Technology Trends in Banking — e-RUPI, Fintech, RegTech, SupTech, Hashtag Banking, Account Aggregators & Open Banking
Principles & Practices of Banking | Module C · Chapter 50
Covers e-RUPI voucher system (QR/SMS-based, 5 entities, INR 10,000 per voucher, 16 banks), the Fintech ecosystem, RegTech (regulatory compliance technology), SupTech (supervisory technology — IDPMS, EDPMS, CRILC), Social Media Banking statistics, Hashtag Banking on Twitter, Account Aggregators (FIPs, FIUs, consent architecture), and Open Banking (APIs, risks).
📌 Why This Chapter Matters in JAIIB
Expect 4–6 questions from this chapter. Key exam focus areas: e-RUPI categories — only P2P and B2C; B2B is NOT a valid category (MCQ answer: (c) B2B); e-RUPI limit — INR 10,000 per voucher; up to 10 vouchers per mobile number; 16 banks live as of Jan 2022; 5 entities — Issuer Bank, Sponsor, Beneficiary, Designated Merchant, Acquiring Bank; e-RUPI vs UPI — e-RUPI operated by RBI; UPI operated by NPCI; Fintech benefits for Banks — 7 benefits (MCQ answer: (d) All of the above for any three-option question); RegTech 3 purposes — Regulatory Monitoring, Regulatory Obligations, Compliance Management; SupTech — used by Financial Supervisory Authorities (NOT suppliers or third-party vendors); RBI SupTech examples — IDPMS, EDPMS, CRILC; API — Application Programming Interface (not Advanced Persistent Innovation); Open Banking question 5— (c) "Being open in nature, open banking facilitates opening of accounts for financial inclusion" is the INCORRECT statement (open banking is about data sharing, not account opening).
Key Facts & References — Chapter 50 at a Glance
Introduction & e-RUPI
FreeIntroduction
The collaboration between technology and finance has constantly been evolving. Growing smartphone penetration, inefficient traditional financial systems, and consumer behavioural shifts are all factors presenting fertile ground for Fintech development in both emerging and developed economies.
Regulations need to collaborate with Fintech and RegTech players. Banking innovations like Open Banking and Social Banking are gaining momentum to enhance customer experience using simple and existing technologies. Products like e-RUPI offer contactless, easy, safe and secure payments to beneficiaries in remote and rural areas — including large sections of the population without smartphones.
e-RUPI — What Is It?
Definition
e-RUPI is a QR code or an SMS string-based e-Voucher delivered to the beneficiary's mobile. It is a one-time cashless and contactless payment mechanism. Users can redeem the voucher at merchants accepting e-RUPI without using a digital payments app, card, or internet banking.
No App Required
No payment app, card, or internet banking needed
Confidential
Beneficiary details kept confidential throughout
Pre-stored Amount
Required amount pre-stored in voucher — fast & reliable
SMS/QR Delivery
Delivered via SMS string or QR code to mobile
e-RUPI Categories — 2 Types
P2P — Person-to-Person
Can be issued between individuals. Framework exists but circular scope covers B2C only.
B2C — Business to Consumer
Primary category. The RBI circular outlines the scope and rules only for B2C vouchers. Issued by Corporates or Government to beneficiaries.
⚠️ MCQ answer — e-RUPI categories
e-RUPI CANNOT be issued for: (c) Business to Business (B2B). Only P2P and B2C are valid categories. B2B is NOT valid.
