’s PayZapp have integrated themselves as an unbranded version of “banking as a service”, the potential in the Indian ecosystem still remains untapped.
So what do banks do in such a scenario? They have three options to choose from.
- Accept: Choosing this option will limit banks’ growth. Well-established banks may be able to hold on to their market share. This is primarily because they are trusted brands with a large customer base and proprietary data. However, even these banks will have their customers linking up to super-apps that could potentially chip away the profits. Choice of this option will leave these banks redundant as time passes by.
2. Extend: Many banks will adapt and extend in order to capitalize on the huge consumer data. Some banks might continue to leverage their brand within the super apps ecosystem. The platform of a super app can be used to create a smoother and more convenient user experience. With so many super apps present in the market, banks need to quicken up the pace of partnerships. With applications like BharatPe, already providing a platform to numerous payment gateways, the competition has never been this fierce.
3. Compete: The boldest banks will step in to overhaul their systems and compete. The banks willing to reimagine their business model and adjust their vision to embrace the challenges of building an ecosystem of their own will be something integral to the cause. these banks will need to take some measures to combat rising and established super-apps :
- Establish vision: Banks that don’t carve out a defined niche could find themselves made redundant. While a niche can take banks a long way. Banks need to understand and pinpoint their role in this new era before undertaking the transformation to become a financial services or lifestyle ecosystem. Banks can achieve that based on a strategic plan based on short term and long term goals.
- Embrace data: Super-apps thrive on the free flow of information between establishments. Banks will need to explore open data architecture and application programming interfaces (APIs) in order to have a say in the ecosystem. Banks will need to build data management capabilities. These capabilities like analytics algorithms and machine learning can unlock the value of data and launch new user experiences and journeys.
Even though it might seem like a tough job to imbibe the brick and mortar banks to divulge with the ever-rising mobile apps and fintech ecosystem, the journey has just begun for the Indian Financial System.