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Technological innovations in the banking sector in India: An analysis

Conference Paper · December 2017

DOI: 10.1109/TAPENERGY.2017.8397342

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2017 IEEE International Conference on Technological Advancements in Power and Energy ( TAP Energy )

Technological Innovations in the banking sector in

India: an Analysis
Malini A Dileep G Menon
Department of Management Department of Management
Amritapuri Campus, Amrita Vishwa Vidyapeetham Amritapuri Campus, Amrita Vishwa Vidyapeetham
Kollam, Kerala, India Kollam, Kerala, India
[email protected] [email protected]

Abstract— The goal of the paper is to identify ten important are expected to drive the dynamics of the banking ecosystem in
innovative solutions in the banking sector and analyze them in the the near future[1].
context of assumptions of the paradigm of relationships and
features of product orientation with related to technology.
Banking is a rapidly changing industry. The biggest paradigm II. ANALYSIS
shift that has occurred is the digitalization of banks which aim at
providing customers with a broad scope of benefits. Technology- A. FinTech Firms are Being Considered as Partners Rather
based innovations will be the key determinant in offering than Competitors
diversified and customized banking services to their varied
customer portfolios, at a reduced cost. Even if it is convergent with Banks are troubled by their inheritance frameworks and are
the assumptions of the paradigm of relationships, it should be centered around following controls as opposed to addressing
indicated that some banking products are based on advanced advancing requirements and desires of clients. FinTech firms
solutions that may surpass real market demands. We examine the have entered the business with inventive items and benefits and
development of technology in the banking sector.
are focusing on the most gainful business portions. Attributable
to their inventive, helpful, and less expensive offerings, FinTech
Index Terms—Technology, Innovations, Banking Sector, India firms have begun procuring clients from conventional banks,
and additionally unbanked clients and customary banks because
I. INTRODUCTION of the absence of positive condition for advancement are
thinking that its difficult to rival them. Section of FinTech firms
With the rise of technology, banking customers are living in
in the managing an accounting industry has constrained banks to
a connected world with their experience from other industries
search for new offerings by making the best condition for
influencing their expectations from their financial services
development with the assistance of FinTechs, considering them
provider. This has led to an evolving customer-bank relationship
as an accomplice as opposed to a contender. This association can
necessitating banks to be more customer-centric by embedding
give a sandbox sort of approach for experimentation, with the
themselves in customers’ lives to meet rising customer
flexibility to test new thoughts, [1]as FinTechs are situated
experience expectations. However, banks have been facing
outside the bank condition free from infrastructural and social
challenges in meeting customer expectations, as they are
imperatives. Many driving banks are running startup projects to
troubled with legacy challenges both in terms of technology and
hatch FinTech organizations or store them through their funding
culture.
arm, notwithstanding putting resources into quickening agents
While technology has been acting as an enabler for banks to
and advancement labs. BNP Paribas has propelled their own
make the right moves, it has also led to the growth of non-
interior quickening agents/hatcheries/tech centers Lux Future
traditional firms like financial technology firms (henceforth
Lab in Luxembourg and TEB startup House, and cooperated
referred as FinTechs). FinTech firms leverage technology to
with other environmental partners, for example, Partech Shaker
provide simple, easy-to-use, convenient, and cost-effective
and NUMA Startup training camp FinTech New York has
products and services to customers. However, FinTechs lack
banded together with Deutsche Bank, Route 66 Ventures, and
scale, access to a larger customer base, and expertise in handling
Wilmer Hale, additionally growing the support in its FinTech
regulations, all of which leading to a realization that there is
Accelerator program Motif Investing is collaborating with J.P.
significant scope for banks and FinTechs to collaborate and
Morgan where introductory open offerings drove by J.P.