5 Entities in an e-RUPI End-to-End Transaction
| # | Entity | Role |
|---|---|---|
| 1 | Issuer Bank (Issuer) | Bank that initiates the request to create e-RUPI. Must be RBI-authorized to issue PPIs and participating as PSP in the UPI ecosystem. |
| 2 | Sponsor | Corporate, State/Union Government department, or business customer that requests the Bank to create e-RUPIs. Defines purpose and designated merchant. |
| 3 | Beneficiary | Person for whom e-RUPI is issued. May NOT be a bank account holder (works without bank account). |
| 4 | Designated Merchant | Specific voucher acceptance points where e-RUPI can be redeemed/used to purchase goods and services. |
| 5 | Acquiring Bank (Acquirer) | Bank providing facility/capability to designated merchants to accept e-RUPI (String/QR) for redemption. |
Salient Features of e-RUPI
e-RUPI Benefits, e-RUPI vs UPI & Fintech
FreeBenefits of e-RUPI — For All Stakeholders
For Corporates
- •Enable the well-being of employees
- •End-to-end digital transaction without human intervention — reduces costs
- •Issuer can track the voucher redemption
- •Quick, safe and contactless voucher distribution
For Merchants
- •Easy and Secure — voucher authorized through a verification code
- •Hassle-free and Contactless — cash handling is NOT required
For Consumers / Beneficiaries
- •Contactless — need not carry a printout of the voucher
- •Easy redemption — 2-step easy redemption process
- •Safe and Secure — need not share personal details; privacy maintained
- •Works without a payment app or even a bank account
e-RUPI vs UPI — Key Differences
| Dimension | e-RUPI | UPI |
|---|---|---|
| Nature | One-time cashless and contactless payment mechanism (e-Voucher) | Application used for receipt or payment of money |
| Type | e-Voucher (QR code / SMS string) | Digital application / interface |
| Operator | Reserve Bank of India (RBI) | National Payments Corporation of India (NPCI) |
| Usage | Redeemed at service providers' / designated merchants' counters for goods and services | Receipt or payment of money — general purpose |
| Internet | Can be used WITHOUT internet banking / app / card | Requires smartphone and UPI-enabled payment app |
What is Fintech?
Definition
Financial Technology (Fintech)is the use of technology to deliver financial solutions — technologically enabled financial innovations. Fintech includes 'start-ups' to 'big-techs' and established financial institutions. At its core, Fintech is used to help corporations, business owners, and consumers better manage financial operations using specialized software and algorithms.
Fintech Ecosystem — 5 Elements
Major Fintech Products
7 Benefits of Fintech for Banks
⚠️ MCQ answer — Fintech benefits
Benefits of Fintech for Banks include: (a) Reduced time to market, (b) Customer Services and Revenue, (c) Reduced Costs. Answer: (d) All of the above.
RegTech & SupTech
RegTech — Regulatory Technology
Definition
Regulatory Technology — technological solutions that streamline and improve regulatory processes. Assists banks or financial institutions in managing regulatory compliance.
3 Broad Purposes of RegTech
(a) Regulatory Monitoring
Monitor regulatory developments in real-time; adapt to new regulations quickly
(b) Regulatory Obligations
Manage obligations arising from laws, rules, and regulations
(c) Compliance Management
Make the compliance process more efficient; reduce human error through automation
Technologies Used by RegTech
RegTech Solution Areas (5)
SupTech — Supervisory Technology
Definition
Supervisory Technology — offers technological solutions to assist financial supervisory authorities in managing regulatory compliance. Supervisory agencies use SupTech to manage risk in the financial sector and implement regulations.
Who Uses SupTech?
⚠️ MCQ answer — SupTech users
SupTech services are used by: (d) Financial supervisory authorities. NOT: (a) Suppliers of Hardware, (b) Third-Party vendors, (c) Emerging technology vendors.
RBI Examples of SupTech Implementation
Future of RegTech & SupTech
Social Media Banking & Hashtag Banking
Social Media Banking — Key Statistics
The phenomenal growth of Social Media across the globe is an unquestionable reality. Banks must maintain active social media presence. Today's consumers — especially younger generations — raise expectations of banks via social media platforms like Facebook, Twitter, WhatsApp, and others, rather than dealing with bank officials directly.
58.4%
of the world now uses social media
4.62 Bn
people use social media (as of 31.01.2022)
~8
social media accounts per user on average
2h 27m
spent on social media per person per day
Top Social Media Platforms — Active Users (as of 31.01.2022)
| Platform | Active Users |
|---|---|
| 2.91 Billion | |
| YouTube | 2.56 Billion |
| 2.0 Billion | |
| 1.47 Billion |
Hashtag Banking
What is Hashtag Banking?
