Banking is considered as the business of money by most of the people. However, if you talk to a banking veteran then he or she will categorically answer you that banking is a business of customers. This realization ensured that customer centricity is a key value adopted by banks and it has stood us in good stead. It then follows, that if we are in the business of customer, then our business is shaped by evolving changes in customer behavior.
2017 was considered to be the gloomiest year by many. However, the year has gone by and the years ahead have been presenting us with both opportunities and challenges.
Sustainable Competitive Advantage
The most important challenge that has been thrown into focus is the amount of digital banking initiatives that have incremental to no impact on business. This effort should not be focused completely on cost and features. In the previous era, cost and product provided competitive advance. Our attempts need to be dependent on experience. Lack of experience always leads to poor adoption and failure of digital initiatives.
Convenience And The Death Of Loyalty
Earlier point above is further explained by the fact that we have moved into a post-loyalty world. Now days, consumers are not tied down by the traditional bonds with their service providers. The urbanization of everything is also forcing banks to change everything about the way they engage customers, because customers are now exposed to superior digital offerings from technology giants like Google, Facebook, Amazon etc. We will need to match up to them, learn from them, perish in front of them and partner with them.
Understanding Customer Context
Trying to superimpose digital solutions on traditional customers is the other area where the organizations have suffered. We were fortunate to identify this challenge early and craft a tech centric consumer segmentation approach called DISC (Digital Native, Intelligent, Social, Connected), which allowed us to think of fresh, agile, and relevant answers which are helping us to consolidate our digital leadership.
Automation And The Future Of Work
The impact of AI and Robotic Process Automation on traditional workforce is one of the most important sociological challenges that have been thrown around. India has a proud legacy of a huge service sector, with the likes of Railways, Postal service, and State Bank of India being some of the largest employers in the world. Therefore, we need to proceed with ample amount of care while we adopt automation. It is necessary for us to understand the impact on jobs and help the workforce transition to newer roles. This will not only be responsible growth, but will have a great positive impact in the future.
The benefits of the DISC (Digital Native, Intelligent, Social, Connected) customers is that they are ready sponges for digital solutions. We are no longer in an era where we need to explain the basic technologies that drive our digital offerings. The post-loyalty DISC customers are also looking to reduce human-based help in favour of digital: self-help. This once again opens up the canvas for banks across service delivery, customer support and product design.
Leveraging The Power Of Social
Facebook has 2.2 billion monthly active customers. What is more interesting to know is that Facebook is only the tip of the iceberg when it comes to social. The gold mine is using social technology for leveraging internal capabilities. Organizations which are able to identify this and organize efforts around this social power would see huge dividends.
The Right Time And The Right Place
Whilst there is so much more to be said about the challenges and opportunities for banking in the digital era, here are some most important opportunities that we should seize:
• We have a huge penetration of mobile infrastructure than ever before.
• We have a government and regulator that have been promoting the development of a strong digital economy.
• The start-up machinery of India, especially the FinTech boom, has given a chance to all banks and NBFC to connect with agile and brilliant start-ups and take these solutions to their customers.
The Future State Of Banks In A Digital World
The fintech sector is often known as a battle between old and new. But it’s worth noting that the flood of new money going into this sector is distributed across both parts. What is of concern is that established financial services players are not doing enough to keep up with this surge in new innovation investment.
A survey conducted recently of senior industry executives involved in the FinTech Innovation Lab stated that 72 percent feel their bank has only a fragmented strategy of dealing with digital innovation.
There has never been a better time to be in digital banking than now. There will always be challenges, but a huge tidal wave of opportunities is awaiting those who are willing to head out. Most of today’s digital ideas will power large businesses of tomorrow.