operate together—driving innovations and providing better
Morgan will be accessible straightforwardly to retail clients on
products/services to customers. As the rise of FinTechs has had
Motif's cutting-edge online business stage. From 2013– 2016,
a significant impact on the industry on both technology and the
worldwide interests in FinTech were at $62 billion, with
business front, there is a growing trend of banks focusing on
ventures topping to $24.6 billion out of 2015. Biometric
innovation by leveraging new technologies such as block-chain,
confirmation strategies utilize novel natural or behavioural
biometrics, and robotic process automation. This document aims
attributes to check a client's character. [3]Given the uniqueness
to understand and analyze the trends in the banking industry
of biometrics, it can give included security and diminish hazards
that

978-1-5386-4021-0/17/$31.00 ©2017IEEE
superior to customary security frameworks Bank of America is apprehensive treasurers will be to pull the attachment on that
utilizing a unique mark scanner on their cell phones for their relationship. On the other hand, banks may push toward an open
clients to sign in to the versatile managing an account app. engineering and open up their innovation determinations to
Barclays offers finger vein innovation to its corporate clients for outside designers. In February, Standard Chartered Plc opened
approving exchanges. One of the principal purposes of keeping up an engineer center for corporate applications, to energize
down banks from full usage of biometric validation into all outsider budgetary innovation organizations to create APIs.
gadgets is the general cost of the innovation and execution; Different banks, including JPMorgan Chase, are investigating
nonetheless, multiplication of cell phones with such comparable capacities. Fintechs are working with banks to
arrangements may quicken the procedure of implementation as enable customers to streamline their money administration and
the weight from clients expands different abilities. TreasuryXpress, for instance, utilizes APIs to
give treasury administration arrangements. "The advantage we
B. APIs to Monetize the Digital Assets and Data find in APIs is in the speed of the network and in this way the
speed of the informing," said Thomas Leitch, VP of business
Customary banks need to manage expanded rivalry from improvement at TreasuryXpress. "Having these sorts of
FinTechs and rising client desires, which is achieved by advancements enables clients to be substantially more agile
comfort and accessibility of propelling advances. With with instalments and to realize what to do to upgrade the money
expanding digitization and connectivity between networks, it is they have." From the perspective of banks and innovation
critical for banks to develop a biological community of suppliers, APIs can limit issues of tweaking frameworks for
advancement around client information. Banks are searching each different corporate customer.
for new income streams and approaches to open the estimation
of computerized resources and client data. Application Program C. Platform to many FinTech Firms
Interface (API) is an innovation convention that enables
different programming segments to impart—if actualized in FinTech players are increasing present expectations higher
banks it would enable them to bundle their business resources for the conventional banks, situating themselves as
and information, making them available both inside and outside straightforward and basic other option to the customary banks.
an organization.[3]API innovation empowers saves money with In spite of the fact that FinTechs don't give the full scope of
the adaptability they have to give the sort of item customization items and administrations, banks remain to miss out business in
and experience that clients expect through outsider applications particular territories. Banking as a Platform (BaaP) is a term
in this developing advanced age. Banks are relied upon to open that implies customary banks will go about as a center money
up their APIs, empowering engineers to assemble creative related stage and will be straightforwardly connected to
applications that can be facilitated on a bank's application store. numerous FinTech ventures. Banks have a significant client
Incorporation of outsider applications through [3]APIs will base, put stock in, steadiness, access to a lot of capital, and
enable banks to address their shortcomings in a specific demonstrated involvement in taking care of direction
territory. Activities, for example, Open Bank Project will prerequisites, alongside an approach to use readiness and
engage banks to improve their computerized offerings utilizing convey the capacity to improve with innovation aptitude from
a biological community of outsider applications. White-mark FinTechs to give a more extensive combination of
arrangements are relied upon to be created by unmistakable arrangements and turn into a center point of circulation. The
managing account players, which can be utilized by others by stage will give clients a one-stop shop, from which they will
paying a charge.The likelihood of white-name arrangements have the capacity to get to conventional banks for their center
and an extensive variety of administrations are required to offer offerings, alongside new arrangements that are offered by
ascent to the API economy. Many banks are likewise putting FinTech firms.
