Indian Banks - Discovering New Digital Dimensions

According to me currently digital strategies and initiatives in Indian banking industry are in discovery phase, though there is no denying to the fact that we have made good progress to start with.

The usage of pen and paper have reduced a lot in banks and the manual intervention is also minimal.

Do you remember when was the last time you visited the bank for fund transfer? With widespread usage of Electronic banking, our bank visits have reduced which has resulted in reducing costs and deepening customer penetration leading to increased revenue generation.

Reduced cost of bank transactions

As per one of the article in Forbes, Branch Banking cost per transaction is estimated to be in a range of Rs.70 to Rs.75 while it is around Rs.15 to Rs.16 on ATM, Rs.2 or less on Online Banking and Rs.1 or less on Mobile Banking. Implementing UPI and Bharat interface for Money (BHIM) in payment space has increased cashless transactions. Introduction and usage of Prepaid Payment Instruments (PPIs) for purchase of goods & services and funds transfers is a testimony to increased digital payment penetration.

As per RBI, the quantum of transaction through PPI cards has reached Rs 532 billion in 2017, but having said that, there is still more to achieve, and we have indeed a long way ahead in terms of adopting Digital practices.

Indian banking is still conservative and reluctant on cloud computing and its implementation. There is a lot of scope for product category for SME lending space. In my experience of working with banks of India, scope of digitization for SME, MSME and Corporate sector is still untapped. From Indian Banking space perspective, the scope and demand for digital products in Wholesale banking (including corporate clients) is massive and needs major push. Customized digital products are and will be game changers in the corporate sector as it will help in deeper market penetration and adding value-based services to customers.

How analysing customer behaviour can help in predicting their requirements

Over the weekend, I was watching a series on Netflix called “Social Dilemma”. It primarily talks about both good and bad aspects of social media. One interesting topic that came up in the series was related to importance of algorithms and how it can be implemented based on consumers actionable behaviour.

In banking sector, its implementation can be very simple; one just needs to observe customer’s financial transaction patterns though banking channel and then can implement analytics. This will facilitate to arrive at strategy for customer engagement campaigns, cross -sell of products, thereby making it relatable with customer requirements.

Let us understand this with an example – say, a product called Quick OD is offered by the bank for business banking customer segment. The concept of the product is very simple, first you arrive at customer profiling w.r.t. type of customer (say SME), transaction volume, cash requirement, turnaround time etc. Once profiling is done and analysed, bank can provide its customer the overdraft solution against existing deposit with the bank. In this example, for factors like big ticket transaction, cash requirement is the data feeder which helps the bank in customizing their products based on customer’s financial expense pattern before launching digital product in the market.

Digital channels in Banks

Fortunately, I got an opportunity to work with a bank which is new in the Indian banking industry. I was part of their digital initiatives for web and mobile channel. The initial focus was on CASA mobilization. In order to achieve this, the easiest way bank typically offers is high interest rates on deposit and offer other value-added services. Bank also experimented few other products and offering though some of their initiatives were not successful. However, over the years they came up with few interesting proposals for customer preferences and designed their digital ventures around it.

Another key strategy which they factored in was the strong amalgamation with third party ventures- be it wealth management services, or features such as offering customers to book cab, food, flights through the mobile app. I know many of you must be thinking that it is basic SDK (Software Development Kit) integration, but the end result was to engage and broaden the customer base. The app was instant hit with millennials and buoyed by its success, the bank launched the concept of wearable banking through which one can transact on the go. Consequently, client’s timely launched services on personalized offers in the market helped them in increasing their customer base.

Being digital going forward is the mantra specially in Indian banking sector where digital competency is a game changer, especially in terms of product development and customer engagement model. The way forward is to think beyond usual digital practices with equal emphasis on security. The ball has just started rolling in Digital space … Sky is the limit!!!

Do you want to know how Xebia is helping banks Embrace the wave of CX-led Digital Banking?
Reach out to us at bfsi@xebia.com or 
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