How banks are engaging with customers with the help of digital technology

It has been the constant effort of banks to augment customer experience, to improve efficiencies by adopting leaner and cost-effective operations and to drive revenue growth by increasing the depth and the spread of customer engagement.

The inception of the digital era has opened up a variety of opportunities, as well as challenges, to this pursuit. Banks in India are at different stages of maturity when it comes to inducting digitisation into their way of banking. PSU banks continue to focus on the branch as a channel that helps them sustain and grow their relationships. They continue to stay relevant to a whole generation of customers who believe strongly in the relationship-centric banking – where stability and trust form the basis of a continued relationship. However, many PSUs are now finding it imperative to stay relevant to the current generation of customers who value convenience, speed and non-intrusiveness in the process of availing banking services. This is the generation that values ease of access to information, and demands services accessible at their fingertips, and engaging this generation is the challenge that most of the PSU banks are now actively working on.

Digitisation in PSU banks today is all about focusing on providing access to information and a wide variety of services on online and mobile channels, improving the user experience on these channels, using physical touch-points to bring in a more expanded digital experience (e.g. kiosks and e-lobbies), and ensuring that they can portray themselves as 'second to none' in terms of the services they can offer digitally.

Private banks, on the other hand, have been aware of the potential of Digitisation for some time now. While offering a wide variety of services online has been a key priority for them, they have realised that digital capabilities are a great way of expanding their business. Applying analytics and AI to extract intelligence that can then be applied back into the channel of interaction is key to many of these banks. And these initiatives have been used in many ways, be it in terms of unstructured means of determining credit-worthiness, or for offering investment opportunities to customers who have a propensity and ability to invest. At the same time, there is a focus on enhancing user experience through AI driven interactions that simplify the interaction and make it more user-friendly.

Digitisation for many of these private banks is also about reducing the load off their branches and driving transactions online so that the branch can focus on higher-value interactions and can drive business expansion. The area of digitisation of payments has been the focus for many larger private banks, and being able to offer apps and tools that allow customers to bank with them as their preferred banks for all their payments needs, has been paramount for these banks. Private banks have taken the lead in being able to digitise even more complex processes. For example, digitising the loan origination life cycle with superior integration of front-end and back-office operations is increasingly common, and personal loans, consumer durable loans or even SME credit is available at the click of a button through online channels and apps, with technologies that enable instant approvals with zero-friction customer-experience.

The foreign banks have focused on driving out the build-out of well-matured digital channels that ably supplement their strong customer relationships. There are newer entrants who have looked at digital as the primary model to build-out a larger retail customer base, while some of the more established ones have tried to ensure that they can preserve and grow their relationships across specific niche segments/areas/services by ensuring that their customers have all they need in terms of access to tools, information and ease of access, to do what they wish to do, and whenever they wish. Many of them have also focused on bringing uniformity of the digital experience across multiple markets they operate in, and the ones with the larger retail bases have looked to adopt technologies to cross-sell and incentivise customers to avail of more products and services. Foreign Banks are majorly focused on high-end retail customer franchise with a higher Net Relationship Value (NRV), and their digitisation efforts are most often optimized to cater to this audience.

In a very competitive Indian banking market, with a number of new entrants recently coming in, and the banking sector in general, becoming a lot more competitive, the ability of a bank to retain and expand wallet-share of their customers is paramount. With a large number of tools and techniques available to competitors to draw away wallet-share from their primary banking relationships, there is a pressing need for Indian banks to counter this attrition and to ensure that their customers continue to see value in their relationship with their bank, and continue to expand their relationship.

Not only this, customers today are faced with more choice than ever before, and the trigger of one bad experience with their bank can mean that the customer chooses to move elsewhere. It is imperative that banks move to ensure that all technological barriers to a better customer experience are eliminated, and they are able to offer all essential services, packaged with high-quality customer experience, digitally, be it via online channels or assisted channels such as the contact-centre or the branch.

Additionally, in most banks, each channel has historically operated as a silo, and there is rarely a mechanism where there is a 360-degree view of what the customer's interactions are across every channel, and this greatly affects customer satisfaction especially around grievances, and this is something that banks need to address from an architecture perspective, by investing in creating an omnichannel digital base. This can help with greatly enhancing their customers' interaction experience and goes a long way towards fixing the leaking bucket.

Recently, one of the findings of the annual FIS PACE report for India reveals the continued criticality of trust in retaining customers and expanding the size of their relationships. In this context, trust is not just about safety and security of the customers' funds maintained with the bank or the stability and solidity of the bank. It is also a lot about the credibility of the bank in providing the right kind of guidance and advice to its customers on managing their finances and their funds. In this context, being able to deliver insights and knowledge that help customers take the right financial decisions at the right point in time go a great way in building out trust with their customers.

There are certain key technology elements that go into being able to enable this 'trust' factor – starting with an analytics base that can identify customer behaviour and identify key events and patterns of customers and their accounts. Second, the platform that can correlate this into advising that can assist the customer with the right decisions, and finally the platform that can be used to seamlessly deliver these insights on both direct channels as well as assisted touch-points – say a branch. Addressing these holistically can transform the perception of trust within their customer base, for any bank, and needs to be looked into on top priority.

In the end, while banks grapple with these business, operations and technology imperatives, they have witnessed a drastic change from conventional banking to convenience banking owing to digitisation, which is a step ahead in the direction of customer satisfaction.

The writer is managing director - banking and payments, FIS