resources into the advancement of utilization programming
interfaces. An API is an arrangement of innovation rules and
D. Cybersecurity Systems with the Increase in Cyber Threats:
instruments that empowers programming designers to construct
associations between two frameworks, taking into account
speedier exchanges and encouraging information access and Expanded appropriation of web and portable applications in
investigation. For the treasury end client, and in fact, for banks, the keeping money industry has made the business inclined to
APIs speak to an essential change in devices, for example, cutting-edge digital assaults. The programmers have turned out
instalment centre points and treasury workstations. APIs are to be more expert and master in breaking obstructions built up
progressively turning into a basic piece of banks' corporate by means of customary security measures.[4]The Systemic
offerings since they understand a few difficulties in addressing Risk Barometer Survey of April 20166 noted digital hazard as
singular organizations' needs around bank network. APIs the best danger in monetary organizations by 25% of
likewise can possibly quicken exchanges, in the nick of time for respondents, while 56% positioned digital hazard in their best
real-time instalments. Banks may offer APIs straightforwardly, five threats. Being the gatekeeper of national riches,
for example, the instalment APIs of Citi Bank. The more esteem governments have a unique concentrate on protecting banks
banks can give, the stickier the relationship. The more esteem against security ruptures. As banks leave working in
included keeping money administrations turn into, the more storehouses and attempt to coordinate a various managing an
account biological community, they should deliver security
worries to ensure clients' cash and data. The worldwide ATM locators, conversing with a relationship chief, do a
cybersecurity advertise is relied upon to develop from $122.4 property hunt, or make instalments. While utilization of AR in
billion out of 2016 to $202.3 billion at a CAGR of 10.6% by managing an account capacities are relied upon to increment
2021. The money related administrations industry is set to after some time, a few banks have just propelled different
witness the most noteworthy development of 11.6% CAGR applications Commonwealth Bank of Australia has built up an
amid the figure time frame.[4] application that when pointed at a property can give its posting
subtle elements and other data that can be utilized to settle on
property choices. An AR application was propelled by Standard
E. Cloud Services
Chartered China that gives area based administrations like
rebate coupons Westpac propelled an AR application, which
Customarily banks have kept close control of their IT, causes its clients to check card adjusts, make installments, and
supporting huge in-house groups and building their own locate the nearest bank or ATM branches – Citibank dealers
particular server farms. This is set to change as banks are taking have been trying Microsoft HoloLens as a virtual workstation
a gander at the chances to diminish the volume of server farms to supplement the bank's current gadgets and work processes.
and spare expenses by executing open cloud-based
infrastructures. The managing an account industry has more
often than not shied far from open cloud usage because of G. Distributed Ledger Technology
shared framework and its apparent security and administrative
risks.[1]Major worldwide banks are expanding their cloud Albeit critical advances have been made in innovation,
ventures, numerous enormous banks are presently banks today are as yet keeping up customary records to record
concentrating on open cloud deployments. The open cloud exchanges inside their biological systems. Regardless of
gives banks' dexterity and adaptability to convey an IT endeavours to decrease intricacy, the mid-and back-office
foundation without putting resources into their own physical capacities stay moderate and wasteful—with electronic
framework, which helps in lessening of expenses. A mix of exchanges that can occur in a matter of moments as yet taking
figuring energy of the cloud and Big Data empowers banks to days to settle and accommodate. [7] The systems are costly and
give better bits of knowledge and make better decisions. Cost powerless because of the procedures that support resource
of processing in the cloud has been on a decrease, making the possession and resource transfer. Distributed record innovation
cloud an alluring cost-sparing choice for banks. [5]Public cloud works on a shared premise permitting appropriated record
is putting forth various decisions in engagement models, for administrators to take out supervision, IT framework, and their
example, Software as a Service, Platform as a Service, related costs. Banks are receiving block chain innovation
Infrastructure as a Service,[2] and Data as a Service, which significantly quicker than anticipated: – 15% of best worldwide
banks can select according to their necessities. Utilization of an banks are relied upon to take off business block chain items by
open cloud is little in huge banks, however, explore says they 2017, and 65% of banks are required to have block chain
could go from zero use to as much as 30% inside three years. extends underway throughout the following three years. Banks
Despite the fact that an open cloud is most suited for keeping investigating disseminated record innovation utilize cases are
money regions, for example, client relationship administration, following an approach that joins inside trials with association
IT improvement, application framework, and examination, it in consortia, which incorporate their kindred banks, other
might progressively discover acknowledgement for other money-related organizations, and innovation suppliers: –
saving money works too. Ripple is a startup assembling a bitcoin-like installment stage
went for banks' cross-fringe exchanges and tending to the
procedure, which is right now expensive18 – R3 (R3CEV
F. Augmented Reality to Provide Enhanced Customer
LLC), in association with Microsoft, drives a consortium of 45
Experience
budgetary organizations in innovative work of block chain use
in the monetary framework taking a shot at the exchange
To keep clients faithful and keep utilizing their settling process. The Hyper ledger venture is an open source
administration, banks are attempting to adjust inventive courses cooperative exertion comprising of 80 individuals made to
for giving straightforward, helpful managing an account drive block chain advancement.
