Impact of Digital Transformation on Incumbents

By Shilpa Kumar, Amol Warange, Baani Bareja, Aniket Dani and Saurabh Prabhu

While our first report in collaboration with CRISIL, Transmission Conundrum, highlighted the predicament of smaller non-banks and suggested five ways of ironing out the landscape, our second looks at accelerating digitisation on financial services and its impact on partnerships, financial inclusion and future regulations.

Digital transformation in finance has undergone a tectonic change due to Covid-19 — one that no business can now escape. But not every organization is looking at the same manner of transformation.

Finance and technology have rapidly coalesced. Customer behaviour across the board has remarkably shifted, be it digital payments or online purchases of financial products. Sweeping internet and smartphone penetration has enabled this structural change. Regulators have also tried to keep pace with this change. Keeping customer convenience in mind, they have been supportive of building robust infrastructure. For instance, The India Stack initiative can be cited as the single biggest reason for the increased adoption of application programming interfaces (APIs) in the banking, financial services and insurance (BFSI) sector

Licensed financial service providers in the game - including fence sitters - have embraced transformation, given the choice between that and risking extinction. They are relooking their technology architecture and striking relevant partnerships with third parties. The intent is to enable easier integration with APIs offered by third parties, shorten time to market, widen the product suite, increase the target customer base and  enhance operating efficiency.  Nevertheless, stark differences exist amongst BFSI players. Not every organization has the same starting point, faces the same limitations or advantages, or serves the same set of customers — leading to different outcomes for different sets of players.  

We partnered with CRISIL Research to assess the impact of digitalisation and API adoption by 12 distinct cohorts of players in the BFSI industry. The study specifically sought to analyse it through two lenses — of a) business growth, efficiency and customer experience, and b) financial inclusion.  Our analysis shows that the pace of digitalisation and extent of collaboration with digital solution providers vary across players. Read the report below to know more.

You can also download the report as a PDF here