Payment technology

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Summary of current scenario at CNB Pay CNB Pay currently caters to end-to-end payments products suite, powers retail delivery channels including ATM, POS, Internet and Mobile as well as critical back-end functions including card management, reconciliation, settlement, merchant management and device monitoring. Through shaping the banking revolution in India three decades ago by setting up India’s first ATM and cloud payment network to powering most of India’s leading banks today, we have cemented a reputation as a payments tech industry leader. While CNB Pay’s largely linear growth has been fueled by license renewals and cross-selling across top accounts, it has seen a steady decline over the past few years and services have now become the primary driver for growth. Given that the entire FinTech landscape has undergone a tectonic shift over the past few years, it is crucial for us to understand this new normal and evolve to serve it’s needs in order to avoid getting disrupted by more sophisticated and agile fintechs.

Evolution of Banks

Digitalization of Transaction/ Payments

Invasion of SUPER APPS

Holistic approach & Thinking

Trends and Opportunities

Software platform

Scope and services of CNB

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Contents

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Evolution of Banks

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Digitalization of Transaction/Payments

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Holistic approach & Thinking

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Software platform

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Invasion of SUPER APPS

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Trends and Opportunities

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Scope and services of CNB 3

1 Evolution of Banks

Banks used to be primarily centered around savings, lending, and payments. From the late 90s onwards, they morphed into ‘one-stopshops’ that bundled these services (and more) for their customers.

By the late 2000s, FinTechs disrupted this centralized model by offering niche banking services and executing it better than incumbents that were struggling with legacy issues.

Venmo and Square specialized in P2P payments, Mint in budgeting, and Lending Club in P2P loans.

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2 Digitalization of Transaction/Payments ➢ Not long ago, banks were the main facilitators of payments; but that too has changed dramatically in the recent past, driven by: new payment products ➢ Increasing smartphone adoption, market need for faster payment modes, and a strong push from regulators to go cashless. COVID-19 has further accelerated this shift to digital, with more businesses looking to integrate both online and offline channels ➢ UPI recording its highest number of transactions ever in September.

➢ In fact, even mutual funds, insurance, lending, etc. are all rapidly going digital, inducing banks and non-banking financial companies to focus on providing more integrated solutions. ➢ Digital payments has evolved from being a cost centre for banks to a key revenue centre and a lever for customer acquisition. Unsurprisingly, the leading FinTech companies today are the ones who are bolstering their payment infrastructure with associated services (like lending, microinsurance, wealth management, etc.) ➢ Pairing them with data analytics to offer hyper-customized and delightful solutions to customers. If the last decade was about unbundling finance, the winners of the next decade(s) will be the ones who successfully rebundle finance.

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3 Holistic approach & Thinking

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To accomplish this feat

We will have to aggregate all financial products and - leveraging data – match them with the right consumer. Hence we will have to depart from our productcentric approach with a client (banks) at the centre to a more holistic approach that incorporates all stakeholders in the value chain and focuses more on facilitating repeated, meaningful transactions amongst them.

Instead of envisioning the market as producers creating value for the consumers, we need to think of it in terms of participants that collaborate, interact, and engage with each other to create and consume value, at scale. This is what platform thinking entails.

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4 Software platform Android and iOS are platforms that provide the critical infrastructure (geolocation, software integrations, storage management, etc.) that enable hundreds of thousands of developers to create delightful apps for billions of digitally native consumers. Similarly, we need to create a platform that provides the digital infrastructure for producers (manufacturers of financial products) to transact and collaborate with distributors and developers to serve the needs of consumers.

Android & iOS Going back to our Android and iOS example - billions of consumers spend hours daily on their Android or iOS powered smartphones communicating, consuming, and shopping.

accessing bank accounts

buying insurance

Groceries

Take-out

Hailing a taxi

Chatting with loved ones

Flight tickets

Much more, happens on their smartphone.

Making payments

None of these apps could have come into existence without the infrastructure or the distribution provided by the underlying platform. Additionally, all these apps have amassed millions of ardent customers just by fulfilling one of their needs really well. Imagine the quantum of untapped revenue each one of them could unlock if they not only serviced not one but all of their customer’s needs instead.

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5 Invasion of SUPER APPS Super apps - the emerging tech giants of tomorrow - do precisely that. One app, one sign-in, and one seamless user experience — for virtually any product or service a customer may need.

The era of single purpose apps is drawing to a close with the proliferation of super apps like Go-Jek (Indonesia), Grab (Singapore), Alipay (China), Rappi (Colombia), Careem (UAE), etc.

WeChat has 7x the ARPU of WhatsApp today because it transcended beyond messaging to become a super app that birthed an ecosystem

of a million mini-apps which cover the entire gamut of a consumer’s needs, across verticals.

It’s a shift away from fragmentation to consolidation which promises to unravel commerce hitherto unknown to humankind.

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A BRIEF OVERVIEW OF

5 Example of Super APP

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6 Trends and Opportunities We combine the trend with the fact that this year, one in every two people on the planet will be a smartphone user. 3.6 billion digital natives will be transacting 4.9 trillion dollars online this year alone. With smartphone adoption increasing active consumers and super apps concentrating consumption, the latent consumer demand that is now beginning to surface will grow that 4.9 trillion by leaps and bounds in the years to come. While super apps are undeniably the Ferraris that will accelerate tomorrow’s commerce, they need an express highway of digital infrastructure - that guarantees a smooth ride even at the highest speeds - to run on top of. Solving for unprecedented scale of transactions on the front-end and keeping cost-per-transaction low is critical for the success of super apps, which is why it is essential that they be built atop a digital infrastructure that leverages internet-scale design and open standards. Beyond the digital intimacy of smartphones and the convenience of super apps, a solid digital infrastructure is essential to open up the floodgates of digital transactions.

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