answers for their clients. Clients these days have exclusive
requirements, requesting a specific nature of administration,
making it harder for banks to keep an aggressive edge. Banks H. Cognitive Banking to Provide an Edge over Competitors
are concentrating on adjusting new advances and finding
inventive methods for conveying answers for giving better As an ever-increasing number of clients advance toward
client experience. AR is the ongoing utilization of data and computerized channels, the measure of information produced
other virtual upgrades, incorporated with true objects. [6]The from their association with banks is expanding exponentially in
capacity to consolidate computerized and physical substances volume and in addition in many-sided quality while
will change client encounters, coordinating saving money investigation is as of now being connected by most put money
flawlessly into regular associations.Visually engaging uses of on this Big Data, maximum capacity is yet to be acknowledged
AR can improve client encounter by giving area based offers, as frameworks can't comprehend and process fluctuated sorts of
non-pre-characterized datasets. Banks are in the need of Banks are seeing a change in perspective in the way their
innovation that can help adapt to these information difficulties purchasers associate and execute with them in this hyper-
to keep pace with contenders and satisfy client desires.AI and associated world with the expansion in digitalization of
psychological advances are being connected in the keeping procedures and assorted advanced channels. This expanded
money industry predominantly toward client relationship digitization and network has prepared for some passage focuses
administration, character validation, hostile to illegal tax in the framework, which have made banks more defenceless
avoidance, consistence, chance control, and other operational against attacks. Biometric validation techniques utilize special
aspects.AI has begun assuming a noteworthy part in client organic or behavioural attributes to check a client's personality.
benefit exercises: – Customer benefit through chat bots or voice Given the uniqueness of biometrics, it can give included
colleagues has just been received by a few banks including security and lessen chances superior to anything ordinary
Santander UK, Atom Bank, Swed bank, and Digi bank, in this security frameworks: Bank of America is utilizing a finger
manner empowering them to deliver client demands to a more impression scanner on their cell phones for their clients to sign
prominent degree – Even for physical channels, for example, in to the portable managing an account app. [7]Barclays offers
branches, banks are testing by embracing humanoid robots that finger vein innovation to its corporate clients for approving
can welcome clients as well as have discussions with them – It exchanges. One of the primary purposes of keeping down banks
isn't just client self-benefit channels where AI is discovering from the full usage of biometric verification into all gadgets is
selection, banks, for example, RBS has propelled AI to the general cost of the innovation and execution; be that as it
empower its staff to answer client inquiries all the more may, expansion of cell phones with such arrangements may
productively .Unlike pervasive examination being utilized by quicken the procedure of implementation as the weight from
banks, AI makes them learn abilities, making it conceivable to client’s increments. Union Bank of Philippines is one of the
process fluctuated sorts of information, subsequently significant banks of Philippines positioning seventh as far as
empowering banks to offer pertinent and customized resources. Usually known as Union Bank, it has made different
arrangements and administrations to their clients. Setting up AI channels accessible for encouraging access to data and
and intellectual frameworks can likewise help in satisfying performing exchanges. Giving wide assortment of monetary
consistence and against misrepresentation necessities, possibly administrations, Union Bank is an all-inclusive bank. The bank
sparing banks from enormous punishments emerging due to has run with an IdentityX stage for versatile biometric
rebelliousness or security ruptures. Banks searching for better validation. The identityx stage is created by Daon, a main
operational proficiency are additionally taking a gander at AI biometric programming arrangement supplier, and is set to give
as a potential arrangement due to its ability of shrewdly an extra layer of security for Union Bank's portable channel by
overseeing robotized forms, which limits errors. Owing to its biometric confirmation and gadget cryptography. Banks far and
significance, AI is as of now getting a huge mindshare of wide are progressively picking biometrics to confirm clients
managing account administrators, as 52% trust AI to be one of getting to their administrations. This pattern isn't constrained to
the developing advancements affecting the saving money banks; different financials outfits are additionally taking up
industry.[2] biometric confirmation to distinguish clients and defend assets.
