DIGITAL CASH ACCOUNTS
Although most governments currently incentivize customers to adopt digital or cashless transactions, the adoption rate is rather low.
WCustomers always have the option of using physical cash instead of digital transactions. Further, the incentives for cash and digital transactions are more or less similar. In order to align with government initiatives for driving digital transactions, banks can offer innovative products, for example, a certain portion of an incoming remittance gest automatically moved into a digital cash segment; such amounts can only be used for digital transactions like buying from an e-commerce site, making wire transfers, and so on, and cannot be converted into cash.
The recent global crisis has also given cashless transactions a visible push, resulting in notable reduction of cash-based transactions. According to a global report from ACI Worldwide and GlobalData, real-time transactions surged by 41% in 2020 in the wake of the pandemic and projects a CAGR of 23.6% from 2020 to 2025. India and China were among the top countries and witnessed 25.5 billion and 15.7 billion real-time payment transactions, respectively.
How customers will benefit
Banks can drive the adoption of digital transactions by providing a nominal upfront discount on all digital account-based transactions. Alternatively, banks can also offer higher interest rates for the amount held as a balance in digital accounts. Such initiatives will result in more savings and higher earnings for customers who adopt digital transactions.
Ancillary to wallet transactions
At present, many consumers are linking their existing bank accounts to e-wallet platforms to make payments, as their banks do not provide wallet-equivalent services. Digital accounts can be linked to wallet-related discounts like cashback, allowing the existing customers to enjoy all the benefits provided by wallet service providers.
Sellers can market their products directly on the banks’ portal or mobile application, which creates a win-win situation for both sellers and banks’ customers. As such, digital accounts can eliminate payment or wallet services through the proposed technology revolution.
Voice-based transactions – Hassle-free access to financial transactions
Voice-based transactions accessible through mobile banking apps allow customers to initiate or fulfill certain transactions through voice commands. For example, the command ‘my account balance’ would display the customer’s account balance on the mobile screen, or a voice message is returned to the customer, which spells out the account balance. Customers can use this service for both financial transactions and non-financial transactions. Voice-based transactions can be customized as per customer requirements.
A customer can open his mobile app and start providing verbal instructions through pre-determined steps (similar to the interactive voice response (IVR), but command-based) and complete both financial and non-financial transactions. Some examples of non-financial transactions are ‘current account balance,’ ‘upcoming EMI or standing instructions details for the day, week, or month,’ and ‘last debit or credit details.’ Such information can be shared onscreen and also through voice notifications to provide an enhanced customer experience.
Financial transactions and other services like ordering cheque books and enabling account statements and double-layer authentication of transactions can be done through voice recognition (first layer) and one-time password (OTP) verification (second layer). The customer can set up a transfer limit for voice-based financial transactions. In addition to the above, all notifications that customers receive through text messages can be converted into voice messages, resulting in better customer experience.
Benefits to banks
By reducing the physical handling of cash, services like the withdrawal and deposit of cash through tellers and ATMs can also be minimized drastically. This will positively impact the manual efforts toward maintaining physical cash, posting entries, and loading money in ATMs. Banks can benefit by limiting the number of ATMs and saving maintenance costs of operating ATMs with a reduction in the footfall.
Benefits to regulators and the economy
In addition to the benefits for banks and their customers, digital accounts also offer various advantages to regulatory bodies and the economy as a whole.
Traceability of money
Digital accounts will provide greater transparency of end-to-end money movement as physical cash handling will be limited with transactions happening in digital mode.
Increased revenue to the government
Digital accounts will reduce the rotation of black money and increase the visibility of money movement. It will directly boost tax collections for the government and indirectly reduce the burden of the government in printing physical money and its associated costs. Money spent on combatting black money, counterfeit notes, and the prevention of money laundering activities can also be saved