Remember the very famous song of the 70s by Eagles, Hotel California. Digital payments in India pretty much is on the lines of this song – “ you can check out any time you like, but you can never leave” .
You can buy a loan digitally. Open a savings bank or even get a term deposit digitally. But try closing your loan or your savings account with a click of a button, it’s practically a tug of war between you and the bank and invariably the bank will win just like the lovely face in the song.
Shaktikanta Das, RBI governor, said last Thursday that digital payments are here to stay. But if digital adoption must truly improve and reach the next level, it has to transcend beyond just the realms of payments. We need an ecosystem where if a loan or a bank account or deposit can be digitally bought, we must be able to close those transactions also seamlessly online.
Well, the mutual funds and stock broking industries, which at a combined isn’t even a third of the banking sector, have demonstrated their strengths all in a click of a button.
Funds can be redeemed online, IPOs are subscribed and refunded online if the allotment doesn’t happen. Why then, should it be any different for banking services? Unless a borrower or depositor makes the mandatory visits to the branches or phone calls to the relationship manager the loan or deposit cannot be closed.
Try pre-closing, let’s say a seven-year car loan within three years, the fight is worse. Of course, there is documentation involved which need to be carefully handed over to the customer and that cannot be done digitally yet, but at least the initiation of the process should be digital. Instead if you ask more, bankers would load you with the famous ALM or asset-liability management concept.
“What if everyone starts taking money out digitally, it might even lead to a run on the bank”. But this is such an archaic argument. The whole premise of strong banking principles is that any asset or a liability can be met instantaneously.
The pandemic bought for this deficiency in the banking system and yet if bankers choose to ignore the need for digital closure processes, it’s perhaps time that RBI starts nudging them in this direction.
After all without the push, the entire digital ecosystem in the banking space would not have taken wings like it has and if the loop should be truly completed, the push is needed once again.
