India’s take on large scale payments innovation: ‘Leapfrogging’ to lead the pack

A new wave of payments innovation is taking place globally and emerging, high growth markets are the ones to watch. Encouraged by increasing customer demand, favourable regulation and unburdened by legacy infrastructure, countries in high growth markets are beginning to lead the pack when it comes to large scale payments innovation.

A great example of this leapfrogging trend can be found in India. As the country’s leading payments services provider, we are seeing first-hand that India is fast becoming a hub of payments innovation and disruption at scale. India is home to several of the ingredients necessary to encourage new technology to flourish and old systems to make way for new. Key among these ingredients are the increasing customer demand for digital payments, a supportive regulatory environment and a highly skilled tech market.

imaginBank: Simpler banking for the digital age

"I don’t need an elaborate banking service with branches, passbooks, letters in the post, an annual financial review and a bank manager that knows my name. Interest? I don’t save enough to accrue any, or I put my money somewhere else. All I really want is an account that will accept my deposits, hold my money and release it when I want to make a payment or transfer. I don’t want to wait for transactions to appear on my balance or for transfers to clear. An automatic payment function would be useful, so I can settle my bills easily. But most important of all, I want to do everything, repeat everything, on my phone. Some exclusive offers and deals would be good too. That’s it."

Welcome to the mindset of a growing demographic of today’s banking customers. All are committed device users - not power users or early adopters - just people that manage their lives using phones and tablets. Many are young – Millennials - but not all. Most have modest incomes and are determined to live debt-free and unconstrained by financial commitments.

Gotta Catch ‘em All: Pokémon Go and the Banking Industry

If you had told us that you had never heard of Pokémon Go, especially after the month and a half the new application from Nintendo has had, we at IBS Journal wouldn’t believe you. The alternative reality game has had children and adults alike enraptured, following their phones around outside hoping to catch elusive Pokémon at local landmarks.

Explosive would be the right word to describe just how much of a phenomenon Pokémon Go has become overnight. Not only has it been downloaded in record numbers, but it is being used more often per day than the most popular apps of all time. The app almost has as many daily users as Twitter and the search term “Pokémon Go” and its derivatives have overtaken the most entrenched top Google searches, including those for pornography.

Keeping the customer front of mind

Banks have focused their efforts on trying to create and launch products that will generate revenue for them but have forgotten the essential element to making a product successful; the customer. FIs must invest in innovation, but only if the intended product seeks to serve the customer. 

In keeping the product customer-focused it creates a need amongst customers and ensures that the offering becomes a necessity when they’re conducting everyday transactions. When a bank brings a product to market that actually solves real problems, it will ultimately become a new revenue channel.

A Tale of Two Wallets

Wallets, or purses, have been around since bartering was replaced by the exchange of goods for currency of whatever variety. Therefore they were handy means of carrying that currency in case you needed to ‘buy’ something on your travels. 

Centuries, if not millennia, have passed and we are now in the electronic, or digital, age. The wallet and/or purse are still with us albeit with that all important prefix the ‘E.’ 

Millennials demand digital banking

Millennials hold the key to the future of banking. By 2018, they will have the highest spending power of any generation, and by 2025 three quarters of workers globally will be a millennial. Challenging the status quo, a third of millennials don’t believe they’ll need a bank in the next five years.

Apathy towards traditional banks is born of frustration. For a generation who have embraced the likes of Google, Amazon and Uber, feeling the need to use a physical branch to make financial decisions is unappealing.

Mondo gets the public Beta blues

Who’d be a challenger bank, eh? Getting that cool digital offering to market is a long and winding road with many a treacherous turn as mobile-only newcomer Mondo has been finding out. Earlier this month, it was forced to reboot a crowdfunding initiative after an initial demand for participation overwhelmed Crowdcube’s servers.

And now the startup (tagline: Finally, a bank as smart as your phone) has been experiencing teething problems following the launch of a public Beta, inviting iPhone users across the UK to download its app from the App Store.

Cash continues to make a splash

Look away now, banks, card schemes and all the other proponents of a cashless society. It seems that notes and coins are not going away just yet. LINK cash withdrawals from UK ATMs in 2015 amounted to a record £128 billion. The total number of cash withdrawals only grew slightly in 2015 (by 0.8%) with the value of these increasing by 2%. The amount cash machine users took out also went up – with the average value rising from £61.25 in 2014 to £61.93 in 2015.

The death of bank products has been greatly under-exaggerated

Source: Moven

Since 2005 I’ve been predicting the decline of branch banking. For almost ten years I fought bankers who decried my assessment that branches would cease to be the most important channel in banking, to be replaced by far more efficient mechanisms for revenue generation and relationship. Today the discussion is increasingly resorting to a sort of desperate plea — 'but branches aren't going to die completely, are they?' No one is saying branches will grow.

The UK, the US, Spain, and a host of other countries are seeing the lowest number of bank branches in decades. For the UK you’d have to go back 60 years to find lower numbers of bank branches than we have today, and 2014 saw the use of bank branches fall 6% in a single year — the biggest reduction ever. 

Do we need the digital-only bank?

Post-crisis a lot of people don’t trust banks. You can’t really blame them, it’s just the way things are now. That mistrust hasn’t stopped people using their banks, of course – where else would they keep their money? Apart from stuffing it into the mattress there isn’t much choice.

Never fear, those of you clamouring for a different way to do banking (raise your hands – anyone?), as a wave of digital-only banks have arrived to save the day.

The 'Pay' model is strong but the banks are still in play

The big guns – Apple, Samsung and Google – are dominating the mobile payments news cycle now that their respective ‘Pay’ platforms threaten to disintermediate the world’s banks. 

They won’t have it all their own way, though; banks are responding with their own platforms. But is it too little, too late?

Is it time to debate the Digital Only business model?

For many bank executives today, there are very real concerns about the impact on their business models by so called digital disruptors. The question is how long will that disruption last, and is being digital enough of a differentiator to create large corporate casualties?

If you are like me, then you must be getting tired of seeing messages about 'Unicorns' and how Uber owns no taxis, and AirBnB has no hotels blah, blah, blah. 

Branches and mobile banking: do you need both?

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One of the discussions at the Payments Knowledge Forum, which took place in London last week, was whether or not both branches and mobile banking are needed? While there were plenty of good arguments for both sides of the debate, the main common point was consumer experience. Consumers want to have an enjoyable banking service that is easy to use and consistent, whatever the channel. Robert Johnston, marketing director at NCR, said that a key differentiator from one company to another is the quality of consumer experience, more so than the products that are on offer.