The banking industry has been one of the most eager adopters of technology, and also one which has perhaps managed to derive the maximum benefits out of the same. Not only has technology aided in significantly streamlining banking operations, but it has also massively improved customer experience when it comes to availing the services of financial institutions. One such aspect of banking, which technology has managed to completely transform, is that of payments. The use of technology for payment modernization has delivered the following benefits:
Benefits for Customers of Financial Institutions
Real Time Transactions
If you talk to anyone from the previous generation regarding their experience with banks, they could talk ad nauseam about how cumbersome it was to transact. People would have to drop handwritten cheques, and wait for at least 3 days before the cheques would be manually verified and passed, while hoping that they do not bounce. With electronic payments, people can now transact instantaneously, anytime.
Greater Convenience of Transactions
Instantaneous transactions as mentioned above are one reason banking has become more convenient for customers. However, there are other factors as well. Payment modernization has ensured that people no longer need to physically visit bank branch and stand in queues to drop cheques or withdraw cash. With systems such as the Unified Payment Interface (UPI), people can transact very conveniently with anyone from over their smartphones. It is as easy as exchanging hard cash with someone sitting across the table with you; rather it is easier as you do not have to count notes anyone but just enter the exact amount you want to transfer.
Merchant POS systems
Electronic payments systems benefit B2B clients of financial institutions by enabling them to maintain POS systems by which customers can make payments by using their credit/debit cards while shopping. This greatly increases the in-store shopping experience of buyers.
How Financial Institutions benefit by Increased Convenience for their Customers?
One feature of good technology is that it not only improves the way a task is performed, but it is also easy to use. Modern payments technology certainly ticks both the boxes. With electronic payment systems, banks derive the following different benefits:
- Minimized interfaces: The bank’s IT architecture becomes highly streamlined because of the elimination of point-to-point interfaces
- Hardware rationalization: By enabling consolidation of payment-related hardware across products and channels, modern payment systems enable banks to substantially reduce the need to maintain hardware by facilitating its more efficient usage
- Process Centralization: The above two points ensure that financial institutions can attempt centralization of payment processing across different payment gateways and banking channels (such as net banking and credit/debit cards)
- Monitoring of Payments: Because the transactions occur via electronic medium, they also get recorded indelibly and can be retrieved on a real-time basis for monitoring and verification.
- Generation of Data: With a high number of transactions occurring over digital platforms which also get saved as electronic records, banks get access to large volumes of data regarding such transactions which would be very well organized in a standardized format. Such data can be analysed to derive insights regarding customer preferences which could help banks in developing more market-friendly banking products
- Reduction of Operating Costs: While banking technology is certainly an expensive investment, it drastically reduces the operating costs for a financial institution. The financial institution would need to open fewer and smaller branches, as also hire fewer new employees. Thus, there would be savings that could accrue due to saving on rent, salaries, and overheads, which would drastically enhance operating profits.
The various points listed above list the different benefits that payments modernization has delivered for financial institutions. At Evolvus Solutions, we have been at the forefront of helping create such cutting-edge payments technology. Our payments solutions have immensely benefitted both, banks and retailers, and we are proud to be an agent of positive change for the banking industry.