What is innovative banking in India
East or West: Innovation dominates banking and financial services
Financial service providers and the banking sector were among the first to rely on digital innovations - driven by customer requirements, strong competition from FinTech companies and regulatory mandates. Innovative products and services based on new technologies and business models and brought onto the market by young financial startups show that common approaches such as mergers and acquisitions as well as new product combinations or the opening up of new markets are no longer forward-looking - the banking and banking sector Rather, the financial services industry should look for growth opportunities based on technology and collaborations.
There are pioneering examples of this around the world. In China and India, numerous innovations come from non-traditional companies, but they also have a large customer base who, while demanding new services and experiences, are reluctant to use new apps.
China - a nation with a desire for innovation
Three of the world's top 5 FinTech companies - Ant Financial, JD Finance and Baidu - are headquartered in China. Ant Financial supports the technology giant Alibaba and is best rated worldwide at 150 billion US dollars. All of the leading banks in China either cooperate with technology companies or invest in new technologies.
The year 2019 saw 840 million internet users in China. In 2018, almost 58 percent of the Chinese had access to the mobile Internet and almost 70 percent of smartphone owners used online shopping. The Olympic Games are to take place in China in 2022. As a result, the country is currently working flat out on the introduction and expansion of the new 5G mobile communications standard. At the same time, the demand from technology-savvy consumers for innovative mobile apps such as IP-based applications and technologies for contactless, mobile payment is increasing.
Digital payment is already well advanced and widespread in China. UnionPay, part of the Central Bank in China, is the largest provider of the Global Card Networks - followed by Visa and MasterCard. More than 50 percent of payments in China are made through Alipay. The WeChat Pay platform is currently the fastest growing payment method and also offers opportunities for business collaboration, social networking and trading.
The government is investing heavily in technology (facial recognition) to introduce digital ID cards for Chinese citizens. New synergies are already being used, among other things, existing mobile and payment apps can be used as a replacement for the national ID card. Alibaba launched government certified digital ID cards in three cities in China.
A lack of physical infrastructure as well as the further development of Chinese regulations - away from investment and towards consumption-oriented - as well as the establishment of the political framework for regulation and support of the Internet and the FinTech industry, has made China the fastest digital in the world the financial industry is growing.
India - a nation of young entrepreneurs and FinTech companies
India is hot on the heels of its neighbor China as an emerging market. Instead of Alipay, India has Paytm. In 2010, Paytm was still a website that allows users to top up the credit for their mobile phones. Meanwhile, Paytm has grown into India's largest digital financial services provider and is supported by Alibaba from China, Softbank Vision from Japan and Berkshire Hathaway from Warren Buffett. Every third mobile banking transaction in India is carried out by the Paytm payment bank. But the competition is getting tougher: In the meantime, Paytm has to assert itself against local competitors like PhonePe, but also against global players like Google Pay and Amazon Pay.
According to statistics, there were more than 480 million internet users in India in 2018. The Global Fin Tech Adoption Index 2019 shows that both in China and India, 87 percent of the digitally active population use some type of FinTech. India is one of the top countries for online sales of household goods such as fashion, travel, beauty and personal care, housewares, and packaged groceries, according to Nielson Holdings.
India's advanced identification system, Aadhaar, is the largest biometric ID system in the world that has effectively digitized a large amount of population data into a database. Businesses incorporate this database into their services - Indian consumers can use it to conduct banking and other financial and government transactions from their digital devices.
The Indian government is increasingly committed to the financial inclusion and digitization of the country through programs such as India Stack (largest number of open APIs that provide entrepreneurs and the government with a technological framework), Startup India Program, Jan Dhan Yojna (which enables bank accounts to be set up for Underprivileged facilitated) and the initiatives of the National Payments Council of India (to introduce innovations in payment systems).
The centuries-old banking industry in the west is now looking for new ideas
Banking and financial service providers have existed as an industry in the West for over a hundred years. But you have now reached a point where outdated infrastructures, traditional processes and rigid work cultures prevent progress. The industry has failed to innovate using digital capabilities - much like its counterparts in the Eastern markets. Tech companies, however, focus on financial products, though not necessarily for banks.
Apple and Goldman Sachs have announced the Apple credit card. Amazon and Airbnb are planning to launch an e-wallet for payment processing together with JP Morgan. Facebook's Libra app is another example. Citi ventures, part of Citigroup, invests in startups to drive technology implementation for Citi and its customers.
There are also numerous innovation stories in Europe, including the cooperation with the name “Barclays Accelerator” between Barclays Bank and the startup Techstars. The joint program specifically develops innovations with the help of artificial intelligence (AI), big data and cryptocurrencies. Deutsche Bank operates innovation labs in Europe, Asia and North America. They work with startups to address bank challenges and test technologies in real banking scenarios.
In January 2019, The Global Financial Innovation Network (GFIN) was founded by 50 international financial regulators and related organizations to drive financial innovation around the world. Previously, the European Banking Authority (EBA) published its FinTech roadmap with priorities for financial innovations and launched the FinTech Knowledge Hub. The aim of the hub is to monitor financial innovation, facilitate the exchange of knowledge and promote the technological neutrality of regulatory approaches.
It is obvious that banks and financial service providers in all countries are considering “FinTech as a Service” in order to compete with new market entrants and at the same time continue to drive the digital transformation from the core with a more comprehensive strategy.
Investopedia, The top 20 economies of the world
South China Morning Post, China may adjust 2020 GDP growth target due to coronavirus, government policy adviser says
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