Expanding instances of money related extortion, wholesale
fraud, and dangers from the internet have made banks to rebuild
I. Robotic Process Automation
their character practices and biometrics in keeping money and
monetary administrations offers the arrangement. Most
The managing an account industry is confronting extensive managing account clients are educated these days and expect a
dangers, inside and remotely, prompting weight on both the grinding less access to saving money benefits yet watchword
best and base lines.As banks confront the risk of disturbance, based character arrangement comes up short stay aware of
there has been an expanding center around changing their desires, be that as it may, with biometrics in saving money,
inward frameworks to remain at pace with outer difficulties, be things is by all accounts evolving now.[7]
that as it may, the many-sided quality associated with Having stored cash and assets of individuals, banks and
inheritance change is compelling banks to investigate monetary establishments are dependably on hit-rundown of
imaginative approaches to drive interior efficiencies. RPA is a fraudsters and digital crooks. Since banks and money related
product based way to deal with organizing exercises among organizations have an awesome significance in the monetary
existing applications by using existing business principles and security of a nation, they are one of the much managed
logic. When executed in banks, RPA can decrease manual establishments. Administrative consistence additionally
procedures, robotize rules-based high-volume exchanges and influences how banks recognize their clients. Customarily
handle redundant procedures flawlessly with higher proficiency banks have been utilizing paper-based personality records or
and exactness levels.RPA gives huge esteem add to different government provided picture ID cards to recognize and verify
ranges of the client lifecycle, particularly credit preparing, their clients. Be that as it may, this technique for recognizable
installments, operations, and accumulations. proof has been always fashioned by fraudsters as it is anything
but difficult to print archives and cards as amazing printing is
J. Biometric Authentication Tools effectively accessible to everybody. With biometrics, be that as
it may, it winds up noticeably close difficult to utilize another incubators and innovation labs, Cognitive Banking to Provide
person's character. an Edge over Competitors-Artificial Intelligence (AI) and
cognitive technology enable banks to speed up its digitization
III. CONCLUSION initiatives and provide targeted, customized products and
In the current scenario, people go with innovation and services, Robotic Process Automation-Robotic process
technology to get their work done much smarter and faster. automation (RPA) is a highly efficient way to help banks reduce
Frugal Innovations that are sustainable and accessible will be IT spending without compromising service provisioning,
able to generate more revenue and increase firm value while Biometric Authentication Tools to Combat Identity Theft and
significantly reducing the resource requirements, cost and Fraud-Biometric authentication will help banks to combat
thereby enrich the environment [8]. FinTech is one such path- identity theft, make transactions more secure, and enhance the
breaking frugal area which will address the issues in access and customer experience.
use of financial services without geographic constraints [9]. So
the trends listed will bring up a satisfied customers in terms of
banking and the trends include FinTech Firms Are Being REFERENCES
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out from the crowd, Distributed Ledger Technology-Banks are 2017
exploring distributed ledger technology applications by either
collaborating, partnering with startups, or by creating

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