The country may have made the greatest transition to e-payments on earth, but its banks are missing one final ingredient …
Thanks to smartphone technology and other factors, the digital payments ecosystem in India ranks first globally, beating even China, the UK and South Korea.
However, a gap exists in the adoption of digital technology in the banking sector, and this requires a stronger partnership with fintechs in the country. One way forward is the use of open Application Programming Interfaces to link the two sectors up.
With greater digitalization of the banking sector, the country’s soon-to-be-10 trillion-dollar (USD) economy will then see improved financial inclusion.
To find out more about how this can happen, DigiconAsia spoke to S Anand, CEO and co-founder, PaySprint, to understand how API-led banking will transform the sector.
DigiconAsia: How will a strong partnership between banks and fintechs benefit the country’s digital economy?
S Anand (Anand): India is expected to be a 10 trillion-dollar economy in the next few years, and banking and fintech are going to play a big role in this growth.
Banks here are currently convinced that in order to grow and extend beyond their own banking channels and technology and achieve true financial inclusion, they will need strong partnership with fintechs, which have launched and implemented various innovations for consumer growth this year.
The most effective way to tap fintech expertise and innovation is the use of APIs that facilitate quick sharing of technology and data between the two sector. This will help boost the banks’ capabilities beyond internet banking, into API-led banking services and innovations, especially in the face of competition from cloud-native digital banks.
The underlying need to move to API-led banking is to improve customer experience and offer more options for customers to manage their funds. The collaboration with fintechs can also help bnaks innovate and lower costs in order to serve the underserved and unbanked.
DigiconAsia: How and why APIs are the next revolution in banking in India?
Anand: The use of open APIs allows banks and fintechs to quickly synchronize software, data and other systems, unlike in the old days where such linkups could take months or more via traditional manual tweaking of existing software programs and network protocols.
Once linked up via a common bridge (the API), banks and fintechs can then exchange their data automatically and conveniently. The key benefits of such data collaboration are the availability of data analytics tools to discern trends and predict user behavior.
This can in turn enable banks to to create more tailored products and services and also specific marketing initiatives. For instance, banks can gain a more realistic picture of customers’ financial profiles, which in turn can help fintechs to create and offer the right product to fill market niches.
Similarly, the broad range of fintech services such as e-payments, collections, e-commerce, omnichannel marketing and AI-driven customer service robots will be readily accessible to banks needing a digital facelift.
More API-led banking benefits:
- With API-led banking, fintech innovators have more flexibility to provide the best features and services to streamline financial services, thereby creating a surge of competition and innovate products that banks will want.
- With real-time banking capabilities getting enhanced by fintechs, cash flows in the country will have greater visibility, helping banks to differentiate and compete equitably.
- Fintechs have reduced many administrative hassles for customers (such as managing their finances, loan applications, credit worthiness and so on), thus encouraging more to use banking services in better ways.
- API-led banking can help lower costs both ways for the financial institutions, thereby encouraging them to target the underserved and unbanked community with less risk.
- API-led banking allows the population to retrieve account balances in real time, process transactions at high speed round the clock, making banking accessible 24×7.
- Fintechs are using APIs with banks to provide enhanced information for reconciliation and other finance transactions in real time, thereby facilitating banks to have faster churn in the ecosystem.
DigiconAsia: What role does PaySprint play in this API-led revolution?
Anand: PaySprint is a fintech venture focused on Next Gen Neo Banking Solutions, offering a Unified Open API Platform. We work closely with various banks to bring in digital banking solutions for the end consumer.
Banks will continue to be the custodian of the customer and of the various banking products and services, while PaySprint will create larger consumer adoption, interface and delight.
We offer a number of solutions to create a platform that offers advantages for startups and the entrepreneurs behind them, as well as for micro, small and medium-sized enterprises, non-banking financial companies and others.
So far, the pandemic has brought massive acceptability for digital payments especially in the rural areas, which has created a huge demand and business opportunity.
Along with digital payments we also customize and deliver bespoke solutions to our targeted segments.
DigiconAsia thanks Anand for sharing his insights on India’s API-led banking revolution.