Technology is set to redefine banking in India.

Digital payments are rapidly disrupting the cash-friendly nation’s spending habits. In an April 2017 global survey on internet security and trust, a whooping 86% of Indians said they would likely use mobile payments over the next year, well above the world average of 57%. By 2020, Asia’s third-largest economy is poised to have a $500 billion digital payments market, contributing to 15% of the country’s GDP.

And IT giant Infosys is at the forefront of this change. Since 1999, Finacle, a digital banking platform run by its wholly-owned subsidiary, EdgeVerve Systems, has been providing bank database management systems to various financial institutions. Today, close to 70% of India’s top 40 banks and over 100 cooperative banks use Finacle’s banking platform to manage their IT infrastructure and applications. As of last June, Paytm, India’s largest e-wallet with over 225 million customers, has been using Finacle for its payments bank business. And even non-banking entities, such as telecom company Airtel, are partnering with Finacle to help customers go cash-free.

Altogether, Finacle serves over 94 markets across the world, handling the accounts of 850 million customers, and logs a daily transaction volume of between 50 million and 75 million.

Quartz spoke to Rajashekara Maiya, the associate vice-president and head of product strategy at the company, about the road ahead for digital payments in India.

Edited excerpts:

With digital payments slowing down as cash has gradually come back into the economy after demonetisation, has the sector peaked?



There’s a lot of scope. Yes, there is a marginal reduction but…Rs2,500 crores (worth of transactions) will be done through digital by 2017-18. In India today, non-cash payment transactions by Indians per capita per annum is 11 compared to 26 in China and 728 in Singapore. Look at the number of sale points—point-of-sale units, ATMs, toll booths accepting digital payments. Pay-points per million people is only 1,100 in India—it’s over 16,000 in China and over 31,000 in Singapore. There’s a very large scope of digital transactions getting increased substantially (in India).

Sure, but by when will it happen?

The government has given enough guidance and infrastructure. This kind of infrastructure is unheard of in any other part of the globe: The Jan Dhan, the Aadhaar…small traders and vendors who make digital payments can claim tax breaks, some can claim some subsidy. The incentivisation and infrastructure will bring the cost down per transaction. The government has (also) given the mandate to the department of telecom that by the next one year, (it must) set aside and provide free data—100mb per month per user.

Security is an important concern. What technologies can make digital transactions more secure?

Using blockchain makes transactions secure, unhackable, and transparent. It takes out the middleman, provides real-time online transactions, and data is safe… It’s like how the Uber or Airbnb platform works today. A person wants to rent a room or a car and, on the other side, a person is ready to rent his room or drive a car for a fee. Blockchain exactly does that without an aggregator being in the middle… you request, you match, (and) form a digital contact or smart contract.

Is that just a theoretical solution or is Finacle deploying blockchain technology for transactions already?

Finacle has spoken to many academics who’ve conducted fundamental research in blockchain (and) Silicon Valley startup companies. It helps us in terms of changing the paradigm of payments—especially cross-border payments—and the digital identity of a customer. We’ve trained around 40 of our staff, who we call the “blockchain black bench,” to use their knowledge to create solutions. (The group) was launched by Infosys in April 2016. In October 2016, one UAE bank called Emirates NDB and India’s ICICI bank were part of the first pilot (test) using blockchain for cross-border payments. Since then, we’ve on-boarded 16-plus banks across Australia, Asia, Europe, and the US on this network.

With automation picking up in the banking sector, and the scope of blockchain weeding out the middlemen (namely banks), is there still room for human jobs in the sector?

AI and machine learning have been around since Alan Turing made the super-computer in the 1950s but the application of that has not really taken off the way we’ve been seeing in the last two to three years. However, machines manage repetitive tasks. For example, I go into an ATM and ask for Rs5,000—I never count notes from the machine. Instead, if I go and draw in front of a teller, my tendency is to count it because we feel there’s a possibility of human error. AI augments services and capabilities beyond what used to be manual and (processes) become much more cheaper, more efficient. It is elevating one’s knowledge and skill sets. But it has undefined and unlimited capabilities. It’s about how you leverage that. Like, we build algorithms to prevent fraud; they’re good at picking up patterns and behaviors, pinpointing among the millions of transactions happening, but they need the support of human intelligence to take the right decision (thereafter).