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After I wrote Calling B.S On Banking The Unbanked, the GoI launched a program to issue zero balance bank accounts through an abbreviated process. While the program succeeded in opening 100M+ new accounts, over 70% had no money in them. The GoI then launched life and health insurance plans with cut rate premiums that had to be direct-debited from the bank accounts, thereby hoping that people would keep at least that much money in their accounts. Now we're hearing that payments banks would promote financial inclusion. Plan after plan with no end in sight, I sometimes wonder if we should spend more time and energy to find ways ways to achieve the more important goal of putting enough money in the hands of the supposedly-unbanked segments of the population.

@DavidG:

You've made a brilliant point about how open CBS platforms are themselves not modern. Having worked for a vendor of one such platform, their average age is 20+ years.

Now that you've brought this up, I'm reminded of how the CIO of a leading bank recently lamented that even the mindset of executives in their open CBS vendor was tending towards legacy, with no sensitivity to agile development, time to market considerations in a crowded market, and so on. The bank wanted to build an instant account opening extension on top of the Online Banking module of their open CBS. The vendor took one month to come up the estimate, which was for $M / 6 months, which totally defeated the purpose of a functionality that had competitive advantage only for a couple of months.

The bank did something similar to what you've recommended, namely, contract with a third-party digital-first web development agency, launch the first version of the instant account opening portal in 30 days.

Some degree of vested interest can't be ruled out but this does largely resonate with the findings given in a recent BBC article. Most specifically:

• Cash in circulation is growing at 7% per year, which is indeed roughly twice the growth in economy;
• MPESA is actually used to send cash from sender to receiver, so proliferation of mobile money services absolutely does not mean fall in cash use. 

Seems like a true veteran, why the 'veteran' qualification?

Well, the last time Coop stopped asking "Why" and moved forward with legacy transformation, it almost went bust: "...calamitous IT re-platforming project that contributed to a £300 million write-off and left the bank on the brink of collapse." 

https://www.finextra.com/news/fullstory.aspx?newsitemid=26019

Unfortunately, Coop is damned if it transforms legacy and damned if it doesn't transform legacy. Its plight is more reflective of the way in which attempted to get out of legacy earlier and the way in which it is now attempting to stay with legacy, rather than legacy itself.

On a side note, I just came across a McKinsey article which prescribes two different ways of doing legacy transformation. Maybe the "two-speed" approach will suit most banks in developed nations and the "greenfield" approach will work better in emerging markets.

http://www.mckinsey.com/Insights/Business_Technology/Two_ways_to_modernize_IT_systems_for_the_digital_era

@VishwanathT: Good question:) One that I've asked many times, including in 6 Reasons Why Banks Can't Transform Legacy Applications.

@JamesP: I can hardly think of a single bank on a mainframe core banking system in India but, in my personal experience, their uptimes are not any higher than those of any bank systems I've experienced in UK. Banking system failures of the nature visible to the outside world can be caused by switches, network, bandwidth, and many other moving parts. While legacy presents its own problems, I'm not sure if it can be singularly held responsible for all failures. 

From personal experience with 2 of the 11 companies granted payments bank license, Vodafone MPESA and PAYTM, both "take deposits, convey remittances & dispense payments" as Economic Times summarized the remit of payments banks. Not sure what else the new payments bank license would empower them to do apart from raising the deposit amount to INR 1L. Both of them having been trying to replace plastic with mobile form factor - albeit on the existing card rails - so I doubt if they'd rush to launch debit and credit cards now.

@Varadarajan CA: Not sure if it's public knowledge but I know from my alma mater circles that RBI's payments committee does include a professor from the maths department of IIT Bombay.

I've been reading about internal fraud and similar measures to detect it for nearly two decades. Part of that time, I've also sold Intrusion Detection Systems and Network Access Control software. Unfortunately, nothing much seems to have changed. Fraud detection is one of those things that present a classical Catch-22 situation: "If you report it, then it is detected, so detection measures are already in place. If it is not detected, it has probably not occurred, so detection measures are not required." On top of that, there is too much scare mongering going around, so many companies have learned to tune out the topic. For example, who will believe that a 31K GBP fraud can bring down a Banco Santander? IMO, the really severe problem is rogue trading of the nature that brought down ING Barings. I recall hearing only one other case like that of a NJ-based trading firm, so I tend to believe that that problem has been nailed.

SQUARE just announced that it'd take over the fraud liability of US merchants who don't move to EMV by the October 1 deadline.

https://squareup.com/news/why-square-sellers-can-rest-easy-about-the-liability-shift

While parties in ROW question why it's hard to remember a PIN, SQUARE actually tells businesses that "It’s all a bit complicated — and scary-sounding" and assures them that it would take over the fraud liability, so "...there’s no cause for alarm."

With a partner like SQUARE, why would a US merchant rush to adopt the more friction-prone EMV technology? Goes to show how local business culture influences mainstream adoption of some technologies like these.

@SeevaS: TY for your kind words.

@CharmaineO: TY for your kind words. I've heard flagbearers of Data Mining claim that their technology actually uncovers related (measurable) variables automatically! More in Difference Between Data Mining And Predictive Analytics.