The Indian Banking industry, albeit well placed, having already adopted digitalization in all forms of banking products, will continue to face challenges as it deals with the current COVID-19 crisis.
Digitalisation in banking sector has augured well for banks, and they have set up manpower and technology-based framework to support diversified digital banking experience for its customers. The RBI has also been guiding banks by prescribing appropriate measures including: (i) information security to ensure confidentiality, integrity, authenticity and non-repudiability, (ii) security and technology framework, risk mitigation measures like transaction limit, transaction velocity limit, fraud/AML checks, transactional alerts, card – blocking, additional authentication steps etc., (iii) maintenance of secrecy and confidentiality of customers’ accounts, (iv) mandatory disclosures, of risks, responsibilities and liabilities of the customers on banks’ websites and/or printed material and (v) adequate grievance redressal mechanisms for banking transactions.
Customer literacy, however, is an aspect that requires improvement. In this regard, an RBI initiative “Expanding and Deepening of Digital Payments Ecosystem” dated October 7, 2019 stated that within one year, one district shall be allotted to a bank on a pilot basis to make it 100% digitally enabled (including digital customer literacy), for making/ receiving payments digitally in a secure, quick, affordable and convenient manner.
Market dynamics are rapidly changing in the Indian banking industry, where, to add to pre-existing issues, a major crisis in the form of COVID-19 pandemic has caused significant disruption. The RBI issued guidance on March 16, 2020 in respect of operational and business continuity measures to be followed by all banks for ensuring measures for prevention of spread of disease within the organisations, continuity in critical business interfaces and preventing disruption of services. However, within just six days, Janata Curfew was announced followed by lockdown which provided little time to the banks to realign their business continuity plans and implement measures for running businesses with limited workforce.
Banking being an essential service must continue operations during lockdown. However, despite staffing restrictions in banks (most of the staff working from home) and reduced working hours (most bank branches open for not more than 4 hours during weekdays), the banks have to service their customers including physical presence at bank branches, which is challenging and also a health risk for the attending staff. To minimise physical banking, banks have switched to email/sms intimations and their websites/ mobile applications to enable customers to adopt digital banking unless physical presence is indispensable. Whilst this has enabled banks sustain operations with minimal physical staffing, it has put to test their digital banking infrastructure and inconvenienced both staff and customers who are not able to cope with the technological knowhow required for such sudden migration to digital banking. Further, while banks typically have agents to attend to and resolve customers’ queries, lately (and on accelerated basis because of the lockdown) they have been at the forefront in adopting and investing in ‘artificial intelligence’. Certain banks have implemented robotic chat assistance system like ‘Eva’, ‘SIA’, ‘Pay bot’ and ‘KAI’ which are able to inform customers about services and products and address common queries/complaints instantaneously, dispensing with the requirement for human interface.
Further, several banks to reinforce social distancing norms, have deployed mobile ATMs to specified locations to enable cash withdrawals without the customers having to move out of the customers’ locality.
Lastly, the RBI has by notification dated March 31, 2020 mandated strict implementation of doorstep banking by April 30, 2020. Once implemented, it will be a vital step towards protecting senior citizens who are most risk prone towards COVID-19.
Being a technologically advanced country, with the think tanks being known to have Indian blood, banking sector, which is the backbone of any economy, will sail through the technological challenges that get posed and hopefully reach the “virtual world” much sooner than anticipated.
Contributed by: Soummo Biswas, Partner; Shivani Sinha, Principal Associate; Simant Satapathy, Associate
This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.
The Bar Council of India does not permit solicitation of work and advertising by legal practitioners and advocates. By accessing the Shardul Amarchand Mangaldas & Co. website (our website), the user acknowledges that: