Cloud Trends That Will Shape India’s Banking Sector in 2021
India’s banks and financial institutions (FIs) continue to adapt and innovate as the pandemic drives mass adoption of digital payments. Long term success will depend on successfully ramping up services and ensuring profitability while reshaping customer experiences. This is where the power of the cloud will come into play: In 2021, cloud will increasingly power vital infrastructure for India’s banking and payments sector, improving remote collaboration as well as enabling faster and more agile application development and deployment.
There are three key cloud trends that we see having the biggest impact on India’s BFSI sector in the year ahead.
Revaluation of operational control processes
One of the big challenges of cloud adoption, pre-COVID-19, was the amount of operational overhead and risk acceptance knowledge required to migrate workloads from on-premise to the cloud. This was coupled with the fact that many banks had in place arduous control processes that were difficult to overcome. However, due to the pandemic, banks have realized that many offshore staff who were maintaining systems could not log in from home, causing a risk issue. Banks were forced to re-evaluate these processes to ensure they were fit for purpose in this new world, where physical distancing quickly became the norm. We expect that in 2021 banks will increase expenditure on process simplification and improvements – something that the cloud can help deliver.
Changing relationship between data regulation and innovation
With changing geopolitical dynamics, we will see increased focus around data sovereignty and consumer safety around the globe, as consumers seek to understand how precisely their data is being used and governed. Some countries may follow the likes of Poland, setting up national clouds where banks shift from capital expenditure (CAPEX) to operational expenditure (OPEX) and enjoy many of the benefits of the cloud, as data remains in the country. Meanwhile, the big public cloud providers will continue to canvas and work with regulators to find common ground on the best way to run their infrastructure long term.
In the past, some regulators have stood in the way of innovation, in part due to a lack of understanding of the competitive landscape. Banks could end up spending more on maintaining the status quo to placate regulators. In India, there are ways that the cloud can resolve regulatory compliance. In 2020, National Payments Corporation of India (NPCI) rolled out more than twenty circulars for UPI, requiring bank compliance – shifting to the cloud should help keep up with these regulatory mandates.
While it will be a gradual shift over the next five years, I would hope banks can reduce overheads, which restricts their ability to innovate, by working closely with cloud providers and regulators to automate and simplify through increased transparency.
Long live the marketplace platform
One of the greatest drivers of cloud within India’s BFSI sector will be the need for banks to diversify their revenue models from fee-based transactions (where it is a race to zero) to new client-based services. India’s banks face eroding revenue as Merchant Discount Rate (MDR), Merchant Service Fee (MSF), and other charges such as interchange are highly regulated – highlighting the need to diversify. For example, with Google Pay or WhatsApp Pay, banks acquire new customers on channels outside of their own at a much lower cost to what they would have incurred the traditional way. Once they have these new customers, it opens up new cross-sell and up-sell opportunities for the bank; they could sell a loan product or a credit card. In fact, Indian banks are partnering with fintechs to provide instant credit, so it does open up new avenues of income for the banks, and it is instrumental to their overall payment strategy.
Beyond these three trends, we also anticipate continued demand for hybrid and multi-cloud environments, where banks avoid being locked into a single vendor by using a mixture of private and public cloud offerings. More bank leaders and CIOs will also recognize the need to get machine-human collaboration right. Greater investment in employee reskilling and upskilling will helps banks unlock the value that lies at the intersection of employees and technology. There will be a more top to bottom approach to “applied intelligence” – combining intelligent cloud technologies and solutions with human ingenuity – across all areas of banking, reshaping core banking processes and transforming customer experiences.
Find out more in our on-demand webinar: Driving Payments Modernization with the Public Cloud
Related Blog Posts
Grocery Shoppers Show Omnivorous Appetite for Omni-Channel
Digital acceleration and the massive growth in eCommerce sales in 2020 have not gone unnoticed by those in the connected world. Largely driven by the COVID-19 pandemic, ACI Worldwide data analysis showed that global online sales in the general retail sector were up 209 percent in April and 81 percent in May (compared to the previous year), and overall eCommerce sales continued to show an uplift of more than 20 percent compared to a year earlier in November.
Merchants Don’t Need a Payments Gateway, They Need a Payments Hub
The term “payments gateway” over-simplifies what it takes to process a payment. The terminology comes from the early days of online payment processing, but has now entered the vernacular for all aspects of merchant payments, including online, mobile and in-store.
How to Recession-Proof Your Retail Business in 2021
2020 has been a challenging year for retailers; many were — understandably — unprepared to deal with the pandemic. With millions of people in the U.K. in lockdown, consumers and businesses have had to change the way they work and live, and the way they shop and pay.
Adding Fuel to the Fraud Fire
Payments fraud is a widespread and difficult issue in the fuel segment. Fuel dispensers are a common target for certain types of fraud – and fuel merchants often lack visibility into the level and impact of that fraud.
The Rise of “Invisible Payments” in Latin America
For retailers throughout LATAM (and the world), driving sales and loyalty depends on keeping up with top payment trends, which are invariably driven by consumer demands. “Invisible payments” is an emerging trend that is already paying benefits for a host of retailers — and it could be a game-changer for Latin America.
Agnosticity: Giving Fuel Merchants the Freedom and Flexibility to Innovate
The absolute minimum that customers demand from their transaction at the fuel stop is a fast, convenient and secure payments experience. But there is also room for fuel merchants to build loyalty and boost upselling by delivering more than just a good price on fuel and a fast payments process.
Could COVID-19 Be India’s Cashless Catalyst?
India’s push towards a digital economy has accelerated over the years, with a supportive regulatory environment, home-grown technologies and innovation around digital infrastructure improving “last mile” connectivity to the remote towns and rural areas of the country. While the “Digital India” drive has been consistent, the COVID-19 pandemic has brought out the true value of digitization for businesses and consumers alike. It is a watershed moment and has fast-tracked the pace of digital adoption, particularly for payments, which now plays a critical role in economic recovery.
Platform Driven Payments Can Drive Improved Profitability for Fuel and Convenience Store Merchants
Those of us who drive often don’t think too much about refueling our cars unless or until our tanks are nearing empty. And as long as the price is acceptable and the transaction efficient, a quick, convenient fill up is all we need.
Only One-Third of Major Fuel Merchants Have Fully Implemented EMV and 20 Percent are Still in the Planning Stage
Earlier this year, we blogged about the issue of EMV implementation in the U.S. fuel sector and the fraud issues fuel merchants can expect to see if they’re not ready by the extended April 2021 deadline.
Omni-Commerce Is Heating Up the Merchant Token Revolution
Merchants around the world have embraced the wisdom of keeping sensitive customer data (such as card numbers) out of their own environments, with tokens emerging as the tool of choice to bridge the gap. Merchant functions — including reservations, returns, reporting, rewards, research, reconciliation and more — have typically required access to sensitive data, but a series of high-profile breaches has highlighted the need to store card numbers in tightly secured safe harbors.