Smaller and newer banks have taken the lead in pushing the government’s digital economy drive, rolling out a slew of innovative digital banking products much faster than traditional banks to expand their footprints.
Kerala-based Federal Bank, for instance, has over the last few months launched several solutions that enable merchants -both small and large -to accept digital payments using their existing infrastructure without spending additional money on new devices or applications. Similarly , IDFC Bank was the first to launch Aadhaar-enabled biometric payment even before Prime Minister Narendra Modi flagged it off on April 14.
For old banks, digital technology is one more way of reaching out to the existing customer, while for new banks digital is the heart of the strategy for reaching out to all customers, said Aruna Sundararajan, secretary at the ministry of electronics and IT (MeitY). “It is their predominant growth strategy,” she told ET.
The government has been campaigning for a less-cash economy since demonetisation.
Sundararajan, who is leading the Digital Payments Mission and driving the target of touching 2,500-crore digital transactions this year, said the government is telling banks to adopt strategies that telecom companies adopted to grow from 50 million subscribers to 500 million.
“They have to go through digital branch-less banking. Till now, only 145 million people have credit in this country , clearly 750 million people need credit. So there is big room for digital branch-less banking to register the fastest growth,” she said.
Solutions that Federal Bank has launched under the `Lotza’ name range from a simple QR code for micro merchants, such as vegetable vendors, to sophisticated applications for large supermarkets to enable payments through UPI and provide printed receipts to customers and merchants for record keeping.
Shyam Srinivasan, managing director at Federal Bank said, the idea was to put in place technology where the merchants don’t have to make large investments in point-ofsale (PoS) devices and can convert existing terminals to payment accepting facility from people without debit or credit cards.
“Currently , we have 7,000 merchants in Kerala on our solutions, and our target it to scale it tremendously and reach 1,00,000 merchants in the next 100 days across India,” he told ET.
Federal Bank also launched selfie based account opening.
IDFC Bank, which received its banking licence only in 2015, launched Aadhaar-based e-KYC to speed up account opening. The bank already has a customer base of close to 1.4 million customers, of which more than 4,00,000 customers have been acquired organically.
December 7, 2023