Digitization in Banking – All About Customer experience and engagement

Reported by: |Updated: December 27, 2019

Prakash Sundaram Chief strategy and digital innovation officer, Fincare Small Finance Bank

Digitization is forcing organizations to re-design their business models and adapt to the new paradigms. The most interesting fact about this is that this shift is being driven by customer experience.

Today, CX drives SX – that’s ‘Customer Centricity driving Strategy’ for the uninitiated!

In the more recent times, customer preference has found a new expression – the Digital Channel! So, right from the choice of device, choice of channel, the type of operating system, the navigation pattern, the buttons clicked or not clicked, the type of transactions done or not done, the offer checked or dropped, transactions that went through or did not etc. reveals more about the customer needs, wants and preferences at the specific point in time and context, than your average customer service manager possibly could.

Businesses are clinging onto digital channels to ‘understand’ their customers from a whole new dimension and be able to deliver a banking experience, customized for each customer.

It is no coincidence that putting the customer first is already the tour de force of many organizations’ journey to success.

The Banking Transformation!

Banking is changing rapidly, and so are the customers. A digital element is providing enormous opportunities for improving efficiency, enhancing experience and optimizing processes, thereby delivering convenience along with access, safety and speed.

A large number of the world’s biggest financial institutions have embraced technology and are continuously innovating in order to get ‘closer’ to the customers.

Rapid technological advances, availability round-the-clock, and digitization is revolutionizing customer experience and guiding buying behaviour. Banks are racing to introduce further innovation in customer engagement through social media, customized apps, cross-channel partnerships and what not. Most of the banks today consider them as a fintech with a banking license and why not? With Digital and technology at the core of their products and offerings, omni-channel experience, these institutions are going after a larger share of the customer’s wallet. Good news for the customer? Most certainly! In return, customers can expect absolutely bespoke offerings, doorstep/self-service, a wider choice of products, lower cost of acquisition, offers and rewards, and an experience as cathartic and at par with shopping.

The challenge

A key challenge for banks is dealing with the levels of digital literacy and experience in handling financial transactions through digital channels. However, this is changing fast as our digital ecosystem is evolving. As per reports, in Q3 FY-20, the total volume of UPI transactions was 2.7 Billion and in terms of value, UPI clocked INR 4.6 Trillion, up 189% from Q3 FY 2019.

Capgemini’s World Retail Banking Report 2018 found that majority of the banks still need to improve customers experience and sharpen their capacity to remain relevant. Most Banks understand that and are making a significant investment in many areas of digital, including User Experience (UX) of their applications to make them more intuitive and easier to navigate.

The significance of digital channels rises significantly when it comes to Gen-Y and tech-savvy customers. Banks need to understand that customers expect a simple and seamless digital experience and, if banks fail to provide it, they may well lose these customers to a digital disruptor. Albeit, banks are moving from brick-and-mortar to digital, a branch/brick and mortar unit remains a necessary evil – firstly, as a point of contact when required and secondly, as a representation of being trustworthy and not a fly-by-night operator!

Banks should focus on the right physical: digital mix

Banks should seriously thin of improving the customer journey and investing in technology.

The way in which banks build and maintain customer relationships is evolving. With the current wave of digital disruption, with competition not only from banks but other service providers, banks need to adapt to the changes rapidly and build an internal culture of ‘making banking smarter through customer engagement and experience’.

Trust, technology and transparency are levers available to a service provider in order to build a lifetime of customer relationship.

In the technology domain, Artificial Intelligence and Advanced Analytics are powering banks to understand clients better, there are Chatbots that are aiding in customer support and handling transactions, money transfer, suggestions on products and services.

Of course, technology is an enabler and banks still need to apply technology, all it can, in order to deliver a befitting value proposition to its customers. Money can buy the technology but having a satisfied and repeat customer takes much more!

In the future, ‘Banks’ will go fast but ‘Banking’ will, ahem, grow-fast! The financial services sector, especially banking, has a phenomenal opportunity to redefine banking and build a lifetime of customer relationships over the lifecycle of customer needs! Digital is a transformative way of banking and banks need to adapt and adopt digital or be left out of the circle of relevance of the customer in the future.

  • Prakash Sundaram S is chief strategy and digital innovation officer, Fincare Small Finance Bank