Banks Will Have to Reinvent Their Services

by Shweta Verma    Apr 11, 2014

deepak sharma

If India banks have to keep pace with the changing expectations of customers, they will have to reinvent their services. The current formats and business models may not work in an increasingly digitized world, believes Deepak Sharma who heads the digital banking initiatives at Kotak Mahindra Bank. Kotak is among the leading new age banks that are embracing digital banking in a big way. In an exclusive interaction with CXOToday, Sharma elaborates on some of their digital banking initiatives and his thoughts on the evolving banking landscape.

Your bank has been quite active on the digital front. Could you elaborate on some of the key initiatives that you have taken?

Yes, we are probably the first bank in India to have created an end-to-end digital vertical. Today many banks are doing online banking and mobile banking. But we have started looking at all the areas where digital enablement can happen in the existing business model. We are working with the matrix to work out ROIs on each of the areas. This basically means that we’re not just looking at internet and mobile banking but we’re also looking at what can be done to improve the sales productivity enhancement, what can we do for an electronic KYC (Know Your Customer) or other pure play products that can be delivered and built through the digital medium.

Recently we launched ‘Jiffi’, which is the first digital and social media integrated platform of its kind in India. Jifi, which is particularly directed at the younger generation of customers, seamlessly integrates social networking platforms such as Twitter and Facebook with mainstream banking

Are you also ramping up your other banking services to for this ‘end-to-end’ digital approach that you mentioned?

See we look at digital from both sides, internally as well as externally. One is what we do for customers and the other is what we do for process redesign to ensure that there are initiatives to increase productivity or reduce the turnaround time.  Or what are the new security measures that need to be built into each channel, integrating the offline channel at the branch level, with contact centers, ATMs and mobile/internet banking. So we look at each aspect rather than just go and pick up just a mobile or internet channel.

What are some of the major concerns or issues that need to be addressed? Can you suggest some steps that can help drive digital banking in India?

I believe the customers are increasingly getting comfortable using the digital channel. But the regulatory framework needs to evolve and changes would be required to keep up with the demands of digital banking. Then there are other issues related to security that have to be addressed. As we launch new banking services, we will also have to ensure complete safety for the customer.

Another thing that can be done is to get banks and telcos to work closely. Another thing that can be done is to get banks and telcos to work closely. This is one area where we still do not have telcos working in the way it is happening in other developed countries like the US. A lot more can be done here. For example, providing geo-banking kind of solutions through mobiles or data plans that customers can choose if they have to use mobile banking services.

What is your view on the new payment banks that are being set up by some of the telcos?

Payment banks is a good concept for a limited purpose, primarily directly towards financials that are going for banks. For a payment solution this is fine, but you see customers still don’t trust telcos as far as banking is concerned. I feel telcos can do a lot more than just payment banks.

Your thoughts on inclusive banking? How can we drive financial inclusion in India…

Again I would say some kind of a partnership between banks and telcos, maybe a Jifi kind of model.

Any advice to other banks for going the digital way…

The pace at which customers are adopting the digital platforms, I think it is just a matter of time when almost everyone will be using e-banking. So banks should take steps to educate their customers on using these services but they should do it in a way that their relationships with customers are not compromised in any way. That’s what most of the banks are worried about.

I believe we should look at creating more convenience for the customer, but at the same time we should also work towards strengthening our relationships with them. We should look at creating new products and services but also ensure that they can be delivered at a low cost.

With m-banking reducing the need for face-to-face interactions, how do you see it affecting your relationships with customers?

Going forward, banks will have to reinvent their services and look at other ways of adding value. If technology can enable customers to manage some transactions by themselves, banks will have to provide those options. But there are still many other things banks can offer. For example, the need for a face-to-face interaction may depend on the quality of advice a customer requires. Technology can help you identify that need, but a bank may still have to provide that advice. I do not think face-to-face interactions can completely go. But obviously, the way they are currently happening may not last long. That will have to go for a complete reinvention.

Any other emerging trends and technologies banks must watch out for…

Besides Cloud, Analytics and Mobile another key area is the ‘omni-channel strategy.’ Statistics show that while customers have started using the mobile and internet channels, they have not stopped engaging with other channels like the contact center, branch or ATM. The frequency may have come down but customers are still using those channels. So banks have to see how they can continue to utilize all these channels effectively while minimizing the transaction costs for customers.