After years, RBI has established a structure which is unique for banks and financial institutions. It kept different licenses for many banking activities. However, this big step will transform the banking system. Digital banking is just making transactions simple, fast and unwieldy. Also, complementing this system is the criteria of minimum balance. This will attract more people from the unorganized sector into the banking function.
Below is the list of points of the disadvantages of payment banking:
1. The Large Size of the Market :
With an underbanked population counting as 233 million, the whopping amount makes an impact. A few registered under Pradhan Mantri Jan Dhan Yojana are still newbies to banking and related functionalities. As per 2011 records, 833 million are still settled in the suburban and rural parts of the population. A very small population knows different banking techniques and have opened accounts.
There’s another issue of ineffective women empowerment i.e. 48% of the total population which indirectly hampers financial decision making, so on and so forth. Women are somewhat upfront about solutions and how to solve them quickly. All banking and financial transactions can be easily dealt with.
This is exactly what payment banks have been counting upon based on segmentation (demographically & geographically). To customize products for the underprivileged was a big challenge.
Of course, we know that the market constitutes different players serving different levels of society.
2. Simplification :
With government support, digitization is spreading everywhere. Especially after demonetization, digital is the new normal. However, cash is still considered convenient for older generations for managing their petty transactions. People are looking for ‘convenient’ and ‘free of cost” of making transactions of small and big value. Mechanisms like RTGS, NEFT, OTP based solutions do not cost-free and technology driven.
Mobile banking was the first to bring technology into play, however, this is not always convenient. A partly technology sound person can even tech-savvy customers accommodates all possible functionalities like SMS, dial numbers, etc. For some, visiting a bank physically makes more sense.
If that’s the case, the solutions are pretty simple too:
The concept of wallets came into being after looking at the “convenient” factor. There is an open field for technology and transitions to take real-time payments into consideration.
NPCI(National Payment Corporation of India) has its own loopholes and which is why we are still struggling a bit. Also, biometrics cannot be utilized properly. It is highly critical to offer effective solutions which serve the niche and regular too. How would it be to have a one-click mechanism?
3. Financial Awareness :
This is extremely imperative for customers to be fully aware of the propositions in town. People require financial advisory at all times, for powerful decisions. This inefficiency can hamper the untapped market in our country. Payment banks can clearly capture the space and create opportunities for greater use.
4. Formation of a Strong Base :
Several bank products can be showcased using digital channels for more and more awareness. FinTech now is increasingly being used to make transactions instant and easy. All the new age services can be given a greater edge for the future. Payment banks can pose to be amazing platforms for a host of financial services.