The expansion of the network of banks and other financial institutions to reach the segments hitherto not serviced, the licenses issued to new institutions for servicing these markets...
The expansion of the network of banks and other financial institutions to reach the segments hitherto not serviced, the licenses issued to new institutions for servicing these markets and innovative offerings being designed to cater to new markets as well as existing markets are healthy signs of the country in the throes of new economic opportunities. Central to all of these initiatives is the momentum being created by the digital efforts of the financial institutions and other stakeholders. With cellphone penetration having touched nearly 90% of the population, the announcement of creating 100 smart cities and rolling out a plan to cover atleast one member from each family in the national digital literacy drive, the digital ecosystem would be shaping the futures of all businesses. Digital Bharat provides an exciting opportunity for banks in particular to reap full advantage of the new avenues available to create new products and tap new markets. There are several important factors that would determine the potential scale of success for the banks in the digital age, some of which are highlighted here.
Thanks to the focus over the last five years on the automation of core banking, several banks have managed to create a common platform leading to reduction of manual processes, setting up of centralised customer database and facilitating a network connecting all the branches. However, while transitioning to the automated system, many banks have adopted old processes and have not taken advantage of the opportunity to reengineer their systems. As a result not only have certain inefficiencies stayed on but the possibilities for presenting better customer experience and speeding up customer service have been missed.
Nevertheless, the core banking platform created by the banks have resulted in one significant advantage—creation of alternate channels namely ATMs, mobile, web, kisoks etc that have resulted in the possibilities for servicing the customers better by providing new services arising out of the centralised database and better segmentation. Thus the automation and the IT investments made by the banks over the years have placed them in an advantageous position with respect to the digital economy. Several banks have recognised this opportunity and have started implementing online, mobile and social systems with the twin goals of personalisation and enhanced relationship building. The significant departure from the past is the relative ease with which rural markets are also possible to be accessed with the help of these alternate channels.
Digital ecosystem enables multiple institutions to create new offerings and also has spawned several new private initiatives that may make some of the services of the banks redundant. Therefore, there is a heightened need for the banks to invest in data analytics and insights which are going to drive the business of the banks in future. Customer experience is another key factor to retain the business which would mean better understanding of the profiles of customers. Since concerns of security, trust and personal relationships are key factors that impact how customers wish to carry on with their banking transactions, unlike other businesses transitioning to the digital spaces, banks have enormous responsibilities to educate and create confidence with the customers, especially with those who are new to digital access and devices.
By the year 2020, the average age of Indians would be 29 years who would be savvy with digital access and would expect services to be delivered anytime, anywhere and with any device they use. According to the report of the Internet and Mobile Association of India (IAMAI), the number of Internet users in India will touch 503 million by 2017 as compared to nearly 278 million users in October 2014. The number of mobile internet users in India is expected to rise to 314 million by 2017, nearly double the 159 million it had at the end of 2014. The next wave of growth is expected to come from the non-metro and rural areas. The availability of low cost smartphones and low mobile tariffs is encouraging consumers in rural areas to use data connectivity and accessing new applications.
In order to encourage such a large segment of customers to access banking services through digital channels, the starting point would be to ensure that the employees of the banks are made aware of the advantages of the alternate channels and how these would benefit both the banks as well as the customers. In the past when banks had to adopt IT, the resistance came primarily from the employees and their union leaders fearing redundancy and displacement. Today the challenges are very different as they are concerned with employees adopting the new methods and at the same time evangelising the new systems with their customers.
Digital environments would call for continuous innovation and changes to the offerings and processes required to service customers. This would mean there would be a need to foster a learning culture within the banks to facilitate ongoing and real time learning using technologies.
Therefore banks would have to make substantial investments in e-learning, m-learning and i-beacons supported systems to help employees upgrade themselves on a regular basis. Digital age would not only keep the banks on their toes to be abreast of new tools, technologies and how customers form opinions of their services through social media but it is the speed and the ability to cull out insights from the transactions to delight the customers with customised offerings that would help the banks remain distinctive in the marketplace.
The writer is CEO, Global Talent Track, a corporate training solutions company