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Portability in Fintech (Kartik Swaminathan)

Portability is a key capability for fintech’s in future, as it enables the customer to switch over / transfer his account, from one Financial provider to another. This can be for various reasons, like he is unhappy with existing provider, or wants to switch, because he is getting better pricing, features etc.

Portability also enables business continuity, in case a player / provider faces technical issues, operational issues or financial issues, because of which it is unable to conduct regular operations or service customers.

Portability can also be beneficial during Mergers & Acquisitions, as it will make switchover / migration easier & faster, thereby reducing costs and risks for all. It can be enabled across various products viz. Bank Accounts, Deposits, Cards, Insurance, Mutual Funds, Loans, Retirement accounts etc.

Besides, ensuring the ability to switch accounts, Portability also needs to ensure that benefits accrued / history (especially for long duration & regular payment products) is also transferred. There will also be a level of standardisation of products required, to ensure smooth transfer and avoid complications.

One needs to also understand that ability to Switchover and retaining the same account number / reference number are two different matters.

Ideal is to create standardised layers (customer, product, provider, country layer etc.) to ensure better interoperability at various layers, with ability to merge. So, portability along with Standardisation & Interoperability is probably way ahead.

With Digital Identity becoming key to identify customers. It will make sense to wed the Portability ecosystem with Digital Identity. Even measures like standardised IBAN can help to some extent.

I say this as most existing portability / switchover initiatives are usually very complex and time consuming and not instant (can be anywhere between 7 to 45 days process). I understand some delay for security and fraud control reasons, but then we can have other measures (like freeze period, limits on switch etc.) in place for that and ensure at least the switchover is smooth and instant in a digital era.

Very recently Israel enabled portability between bank accounts. India also enables portability across Health Insurance providers, and also has an Initiative called unique customer identification code (UCIC), since 2012, but that has not picked up.

In fact, retiral accounts / Provident funds, as a product have wider adoption of Portability globally, as people can switch jobs, but retain the same retirement account.

Probably it is time for Portability and related initiatives to be prioritised, to ensure a smooth digital experience, true competition and choice for customers.

Happy Reading! And look forward to hear your thoughts.

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