With the advent and penetration of banking services like UPI and mobile banking, the banking sector is on the cusp of witnessing massive transformation. The introduction of digital banking units (DBUs) and digital currency by the government are two major initiatives bringing concepts of self-service, financial inclusion and cost-effective banking seamlessly integrated onto regulated platforms.
DBUs helping further the digital economy
With DBUs and self-service functionality, many processes will become extremely efficient. This model, particularly in urban areas, will assist customers with much-needed access to easily carry out most of their day-to-day banking operations. This, in turn, helps to reduce the burden on banks while also keeping the economy consistently operational and driving financial inclusion.
DBUs have their own limitations, such as inaccessibility for the unbanked population and technological literacy issues, and we still have a long way to go on our journey to truly connect every Indian to the banking system. However, this is a significant step forward in furthering India’s digital economy agenda. The digital avatar of paper currency — digital rupee will now be considered a regulated and safer mode of payment. Digital banking and digital currency have also given a significant boost to the startup ecosystem, with many fintech players and tech startups thriving in operations such as customer service, automation, and so on.
Also read: Cross-border B2B payments to surpass $40 trillion globally by 2024 driven by e-commerce: Report
In terms of financial inclusion, the government has made significant progress in the digital currency space with the introduction of E-Rupee, a tokenised version of India’s currency. As this becomes more widely available, we will upgrade our payment systems so that digital transactions can be used for both person-to-person and person-to-merchant transactions. While cryptocurrencies have grown in popularity in recent years, the RBI-regulated digital currency will be much more regulated, secure, and centralised. This will boost Indians’ trust, encouraging them to conduct more digital transactions.
Crucial role of cloud computing
Also read: Budget 2023: What are expectations of startup and investors from FM Nirmala Sitharaman
Cloud computing cannot be underplayed when discussing how technologies support digital banking. Because of increasing competition, changing business models, mounting regulatory and compliance pressures, and disruptions, financial services leaders are heavily relying on the cloud to increase profitability and improve customer experience.
With the introduction of DBUs and digital currency, we have entered a new era of self-service, smarter, and faster banking. More such innovations will change the way banking services operate in future. With the government’s push and the integration of smarter technologies into financial services, the coming years will see even more such innovation and disruption in the BFSI space.
The writer is vice-president, Global Strategic Clients Group, Oracle India