As India transitions from being a cash-driven economy to a digital payments economy, banking CIOs have a fresh list of challenges to grapple with. Let us take a look at the changing scenario and potential solutions.
The role of a banking CIO has grown beyond the traditional tasks of compliance, security, and procurement and management of IT infrastructure. The new dimensions of his expanded role range from managing a complex payments ecosystem to protecting the bank’s brand perception. Let’s explore these new, challenging scenarios in greater detail.
1. A complex digital payments ecosystem
Different banks have different technology stacks and they follow different business processes even for the same (or similar) business outcomes. When a digital payment transaction fails, it may be on account of the failure of any one (or more) of the several technology elements in a vast and highly complex IT ecosystem at the work.
The point of failure may reside anywhere—a customer’s device-specific issues such as hardware, OS version, the internet service, the technologies of third party service providers (such as payment gateway), the merchant’s system (in case of an e-commerce transaction), or the technology stacks of the sender’s or recipient’s bank. Due to the complex nature of digital payments systems, the number of payment-touchpoints demanding a banking CIO’s attention has grown substantially.
2. What’s your ranking, Mr. Banker?
Another digital payments challenge of banking CIOs is the preferential ranking systems introduced by various e-commerce players. Followed by the likes of Amazon and IRCTC, e-commerce platforms rank the banks based on their performance while offering payment gateway options to customers to choose from.
The names of banks with highest success rate automatically move to the top of the order and are displayed prominently while those with high failure rates are removed from the list. The ones with moderate to low success rate are retained but incorporated in a drop-down list. Naturally, the banks that get a prominent display get selected by customers more often and those with lowest success rate have to be content with opportunity loss. The challenge for the banking CIOs is to ensure that their banks remain at the top of the preferential rankings of major e-commerce players in the country.
3. OTP issues
Over the last few years, the two-factor authentication technology, one-time password (OTP), has emerged as the default standard followed by Indian banks to ensure security of every digital transaction. OTP is valid for a specified time-duration.
Many a time the payment transactions fail when a customer enters a wrong OTP or fails to enter it within the stipulated time-frame. However, at times, there is a delay in delivery of OTP. Typically, lower the delivery latency, higher are the chances of a transaction’s success.
Irrespective of the reasons behind it, every failed transaction causes irritation to a customer. Repeated failures may even result in customer feeling frustrated about the bank’s service quality and capabilities.
4. Speed of response
Linked to the issues discussed above, there is another business challenge that banking CIOs face—the speed of response in the event of transaction failure. This response needs to have two constituents—taking immediate corrective measures and alleviating customer pain. A failure or delay in response may result in the customer-pain finding its way to social media and cause irreparable damage to a bank’s reputation.
How technology can help
In the digital payment scenarios discussed here, many a times, the potential failure-points are not under a banking CIO’s direct control. The CIO, however, is held responsible for transaction failures every single time. In this context, Digital Payments Monitoring System (DPMS) may be of immense value to banking CIOs. Typically, DPMS comprises two technologies—robotic process automation and real user monitoring. While tracking the entire payment transaction ecosystem—from sender’s device to the recipient bank’s technology stack—it examines every potential point of failure including third party service providers.
For example, in the OTP issue discussed above, DPMS can identify the exact cause of latency, such as the speed of a particular telecom operator’s service in a given circle, and inform the bank. The remedial step in this context could be switching to another operator to ensure timely delivery of OTP messages. In the same way, this solution can help banks improve the success rate of their payment gateway transactions, and correspondingly, their preferential ranks on popular e-commerce platforms.
DPMS sends advance alerts to the bank helping it identify potential issues so that preventive actions can be taken. Similarly, in case of failure, the bank’s helpdesk and customer-service are notified with instant alerts describing the issue in detail so that corrective steps can be taken without delay. Powered by detailed information, the support staff can contact the aggrieved customer and explain the nature of technical issue encountered and the estimated time of resolution.
DPMS helps a banking CIO to take corrective measures. However, if digital payment failures are observed as a recurring phenomenon, the right approach may be quality re-engineering. A thorough root-cause analysis can provide a roadmap to improve process-flows and the right technologies to use so that failures can be prevented to a great extent.
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The rise and rise of digital payments
Starting from August 2015, when Jan Dhan Yojana was launched, the Indian government took a series of steps, such as demonetisation, Aadhaar-linked direct credit scheme, the introduction of Unified Payments Interface (UPI), and Bharat Interface for Money (BHIM). These policy measures, along with rapid adoption of mobile, internet and online retail by consumers, has led to a revolutionary growth in digital payments in India. The World Payments Report 2017 (WPR) places India as one of the four global powerhouses of future non-cash transaction growth—along with China, Brazil and Africa.
According to data published by Reserve Bank of India, the total value of ECS/NEFT/RTGS/Mobile transactions in November 2017 was ₹ 13.88 lakh crore. Add ₹ 75,779.46 crore to this amount, the value of POS transactions carried out using credit cards (₹ 39,260.16 crore) and debit cards (₹ 36,519.3 crore), and you get Rs. 14.54 lakh crore—the total value of digital payments executed during November 2017. This data does not factor in cashless transactions carried out via ATMs of banks. While no POS data is available for December, the value of ECS/NEFT/RTGS/Mobile transactions itself stood approximately at ₹ 15.78 lakh crore in December 2017, which is higher than the total combined digital payments for November 2017.
As per an IDC Financial Insights report, digital payments in India are likely to surpass cash transactions by 2022. In effect, India is moving rapidly towards a digital-first future in the area of payments.
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