Online banks, such as the major online banking services like ICICI Bank, Paytm and Axis Bank, are a big part of the financial ecosystem, but many online firms have not received their due, says Amit Jain, senior associate at the Center for Financial Innovation, a think tank in Mumbai.
The Indian regulator has recently been cracking down on intermediaries that provide online banking to consumers and is calling for a complete overhaul of the banking industry.
The Indian Financial Services Authority (IFSA) recently ordered the establishment of a new regulator, the Central Bank of India, to be headed by a former Supreme Court judge, Ashok Goyal.
The new regulator will be tasked with taking the regulator’s recommendations and updating the existing regulator.
IBS is a prominent example.
IBS operates over 3,000 banks in India and has been in the news lately after a court case forced the bank to shut down its branch in Bengaluru.
Its online banking is not perfect.
The IBS branch in Chennai, which is one of the biggest online banks in the country, had recently shut down for good.
The branch in Karnataka had also closed its doors in December last year.
In the last five years, IBS has made some significant improvements in the way it deals with the regulatory environment.
For instance, it has been working on a platform to simplify the customer experience and to make it more convenient for customers to use its platform, said the bank in a statement.
For the past five years now, the IBS team has worked closely with the regulator to develop a system that simplifies customer transactions, reduces the risk of fraud and facilitates faster delivery of payment products.
Another notable change that IBS is making is that it is introducing new features that will make online banking simpler and more convenient, said Rajan Sharma, vice-president and general manager of banking at IBS in a recent interview.
“We have changed the way the customer interacts with the bank.
We have given customers the option to select payment methods from our platform,” he said.
India has around $1.3 trillion of digital payments in circulation and more than 80% of the payments in India are made online.
The country has a number of payment systems that are online and that are not compliant with the Financial Transaction Policy (FTP) of the World Bank.
Ibs is one such payment system that is not compliant and so the regulator has called for the complete overhaul.
In a press release, Ibs said it would have to implement the new regulations and take the regulators’ suggestions to ensure that its online banking system is compliant.
Currently, there are more than 7,000 online payment providers in India, according to IBS.
If the regulator makes any changes, they will have to be put in place before the end of the year, said Sharma.