There has been an exponential growth in online payments in India in the last few years, spurred by the need to build a cashless economy in the post-demonetization period. The total digital payment market is expected to grow to $1 trillion by FY2023. However, along with this meteoric growth come the emergent threats of security and breach of data privacy. The major threats include mobility security threats, large-scale anti-fraud bypass, prevalence of fraud-as-a-service, and frequent ATM and account hacks.
How data breach impacts customers
A study in 2020 by IBM Security found that data breach can cost a company in the financial sector an average of $5.85 million. In 2021, the financial industries, on an average, suffered losses of $5.72 million due to data breaches. Across the globe, data breaches have increased by 10% from 2020 to 2021, according to the IBM report.
The 2019 breach at State Bank of India, exposing the data of 422 million customers, further reiterates the urgent need to strengthen security around personal identifiable information (PII) and ensure customer engagement platforms are compliant with data privacy norms.
Data protection laws in India
Till today, the personal data of the country’s 1.4 billion people has been protected under the Information Technology Act, 2000. Data privacy and regulation has been governed by the IT Act and also the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 (‘Privacy Rules’). The regulatory authorities of Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI) and Securities and Exchange Board of India (SEBI) also have certain sector-specific regulations and directions to govern data privacy in certain sectors.
The need of the hour is an updated and comprehensive legislation that will address all the requirements of the country’s large population, taking into consideration the widespread technology transformation in the country. A fresh legislation, Data Protection Bill 2021, proposes to govern the use of data in India. Deliberations over various aspects of the bill are ongoing.
While the government regulations and laws evolve, it is the responsibility of financial institutions, BFSI and fintech firms to provide relevant and unique banking experiences while ensuring that the customer’s sensitive data is protected.
How financial organizations can continue providing delightful banking experiences while protecting customer’s personal identifiable information
This can be done by partnering with insights-led customer engagement platforms that are compliant with the security standards, such as General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA), Service Organization Control 2 (SoC2), and ISO 27001:2013.
Leading fintechs and BFSI firms in India, the likes of Navi, Future Pay and Ujjivan, already utilize insights-led customer engagement platform to offer seamless, delightful, convenient and secure experiences to their customers.
Here’s how banks can continue providing delightful banking experiences while protecting customer’s personal identifiable information: .
- Leveraging customer insights to provide personalized experiences
Customer engagement platforms comb through customer data and offer real-time insights into customer behavior, such as frequency of buying, volume of transactions, and how active or dormant the customer is. These actionable insights, coupled with AI-enabled optimization, help BFSI companies to tailor their engagement with customers and provide a personalized experience based on affinity and interest. Banks reaching customers with personalized banners and tailored solutions at the right time, have seen their CPAs reduce by over 200%!
- Prioritizing safety and flexibility
The fact that banks have digitized the KYC process using AI-based ‘optical character recognition’ (OCR) is proof enough that the BFSI sector is incorporating technology into their processes. With ‘natural language processing’ (NLP) being used to process forms, the whole activity been made swift and agile. It is not only convenient for customers but is also extremely safe, as most modern OCR technologies prioritize security and privacy.
- Leveraging AI as a constructive disruption technology
Thanks to AI, fintechs and BFSIs can now offer financial transactions in a quick, easy, convenient, and, most important, secure manner. AI is fast emerging as a ‘constructive disruption’ technology, transforming customer engagement every step of the way.For example, credit disbursal apps, powered by AI, can now disburse personal loans in 15 minutes—from start to finish. AI processes the customer information from the documents uploaded.
AI-powered customer engagement platforms also enable fintechs to improve customer experience by enabling a smooth workflow at optimal costs and minimal time, helping them reach underserved segments and ultimately widen their customer base.
- Optimization of costs
The increase in contactless services has improved overall efficiency and productivity, thus reducing costs. Leading banks and financial institutions have used AI-enabled chatbots to enhance customer experience. Chatbots carry out intelligent conversations with millions of customers simultaneously and customers receive immediate responses. Thus, banks can automate customer requests and cut down operational costs. Examples of chatbots servicing customers include SIA by SBU, iPal by ICICI, EVA by HDFC Bank, and ICICI Lombard’s GIC.
- Nurturing customer loyalty
BFSI institutions today offer a range of tailored financial products and offerings that cater to the specific needs of the customer. Many institutions also offer personalized payment methods based on the previous payment patterns and prompt the users about their preferred payment method/option at the time of checkout.For example, if a customer exhibits a preference for the EMI option regularly for big-ticket purchases, the system automatically makes sure the best EMI option is made available to them. Providing such customized experiences help in building brand stickiness and customer loyalty.
Advanced AI-powered, insights-led, customer engagement platforms are built on the strong foundation of security and the promise of data protection and function on the premise of customization, personalization and meaningful engagement, thus making the entire customer journey safe, delightful and fruitful. A satisfied and happy customer can only mean one thing for BFSI: better business outcomes and profitability.
(The author Mr.Raviteja Dodda, CEO & Co-Founder, MoEngage and the views expressed in this article are his own)