Banks Should Become ‘Digital-First’ for a Better Customer Experience

Indian Banks have demonstrated greater resilience while withstanding global downturns as well as the recent pandemic. As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalized and well-regulated. However, there is one area where the banking sector lags and needs to focus on – Technology integration for a better customer experience.

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks, in addition to cooperative credit institutions. While the adoption of technology differs with the category of banks, all banks need to improve customer engagement with the use of new technologies integrating AI and ML into the processes. It is now more important than ever, as Covid has pushed all industries to take their customer engagement digital.

The magic of Customer centricity

A customer relies on his/ her bank for a number of aspects such as savings, deposits, credit requirements, financial guidance, financial know-how etc. It is the basic requirement of a customer to be guided by the bank for all his financial transactions, investments, records and guidance. With the advent of technology, it is now possible to help each and every customer in his hour of need. Banking sector needs to be the first one to adopt new-technologies and set a benchmark for others to follow.

Today’s FANG (Facebook, Amazon, Netflix,Google) generation has adapted to ultra-responsive service in their digital interactions; first-rate communication and functionality are non-negotiable and the precedent is being set higher each day. More than half of the customers say instant support is key in building loyalty. Banks that invest in the customer experience trends have higher rates of recommendation, greater wallet share and are more likely to up-sell or cross-sell products and services to existing customers. At the same time, poor service and lack of financial advice have emerged as the top reasons why people leave their banks and credit unions.Banks have to take responsibility to evolve to the growing needs to its customers and stay relevant.

India’s banking and financial services space has become immensely competitive with the introduction of new-age fintech firms who have brought in the never back-down attitude and have offered solutions to all the backlogs prevalent in the banking and finance space. For all new fintech companies, customer centricity is at the core of their operations. A number of fintech companies have been focusing on specific banking use cases to provide additional value to customers like customizing banking services for specific age groups, lending for specific sectors, ever-evolving payment modalities and privacy related use-cases. Deployment of technology and association with fintech firms has enabled some banks and NBFCs to reach and service the last mile customer with the sophistication offered to customers residing in the metropolitan cities.

Why technology for customer engagement:

While banking services are very elementary in use, they are very complex in nature and the customer needs guidance not only during on-boarding but throughout his tenure as a bank customer. Reserve Bank of India has been pretty straightforward when it comes to guiding the banks to impart financial literacy till the last mile customer. RBI expects banks to conduct financial literacy programs and simultaneously provide their customers affordable and user friendly access to the products and services. RBI has entrusted banks with the responsibility of imparting financial literacy to promote financial inclusion as a scalable, sustainable and viable business opportunity for banks that would enable the transition of the country from poverty to financial empowerment.

Banks must become digital first in their vision and execution, by transforming the engagement layer, enabling AI-powered data crunching and decision making, deploying technology at the core of data infrastructure and operating model. When fully integrated, these capabilities can strengthen customer engagement significantly, supporting customers’ financial activities across diverse online and physical contexts with intelligent and customized solutions delivered through an interface that is smart, intuitive, seamless, and responds on a real-time basis. These are the baseline expectations of new-age customers.

A number of banks have created dedicated customer engagement platforms to impart financial literacy and spread credit awareness amongst masses. Initiatives such as Akshar by Axis Bank is one good example as the bank is helping in creating a financially literate society in the digital age, focusing on helping people improve their personal financial responsibility. The platform uses an interactive and gamified approach to make learning fun and interesting, while demystifying the financial space for a common person, such as financial terms and other jargons that are often difficult to understand and ignored, despite being an essential part of every financial contract.

Benefits of digital engagement

Traditionally it has been difficult for banks to reach out to millions of customers and discuss their banking requirements, however, with technology, a bank can segment customers basis their credit profiles, understand their financial needs and risk appetite and engage with them through chat-bots, IVRs, messages and contextual nudges etc. sans any human intervention. To sustain and evolve with the ever-changing time, banks need to embrace open-banking and collaborate, sometimes compete with fintech firms to provide a better customer experience. Nowadays, customers expect proactive notifications to stay updated on upcoming payment deadlines, investment advice among other personal banking solutions.

With AI and ML, banks can offer live assistance through chatbots and IVRs, offers improved customer service and real-time solutions to all the banking needs of a customer at any given hour.

The benefits of having a digital approach to customer engagement has many positives such as:

1. Better access and scale – Offers access to newer untouched customer segments and a higher speed as the turnaround time in digital engagement powered by AI and ML is really quick
2. Low cost and higher efficiency – Digital engagement reduces the cost and the risk otherwise brought in by human intervention. In some cases, the cost is reduced by half
3. Better ROI – better and regular engagement backed by contextual nudges also leads to higher cross-sell of new products

For banks, successfully integrating core personalization elements across the range of touchpoints with customers is critical to deliver a superior experience with better outcomes. Technology driven platforms provide the bank with a deeper and more accurate understanding of each customer’s context, behavior, needs and preferences. This understanding, in turn, enables the bank to craft an intelligent, personalized offerings to its customers.

As the government and regulatory body focus on making banking available for all Indians, it is now the responsibility of the banks to engage with the last mile customer, under the financial requirements and offer solutions through customized engagement in a language of his/ her preference.

(The author Anshuman Panwar is Co-founder of Creditas Solutions and the views expressed in this article are his own)