Indian banks testing blockchain, AI, biometrics, open API and payments
Several Indian banks are testing and launching new technologies including blockchain, artificial intelligence, biometrics, open API and payments, in both the corporate and retail banking space, according to a report by Live Mint.
The banks are exploring these five technologies either independently or with the aid of fintech companies.
In July, the Reserve Bank of India (RBI) established an inter-regulatory working group to study issues relating to fintech and digital banking in India in an effort to better understand major fintech innovations and developments and how the markets are adopting new delivery channels, products and technologies.
Axis Bank Ltd, ICICI Bank Ltd and Kotak Mahindra Bank Ltd are currently testing blockchain technology to potentially use in trade finance and remittance space.
“We see a possibility to use blockchain for cross-border remittance and funds transfer in banking. We are right now in the testing phase,” said Deepak Sharma, chief digital officer at Kotak Mahindra Bank.
The use of blockchain-based applications by Indian banks will likely not materialize for a while since they cannot work in isolation and require a network.
There are a growing number of Indian banks testing chatbots, which are programs that leverage artificial intelligence (AI) to imitate conversation with people.
Banks such as HDFC Bank Ltd and Kotak Mahindra Bank are looking to use chatbot-based technology in customer service to provide a more seamless experience.
In April, DBS Bank Ltd launched a banking app in India with in-built AI. Meanwhile, fintech companies such as niki.ai are developing AI-based chatbot apps for use by banks.
Biometrics is perhaps one of the most popular technologies, as some Indian banks are using fingerprint recognition, voice recognition and iris recognition for identification purposes.
Large commercial banks such as ICICI Bank, HDFC Bank and Kotak Mahindra Bank are currently testing biometric identification features, while smaller banks such as DCB Bank Ltd have already launched fingerprint-based ATM cash withdrawal using the Aadhaar enabled platform.
Open application programming interfaces (APIs) are slowly gaining traction in banking, fueled by the Indian government’s open API policy for five programs: Aadhaar, e-KYC, e-Sign, proposed privacy-protected data sharing and the Unified Payments Interface (UPI).
Many commercial banks are in different stages of using Aadhaar and e-KYC and offering products linked to it to their customers, such as the use of Aadhaar-enabled biometric authentication to log into bank accounts.
The National Payments Corp. of India (NPCI) is also offering UPI for transaction, which eliminates the need to exchange sensitive data such as bank account numbers during a financial transaction.
Finally, the past few years has seen a rise in banks and e-wallet companies focusing on newer digital payment technologies to make transactions easier.
The banking sector continues to test out these technologies, which include virtual cards, sound waves, quick response (QR) codes and near field communication (NFC).
Previously reported, India’s Aadhaar biometric authentication system has provided the foundation for at least nine startups, which are leveraging the system to develop various technologies including database and payment solutions.