With these changing times, it is imperative for banks and financial institutions to change the rules of customer service and engagement accordingly.
The ongoing pandemic is compelling the world to adapt to a new reality. We are witnessing a dramatic restructuring of the economic and social order which will change the way we live. This has had an evident impact on banking as well.
Digital or contactless banking has been an evolving concept, especially in the metros and tier 1 cities, further accelerated with the emergence of concepts like Neo Banks and Payment Banks. What changed during the pandemic is the extension and acceptance of this concept beyond the urban regions and digitally literate customers.
The unprecedented times forced non-digital natives to get acquainted with the contactless form of banking. This was actually a boon in disguise as it encouraged people, who were heavily dependent on physical banking and offline transaction modes, to recognize the benefits of using digital channels for their daily banking needs.
Small Finance Banks are designed to serve the underserved and the underbanked across regions and customer segments. Their constant endeavor is to ensure that every person benefits from a structured and regulated financial framework irrespective of the geography or social strata they belong to. Contactless Banking actually serves as a neutralizer in filling this gap. Today, with concepts like Video Banking anyone can open a Bank Account in a few steps, as end-to-end virtual verification can be easily done in a few minutes. Beyond onboarding, today a customer can be successfully engaged and satisfactorily serviced by a Virtual Relationship Manager.
Services like WhatsApp Banking, Missed Call banking, and ChatBots have eliminated the need to even get on a call with a customer care executive for basic banking needs. The technology has graduated to be intuitive enough to give the feel of a personal and customized interaction. There was a significant surge witnessed in the usage of these services during the lockdown, which was a testament to the fact that all that a customer needed was a nudge to adapt to branchless banking.
This practice is gradually being extended to credit offerings and has the potential to change the face of credit accessibility and availability. Space largely dominated by NBFCs and FinTechs is now seeing an influx of initiatives from banks. Today, the end-to-end lending process, right from the first connection to evaluation to disbursement can be done digitally. The Open Banking system is helping create an ecosystem where banks and technology providers can collaborate to offer true digital solutions to a customer even at the last mile.
This pandemic has not only changed the way a customer engages with its bank but also has brought a behavioral shift in payment habits across entities. If 2016 demonetization was an accelerator to digital payments, the current situation has actually given it wings. This can be very well seen in the massive rise in UPI transactions witnessed recently. A person doesn’t panic or rushes to an ATM anymore if they are low on cash.
Today, it is presumed that the merchant they are interacting with would accept some form of digital payment. QR codes at merchant outlets have become so ubiquitous that the ones not having it are seen as outliers. This shift in transaction habits is not just limited to metros which is a welcome change and here to stay.
With these changing times, it is imperative for banks and financial institutions to change the rules of customer service and engagement accordingly. Today, being available for the customer whenever they want and in whichever form they like, is no more a value add or a novelty.
Contactless Banking has become a new normal which has to be seamlessly adopted by all stakeholders of the ecosystem. The user experience of a digital banking system is crucial to its adoption and it has to be glitch-free and smooth. This is not just limited to the user interface, the backend systems have to be equally robust and secure enough to deliver an uninterrupted and safe experience. The four cornerstones of a truly contactless world would be the integration of the latest innovations, consistent application uptime, the capacity to manage huge transaction volumes, and end-to-end security.
The onus of making this transition easy and frictionless lies with the institutions and they can do so by offering digital solutions that effortlessly integrate with the daily lives of their customers.
By Ankur Tripathi, Chief Information Officer, AU Small Finance Bank