Banking Central | Why would a customer opt for digital banking?

Digital banking

Why would you choose digital banking? That's the fundamental question every banker needs to ask himself. Why would a customer stop visiting the bank branch and, instead, switch to the mobile app for most of his banking needs?

For the sake of convenience, of course.

Well, that's the obvious answer, no doubt, because digital transactions saves you from long queues, time constraints, and money, while making the entire process faster and smoother. All these combined, digital banking offers a better experience - at least that’s the idea.

But what's happening in reality?

Customers often find themselves at the receiving end of frequent digital outages and transaction failures. Such instances have been recurring and, on many occasions, go unreported. In February and April this year, customers of HDFC Bank and State Bank of India (SBI) had complained about digital outages.

In March, Bloomberg reported that DBS Bank restored its digital banking services after a 10-hour delay. Let us be clear, digital outages aren't only about these banks. The problem is much larger than it seems.

Similar digital outages are happening with other lenders as well that largely go unnoticed by the mainstream media. Typically, only what happens with big banks get noticed. That doesn't mean the problem doesn't exist elsewhere.

Is the RBI aware about this problem? Of course, they are. In fact, the central bank has been cautioning banks about this problem and insisting for more investments in technology.  Back in 2011, RBI Governor Shaktikanta Das asked banks to make more investments for building robust IT platforms and technologies for operational purposes as well as for fortifying public confidence in digital banking. But often these calls from the regulator are ignored - unless there is a direct penal action on the specific entity.

What is the route cause of such technology outages?

If we leave out the technicalities, experts have, time and again, cited that banks have to strengthen the fundamental technology platforms to handle the large customer volumes and new services. These platforms were built years ago when banks had lesser number of customer volumes to handle and lesser products to flash across the screen.

But, that changed over years. Banks kept on adding new services and products on the existing foundations, while on the other side, number of new digital customers spiralled. That explains the frequent failures.

This apathy in correcting the problems cannot continue.  If the digital shift has to happen in the way banks expect and, as the regulator sees, banks need to invest more money in strengthening their digital foundations and ensure that adequate preparations are done to ensure a smooth experience for the end-user.

A recent report from an RBI panel on customer service standards has emphasised the importance for banks to ensure golden standards in customer care. The panel has also recommended penalties for deficient customer services. There is a clear message from the RBI to banks that customer service is not a charity but a duty that every bank is bound to comply. The earliest banks get the message, the better.