Financial markets are fragmented, and less than 24 percent of the population is financially literate. The right investment decision can be made with the help of reliable information and tools. There is a large percentage of the population that is illiterate, which poses a major challenge. To learn more about the key challenges and opportunities of the banking sector, Srajan Agarwal from Elets News Network (ENN), had a chat with Jitendra Dhaka, Founder, BankSathi.
1. The banking world has faced unprecedented changes in recent years. Do you agree that data and its management have now become an important part of financial institutions?
Yes, with the advent of UPI and the transformation of physical currency into digital currency. Nowadays, more and more transactions are done online. As a result, it differs from traditional banking, which involves physical intervention and a lot of paperwork. As more and more consumers go online, the need for data and its reliance becomes paramount as customers have access to dashboards provided by banks to track and record all transactions. This has created a lot of transparency in the system and facilitated transactions.
Since banks / financial institutions have access to data, they can provide customized solutions to their customers.
Proper questionnaires are floated to customers and data is collected so that products can be recommended based on demographics, age, income group and investment goals.
This will help financial institutions position products more effectively and customers can make better decisions.
2. How does BankSathi stay abreast of the Indian financial landscape?
Currently, the financial market is fragmented, and less than 24 percent of the population is financially literate. The right investment decision can be made with the help of reliable information and tools. However, the majority of the population is illiterate, which poses a major challenge.
Banksathi’s channel partner system by existing agents and financial consultants provides the right set of tools to empower partners in the network to sell the right products to customers. Consultants can expand their existing portfolio by offering a variety of products and services without going individually to financial institutions and maintaining many different IDs. Everything will be available to them under one umbrella and commissions/incentives will be available from one channel.
This enables agents/consultants to provide better services to customers and assist them in the decision making process.
3. According to different statistics, only 24 percent of Indians are financially literate. Why do you believe having financially literate people is important in this country?
Financial literacy has become one of the most important priorities, it helps improve the quality of financial services and contributes to the country’s economic growth.
According to a global survey, financial literacy in India is seen as very poor compared to other countries in the world. However, 76 percent of the adult population does not know or understand basic financial concepts. In Asian countries, Singapore has the highest percentage of financially literate people (59 percent of adults). In western countries like the United States, it scores 51 percent-100 percent. In European countries like Norway, 71 percent of people are financially literate. In India, there are many differences between different states and the literacy rate is very low in states like UP, Bihar, Rajasthan etc.
It seems most people are often cheated by their sales or insurance agent. Financial awareness helps people become self-sufficient and independent. It helps to understand the questions and solutions explained by their financial advisor. If the people are financially literate then the level of investment will increase and it will help the development of the country.
4. Since you are across India, what are the key challenges and opportunities you have seen and what solutions are you working on?
There are several challenges. The most common are the various languages in India. Advisors prefer to speak and read their local language. We are working on introducing our mobile app in multiple languages so advisors can easily access all content and videos in their preferred language. The app will be available in Hindi, Marathi, Bengali and Telugu languages.
We also improved our mobile app experience by adding more features and making it more user-friendly. We want to make sure they don’t regret using our platform, we want them to be happy with their choice.
5. What are the key challenges and opportunities for the Indian banking sector?
If we talk about the economic growth of the country, banks are the backbone of the economy. Especially in a developing country like India, banks are a pillar and they play an important role in activating and sustaining economic growth.
The majority of India’s population lives in rural areas and does not have access to formal finance, which is a problem for a developing country like India.
The challenge for banks is to ensure that customer needs are met in a cost-effective manner. The advent of technology and competition has raised customer expectations. Banks need to create a positive image among customers by offering attractive products and services, including ATM facilities, internet banking, mobile banking and bill payments etc.
To survive in this highly competitive environment, banks need to focus on their core capabilities and enhance them further by providing innovative products and services.
Increase the level of penetration-
Government of India and Reserve Bank of India (RBI) has made a concerted effort to increase banking penetration. To achieve this success, the government must consider ideas outside the box. Rural areas are not really equipped with the latest technology, but this offers opportunities for innovation.
India’s economy is growing rapidly and it has a large population base that can benefit from more banking services. If banks can increase their reach in rural India then they will be able to tap into the huge potential that exists there.
It is important that its population does not have access to a variety of products. Therefore, there is a need to have different schemes for rural areas and urban areas. Furthermore, different schemes can be created based on the nature of people’s jobs. For example, a daily wage laborer may be allowed to make a small deposit every day.
Therefore, banks should offer a variety of products such as savings accounts, term deposits and other similar facilities to meet the needs of their customers.
Banks should provide flexibility in terms of deposit rates or interest rates on loans. This will help them attract more customers as they will not be tied to some fixed rate or ceiling on interest rates or fee levels as long as they comply with regulatory norms.
The most important aspect of financial inclusion is financial literacy. Lack of awareness especially among rural and urban communities.
Financial literacy includes knowledge and awareness about the use of money, its importance and the types of financial products available. It is necessary for any person to fully understand his financial situation, to make the right decisions and make informed choices about investments, loans, insurance and savings.
Read Also: Indian Banking Opportunities – Changing the Banking Business
In this regard, financial advisors play an important role in creating financial awareness and promoting financial products.
Role of Information Technology –
It is important for banks to ensure that their customers can access their services at all times, even in remote areas. Today, several banks are already offering mobile services to the ‘unbanked’ community. In rural areas, where accessibility is a problem, financial advisors play an important role in bringing more people under the purview of banking services.
In India, only 200 million people have access to a bank account, while 811 million have a mobile phone. Mobile banking has the potential to emerge as a game changer in terms of cost, convenience and speed of access. Penetration of the banking industry into the unbanked, remains sluggish. Banks must adapt to technology and improve their services.
6. What security measures do you take to prevent fraud and cyber security attacks?
We use a private API and multi-layer security tokens. In addition, we use a fully structured code base. Additionally, we have documented coding guidelines for developers that they must follow and team leaders review them regularly. In addition, we conduct VAPT tests from time to time to check our security.
We have an automated testing system developed by us in collaboration with our developers and QA engineers. This system is used to test all our APIs before they are deployed into the production environment so that there are no issues after deployment or during the testing phase.
We also maintain a database system that stores information about users, passwords and other details related to them so that if someone hacks into the system, they won’t be able to access other users’ information as well (for example if someone hacks into your system. database then he will not be able to see other users’ data).