How Customer Centricity is Fuelling Rapid Disruption in the Payments Space

Reading Time: 4 minutes

‘’As we embark upon the journey of realising Payments Vision 2025, the steps taken so far towards enhanced outreach, customer centricity, cyber security and digital deepening would be further consolidated. Customer centricity is always paramount in every initiative of the Reserve Bank with multiple efforts in this direction, and this increases with growing customer confidence. And every initiative has been acknowledged, accepted and appreciated by an increase in user onboarding and transaction volumes’’. –  RBI Payments Vision 2025, published June 2022 

How digital is accelerating customer convenience?

RBI, in its recent policy paper for the digital payments space, has reemphasized the importance of customer-centricity while building fintech products. Rightly so, as a customer-first focus remains the guiding force behind the payments ecosystem.

At Simpl, we are proud to be able to do our bit towards the democratisation of payments in India through our full-stack checkout network towards ensuring a secure, reliable, convenient, flexible, speedy and hassle-free checkout experience.  The secret sauce behind the success of payments: Digital Thrust. The digital-only mode has fast-forwarded the speed of processing transactions at scale and efficiently.  As per RBI, over 26 crore digital payment transactions are processed daily by Indian payment systems. 

Rise of purchasing power in Indians

In terms of purchasing power parity, India’s economy is the world’s 3rd largest valued at $10.21 trillion as per World Bank Data 2021. India’s growing middle class also referred to as the aspirational class with higher discretionary spending, is a heavy user and key beneficiary of the country’s consumer-friendly payments system towards large value, retail or ready purchases. Digital payments are playing a key role in accelerating India’s consumption-driven demand economic growth, as is evident from RBI’s Apr 2022 data:

 

Source: RBI

Key drivers in the fintech race

As per RBI’s insights, the digital payments space is witnessing higher expansion fuelled by a surge in e-commerce adoption, fintech app installations, active Internet users and mobile ownership. On the reforms front, several ground-breaking initiatives have played a positive, decisive role in firmly positioning India as a payments leader globally. These include:

• India Stack
• JAM (Jan Dhan, Aadhaar and Mobile) trinity
• The Account Aggregator framework which simplifies the process for financial institutions to share customer information as per customer consent
• OCEN (Open Credit Enablement Network) towards establishing an open lending marketplace, mandating local storage of payments data
• Data Protection Law, which is in the pipeline. 
• In fact, India has taken its achievements in payments a step further by extending UPI beyond borders to several other countries including Nepal, Bhutan, France, Singapore and UAE. RBI estimates India’s digital payment sector to soar to 21700 crore transactions by 2026. 

The customer rules, still,  in the new normal

Amidst shifting goal posts in payments with respect to cyber security, digital expansion, innovation and the launch of new products, customer-centricity continues to prevail as a common and universal goal. A customer-first approach requires further thrust on operational excellence, speed and quality of services, irrespective of the transaction value.

With the emergence of multiple homegrown D2C brands and the entry of small merchants transitioning to digital business, there is a growing demand for contactless payments. RBI data reports a jump of 500% in merchants accepting digital modes of payments till Sept 2021 as compared to March 2019.

Building solutions for the Mobile-first generation

Digital payments are not restricted to payments only at the checkout page of the merchant website. Given the convenience factor and a large number of mobile-savvy customers, payments has strengthened its digital presence via mobile. RBI data reveals a massive spike in unique users of mobile banking (99%) and internet banking (18%) between March 2019 and Sept 2021. The hike in the usage of digital payments is both in value as well as volume terms.

RBI stats indicate that digital payments witnessed a volume growth of 216% and value growth of 10% during March 2022 vs March 2019. Interestingly, the use of paper instruments such as cheques has shown a sharp decline during the same period from 3.83% to 0.88% in volume terms and from 19.62% to 11.47% in value terms. 

Security is paramount

Payments solutions serve the fundamental purpose of building trust in the ecosystem and merchant network. In fact, RBI recommends alternative authentication mechanisms for digital payments, viz., AFA or 2FA i.e. 2-factor authentication. While SMS-based OTP is commonly used, there are concerns namely phishing, vishing and smishing attacks whereby confidential customer data is vulnerable to theft. Recognizing these security pitfalls, other risk-based authentication tools are being explored which deploy behavioural insights, biometric identification, location or historical transactions, digital tokens and in-app notifications.

RBI also intends to expand the use of LEI in payments systems especially sanctions screening, KYC, fraud detection etc to facilitate prompt payment tracking, uniquely identify the parties and encourage greater transparency. As a landmark step toward localization of payments, RBI intends to explore geo-tagging of payment touch points which ensures customer privacy is maintained at all times.  These positive developments would amplify the customer-centric ethos of the payments landscape and amplify digital innovation in building a formidable payments infrastructure across the country.

 

Leveraging customer intelligence to deliver customer-centric experiences

Customer intelligence plays a critical role in boosting customer centricity. By studying customer pain points, expectations and objectives based on past buying patterns, website and in-app activity, support calls and feedback, payments providers can deploy the data intelligence to offer solutions that help overcome customer challenges.

Data analytics enables robust customer decision-making as well as encourages better customer engagement. Ultimately, being customer-centric is all about understanding the customer needs and analysing the customer behaviour at a deeper level while providing solutions that keep the customer front and centre!