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Demonetisation has been successful in accelerating the spread of digital infrastructure across the country and has seen many small businesses using digital payments to expand their business, according to a report by HDFC. Financial services across the country have been pushing out a large number of digital services at a faster pace than was possible earlier following increased acceptance post-demonetisation. While the change in consumer behaviour will occur eventually, the fact that there now exists tangible infrastructure to make it possible is a step forward, the report says. “Demonetisation has provided a fillip to digital payments in the country. Rising data and mobile connectivity and increasing demand for smartphones have changed the way consumers make purchase decisions,” said Sourabh Chatterjee, head and president, digital and technology, Bajaj Allianz General Insurance. During the last year, the company used technological advancements such as Blockchain, telematics and artificial intelligence to provide personalised products, reduce the claim settlement time from days to minutes, and provide 24X7 customer support, Chatterjee added. “Demonetisation has not only nudged people towards a preponderance of PoS (point of sale) and e-commerce transactions in their overall financial transactions, it has also accelerated the adoption of digital mobility options like e-wallets and fund transfer apps,” said Radha Rama Dorai, managing director of ATM and allied services at FIS, a B2B payments processor. The requirement of linking Aadhaar numbers to bank accounts and e-KYC norms also had banks scampering for rapid adoption of digital onboarding technologies, said Rama Dorai. Digital transactions touched a value of Rs 149 crore in March, followed by a slowdown only to rise by almost 14 per cent in September. The total value of digital transactions in September reached Rs 124 lakh crore, of which almost Rs 5,290 crore was done through the UPI interface, according to data by the National Payments Corporation India and the Reserve Bank of India. Another Rs 2,700 crore of transactions were conducted through mobile wallets. ICICI Prudential has been able to push digital and e-KYC services to an extent that these have reduced the customer onboarding time from 10-15 days earlier to less than an hour now, say company representatives.
Higher volumes of digital policy payments have also added to the overall efficiency measures. "For FY15 we received approximately 50 per cent of the total premium digitally, for H1 FY18 this figure stood at 73 per cent. The various digital initiatives that we have implemented has enabled us to enhance employee productivity from Rs.4.26 million in FY15 to Rs.5.55 million in FY17," said Puneet Nanda, Executive Director, ICICI Prudential Life Insurance Company Limited. A factor apart from demonetisation that added to the rapid acceptance of digital services was the crash in data prices, which suddenly made the Internet access affordable to a larger population. While it had a negative impact on the telecom industry, the development paved the way for a wide array of financial technology providers. According to the National Payments Corporation India data, the number of PoS terminals has doubled since November 8, 2016. With easing of the liquidity crunch, transaction volumes for overall retail electronic payments have seen a marginal dip, says the HDFC report. Most banking players have embarked upon a digital journey in response to broader digital financial services opportunities, notes Deloitte. “While it (demonetisation) may have boosted certain modes of digital transactions, these are still a fraction when compared to the total volume of retail payments. Financial inclusion has increased the number of bank accounts in the unbanked segment, but a corresponding increase in digital transactions is not reflective of such an increase in banking customers,” said Kalpesh J Mehta, partner, Deloitte Haskins & Sells. He further noted that the pace of growth in digital transactions was higher as long as the effects of demonetisation affected currency circulation. Customer preference for using the digital mode of banking transactions is dependent on accessibility, ease of use, security and the ecosystem.