How are digitalization and technology shaping the BFSI sector in India?
Since the financial crisis of 2007-2009, the banking industry has faced a devastating phase, from low credit growth to a damaged reputation. By 2020-2021, there were 7.6 million active customers on digital channels in India.
The reason for this transformation can be attributed not only to banks facing the crisis but increasingly to the use of information technology and big data, along with highly specialized human capital.
This blog gives you insight into the different ways in which digitization and technology are helping to pave the way for the future.
How is technology transforming the BFSI Sector?
Digitization and technology have played a major role in transforming the banking and financial services industry (BFSI) sector in India and globally.
According to the Reserve Bank of India’s annual report for 2020-21, the total volume of digital transactions was Rs. 4371 crores as against Rs. 3412 crores in 2019-20. Thus, today’s economy and modern financial systems continue to disrupt traditional forms of banking.
Technologies that can shape the BFSI sector.
Here, we see a whole new spectrum of newer and faster banking solutions with the help of the following next-generation technologies.
Artificial intelligence and machine learning
For innovative and frictionless banking operations, banks and financial service providers choose AI and ML technology. AI-powered chatbots are the main attraction for the banking sector. Not only this, AI and ML have immense potential in financial fraud detection. It can offer a high level of accuracy in validating the credit risk profile that determines the profitability of banks.
Blockchain-based systems offer transparency, trust, and vastly improved native regulatory advantages, blockchain adoption gets support from the Indian banking sector from regulators.
With the help of this progressive technology, banks can process payments quickly and, more importantly, accurately. Blockchain reduces transactional costs and leads to the development of new banking products and services that can generate new revenue streams.
The volume of customer onboarding increased with digital banking, and an increase in the number of customers also increases the amount of data. This is the time when cloud technology can make a difference. As it is a suitable way to store, organize and retrieve data with security and agility through Indian cloud storage and hosting solutions.
Cloud technology helps banks improve their banking revenues, customer service, and overall efficiency, as well as reduce operational costs.
Robotic Process Automation
In the BFSI sector, robotic process automation is used to create pre-programmed processes that can learn on their own from existing data patterns and business decisions. These processes cut administrative costs in half, while robotic process automation still improves the quality and agility of the banking process.
This technology also simplifies compliance by automatically generating auditor reports and maintaining automated process details. Robotic process automation and cognitive automation together can help banks deal with future problems, such as data overload.
ATMs give a massive change in customers’ lives. With the help of ATMs, customers can easily withdraw cash from anywhere and anytime. It enabled them to withdraw and deposit money, and update passbooks without having to wait for banks to open.
The adoption of advanced technology processes is more in BFSI sectors than in any other industry. Digitization and technology like cloud technology, Artificial Intelligence, etc. will take the BFSI sector to greater heights by helping banks to minimize costs and make them efficient. It can increase customer satisfaction and secure a place in the digital future.
Therefore, adopting and enforcing these technology trends will accelerate digital transformation in the BFSI sector.