Future of Banking

Retail banking is evolving at an accelerated pace. Globally, banks are facing

disruptions from multiple directions.
In future also, the concept of Retail Banking in Urban areas will be limited to
Current Account holders only. As such we have technology like ATM, Mobile
Banking, Internet Banking, KIOSK machines and Cash Deposit machines.
The population of urban area is educated and hence they know how to use
technology for best use. The future of banking lies with rural population.
Mobile wallet
simply put, it's a mobile-based virtual wallet, where you preload a certain
amount in your account created with the mobile wallet service provider, and
spend it at online and offline merchants listed with the mobile wallet service
provider.
For example, if you go to a coffee shop A, which is listed with XYZ mobile wallet,
you can pay for your coffee through the phone. Depending on the service
provider, you can also pay through app, text message, social media account or
website.
Types of wallets
there are four types of mobile wallets in India - open, semi-open, semi-closed and
closed.
Open wallets are the ones that allow you to buy goods and services, withdraw
cash at ATMs or banks and transfer funds. These services can only be jointly
launched with a bank. M-Pesa by Vodafone and ICICI is one such example. Apart
from the usual merchant payments, it also allows you to send money to any
mobile number bank account.
Semi-Open Wallets Airtel Money is a semi-open wallet, which allows you to
transact with merchants that have a contract with Airtel. You can't withdraw cash
or get it back. You'll have to spend what you load.
Closed accounts, which are quite popular with e-commerce companies, where
a certain amount of money is locked with the merchant in case of a cancellation
or return of the order, or gift cards. Semi-closed wallets like PayTM, which do
not permit cash withdrawal or redemption, but allow you to buy goods and
services at listed merchants and perform financial services at listed locations.
Merits
your wallet can be snatched, misplaced or pickpocketed, your mobile wallet
cannot be. But remember, your mobile can still be stolen.
Secondly, if the bill is of Rs 353.53 or Rs 462.65, you will not have to run around
asking for change, and no one will ever give you a candy instead of a rupee.
Also, mobile wallets allow you to pay in one-tap unlike net banking that calls for
opening several browsers and are time consuming.
When you make a payment through net banking or through a debit or credit
card, you are disclosing your sensitive bank data on the merchant's site or
establishment; it can lead to unwanted financial happening. But when you use
mobile wallets, you restrict the exposure of your confidential data, which singlehandedly wins the case for a service like ours."
Demerits

Only mobile-savvy people (with dependable and speedy internet connection) can
use such services. Also, there are only a limited number of merchants currently
listed, so you will still need net banking or cash or card.
Plus, there is a limit to the amount you can deposit in mobile wallets and daily
spend, which means mobile wallets are currently useless for high value
payments.
Major Players: Airtel Money, ikaaz, mRupee, Vodafone m-Pesa, Oxigen Wallet,
Paytm, Mobikwik and Idea Money Experts: Vijay Shekhar Sharma, Founder CEO,
PayTM and Soma Sundaram, Founder CEO, iKaaz
PM Jan Dhan Yojna
Here is looking at Five important features of the PM Jan Dhan Yojna
1. Under the scheme, account holders will be provided zero-balance bank
account with RuPay debit card, in addition to accidental insurance cover of Rs 1
lakh.
2. Those who open accounts by January 26, 2015 over and above the Rs1 lakh
accident, they will be given life insurance cover of Rs 30,000.
3. Six months of opening of the bank account, holders can avail Rs 5,000 loan
from the bank.
4. With the introduction of new technology introduced by National Payments
Corporation of India (NPCI), a person can transfer funds, check balance through a
normal phone which was earlier limited only to smart phones so far.
5. Mobile banking for the poor would be available through National Unified USSD
Platform (NUUP) for which all banks and mobile companies have come together.
The future of Banking
Increased competition. The competition will come from non-traditional
competitors in big tech. Many start from scratch truly digital banks will carve
out a niche for themselves. Some of the big traditional banks that dont embrace
partnerships with fintech or generate their own innovations will fail.
Unbundling will continue. Banking will be more fragmented with incumbents
losing more and more pieces as consumers build their own suite of products from
a multitude of providers.
More open, more APIs. Expect an open and integrated ecosystems with
several solutions outside banking.
Increased specialization. Banking will be split between specialty players and
customer-broker combining a series of low-cost marketplaces and platforms to
serve specific customer needs with speed and adequate value for money. [Banks
will be] severely hit by over-the-top competitors, scaling down size and
employees.
Competing beyond financial services. Banks will become marketplaces
competing on a wide range of business models.
Remain trusted advisors. I think many of the day-to-day things you do with
a bank will go to self-service (aka mobile), while the consultative, face-to-face
needs will still be the norm for more complex items, albeit with technology
creating the arrangement. People, for all their love of technology, still have a
need to socialize and when it comes to finances, discuss with someone they
trust.
More flexibility, more context-awareness. Using more sophisticated
analytics, [banks will] deliver customized experiences to each person. We should
see greater adoption of API models and some interesting new ways to leverage
them to improve service and stickiness.

The blockchain will reign. Digital systems like Blockchain, Ripple, Ethereum
will be common place. Its not a matter of if, but when. Outside of US will see the
biggest moves as mobile banking, blockchain tech will move faster.
Aggregators of services. A bank will be an aggregator of functionalities
provided by startups, but will remain close to the customer and protected by
regulators.
Customer-centric. Banks will be driven by customer needs, not banks needs.