PAYMENT SYSTEMS ** EVOLVING PARADIGMS **

Transcription

1 PAYMENT SYSTEMS ** EVOLVING PARADIGMS **

2 Payments Landscape in India Currency in Circulation as % of GDP Market Overview Break-up of Non-cash Retail Payments 11.5% 12.5% 7.4% 8.5% 34% 40% 47% 55% 65% 3.6% 4.2% 4.3% 66% 60% 53% 45% 35% UK Brazil Australia USA Singapore India Russia FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Paper Clearing India has higher cash in circulation Large headroom for migration to digital At 11.5%, India has amongst the highest currency in circulation as a % of GDP Digital Payment The ratio of money held as cash to the amount held in demand deposit accounts in India is 51%, which is higher than even cash intensive countries like Egypt (29%) Saving in the form of cash to total financial savings of households has been ~ 10% over the last decade Share of electronic payments in non-cash transactions has increased from 10% Y-o-Y in FY 10 to >30% Y-o-Y in FY 14 *Source: Bank of International Settlement, RBI 2

3 Non-Cash Transactions per Individual per year 2014 USA 360 UK 300 South Korea 271 Brazil 112 South Africa 47 India 6 India lags way behind... indicating a huge potential to tap! Source: Cap Gemini World Payments Report 2014

4 Payments in India - Revolution Unfolding Payments in India are driven by both regulatory & banking system changes & innovation in technology, processes and delivery Cash Payments Conventional Payments Cash Payments Cheque Payment Debit Cards Credit Cards Prepaid Cards Correspondents Plastic Cards Payment system has been innovating constantly to enhance customer convenience and reach Innovations around better and faster delivery of right products has led to customer delight for a modern day customer Disruptive Innovation Digital Payments Digital Payments Online Payments Online Transfer Telephonic Banking Digital Wallets Mobile Money transfer SMS, USSD Biometric ATMs NFC Enabled Payments SMS/ USSD Mobile Wallets Voice Biometrics 4

5 Digital Payments m-wallets recorded 108 Mn transactions in FY 14 with a transaction value of USD 465 Mn Break up of retail Digital Payments by Volume ( FY 2014) M wallets account for less than 6% of digital payments Debit Cards 26% Credit Cards 21% Others - m- wallets, prepaid cards etc 6% Retail Electronic Clearing* 47% but have recorded YoY growth of 229% 18% FY 2013 FY % Comparison of Mode of Payments 60% 50% 229% 190% 78% 274% RTGS Retail Electronic Clearing M-wallet Mobile Banking % growth in transacation volume % growth in transaction value M-Wallet: Transaction Value & Volume accounting for USD 465 mn and 108 mn txns FY2013 FY2014 Transaction Value (USD Million) Tranaction Volume (Million) Money Transfer and Mobile recharge are dominant use cases Bill Payment 12% Recharge 30% * Includes Electronic Clearing Services, Immediate Payment Service (IMPS) and National Electronic Funds Transfer (NEFT) Break - up of use-cases Transaction value: USD 160 mn Others 20% Money Transfer 38% FY

6 Challenges. SUPPLY SIDE CHALLENGES Safety and Reliability Interoperability of Bank and Non-Bank financial service providers Physical Infrastructure Increasing Cash out points DEMAND SIDE CHALLENGES Customer Experience Product Design Customer Education Sticky Prices Building Digital Ecosystem Usage of Products Vested Issues

7 And Opportunities. Increased Transparency Cost Reduction Increased Incentive to Save Increased Speed and Security Fiscal Inclusion Financial Inclusion

8 Focus Points How should Banks reposition themselves to meet challenges from Payment Banks With brick and mortar branches facing obsolesce, how will Banks metamorphose to continue sourcing business With customers increasingly using Alternate Channels, how will Banks maintain contact with their clients With digital banking growing exponentially, what will be the new risks and how would they be mitigated Availability of digital channels is one aspect, getting clients to use them is another aspect. How will so many clients be educated adequately to successfully migrate to neo payment systems

9 THANK YOU