A hashtag (#) is a word or phrase preceded by a hash sign, used on social media (mainly Twitter) to identify messages on a specific topic. Indian banks have started using hashtags to provide banking services — fund transfer, balance inquiry, prepaid mobile recharges, etc. — to customers via Twitter.
6 Services via Hashtag Banking
How Hashtag Banking Transaction Works
Key note on Hashtag Banking
Whatever social media platform is used, the ultimate transfer of funds happens through the usual payment system channels like NEFT, IMPS etc. Banks look at hashtag banking in two ways: (1) to provide basic banking services, and (2) to give information.
Account Aggregators, Open Banking & APIs
Account Aggregators (AA Framework)
Account Aggregators retrieve or collect information related to financial assets of a customer from the holders of such information and aggregate, consolidate, and present it to specified users. Major banks in India (both public and private sector) have already joined the Account Aggregator network.
FIP — Financial Information Provider
Holders of financial information about the customer. These are the entities from whom the Account Aggregator retrieves data (e.g., banks, insurers, mutual funds).
Account Aggregator (AA)
Retrieves information from FIPs based on explicit customer consent. Aggregates and presents to FIUs. CANNOT store data or use it for other purposes.
FIU — Financial Information User
Entities that use the aggregated financial information for decision-making — e.g., lenders assessing creditworthiness, wealth managers.
Key Rules of AA Framework
- →Based on EXPLICIT CONSENT of the customer
- →Response envisaged to occur in REAL TIME
- →Data CANNOT be stored by the AA for any other purpose
- →Proper consent architecture required
- →Audit trails must be available
- →FIPs must implement interfaces for consent artefacts
What AA Framework Enables
Open Banking & APIs
Open Banking Definition
Banks and non-bank financial institutions use APIs to provide third-party financial service providers with open access to consumer banking, transactional, and other financial data. Also referred to as "open bank data."
API — Application Programming Interface
Enables businesses to make the specific data and functionalityof their applications available to external third-party developers, business partners, and internal departments. Services communicate and benefit from each other's data through a specified interface.
How Open Banking Works
- →Banks grant access to and control over customers' personal and financial data
- →Third-party financial service providers can access banking transactions and other financial data
- →Uses networks (rather than centralisation) to securely share financial information
- →Consumers, financial institutions, and third-parties can connect accounts and data across institutions
- →Makes it easier to do business and access financial services
Risks of Open Banking
- ⚠Data breaches due to inadequate security
- ⚠Hacking of banking APIs
- ⚠Insider threats at financial institutions
- ⚠Malicious third-party apps emptying customer accounts
⚠️ MCQ answers — API and Open Banking
Q4 — API in Open Banking refers to: (a) Application Programming Interface. NOT "Advanced Persistent Innovation."
Q5 — Which statement about Open Banking is INCORRECT? (c) "Being open in nature, open banking facilitates the opening of accounts to foster financial inclusion." — This is WRONG. Open banking is about sharing existing financial data via APIs, NOT opening new accounts. The other three statements (a), (b), and (d) are correct about open banking.
Chapter 50 — MCQ Quick Reference (All 5 Answers)
e-RUPI cannot be issued for which category?
✓ (c) Business to Business (B2B)
e-RUPI has two categories: P2P and B2C. B2B is NOT a valid category.
Benefits of Fintech products for Banks include...
✓ (d) All of the above
Reduced time to market, Customer Services & Revenue, Reduced Costs — all are benefits.
SupTech services are used by...
✓ (d) Financial supervisory authorities
Not hardware suppliers, not third-party vendors, not technology vendors — it is used by financial regulators/supervisors.
API in terms of Open Banking refers to...
✓ (a) Application Programming Interface
The full form of API is Application Programming Interface — enables external access to banking data.
Which statement about Open Banking is NOT correct?
✓ (c) Being open in nature, open banking facilitates opening of accounts to foster financial inclusion
Open banking = sharing existing data via APIs, NOT opening new accounts. (a), (b), (d) are all correct statements.
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