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From Pin-Codes to Pin-Numbers: Banks get a new address

Mobile banking, Internet banking, online relationship manager, 24/7 banking, virtual branches and conferencing meet-ups are terms that are hastening the change into the future

January 09, 2015 / 12:16 PM IST

Way back in 1970s, author Alvin Toffler decided to imagine the future like none had done before. The future he described then was way ahead of his times. In one of his book, Future Shock, he described the world that had immensely changed in the post-industrial society, where many goods had become disposable and companies form and wither away. One of the defining trend was the impact on banking sector, since hard-money was replaced by digital one, economies would grow manifold and transactions worth millions took no more than a few seconds. The digital would replace the brick-and-mortar, Toffler had predicted.

The future, as defined then is true today, as digitization is increasing the making the physical infrastructure almost redundant. After all in a world where, much of the transactions from depositing to withdrawal, to opening FDs to ordering chequebook, can all be accomplished online, why take the trouble of going to a bank branch.

Mobile banking, Internet banking, online relationship manager, 24/7 banking, virtual branches and conferencing meet-ups are terms that are hastening the change into that future. As per a recent research by the McKinsey Global Institute, disruptive technologies are offering an opportunity to address persistent challenges such as lack of financial inclusion; when just 36% of Indians have a bank account. Technology applications such as mobile payments have the potential to help as many as 300 million Indians gain access to banking services and could raise their incomes by 5-30% due to better access to credit and the ability to save and make remittances.

Technology is no doubt, an intrinsic part of the banking industry today is helping them close the gap between consumer expectations and adoption of new technology. BFSI players are using it to reach out to their customers in manners never thought before, from Mobile Apps to banking websites.

Nevertheless, some challenges do remain. As banks have to retain and delight a new breed of digital-savvy breed of customers at every imaginable portal of interaction. At the same time they have to squeeze out profitability from existing relationships and drive net new business. A never-before appetite for trust, unrelenting pressure for transparency and new imperatives of risk management and business integrity add to the potboiler broth of challenges.

Consultancy firm Zinnov has encapsulated the trend well saying that some 30 trillion in market capitalization across 8 key verticals will be disrupted due to current digital age. During 2013- 2015, 550 companies will move out of Forbes 2000 list due to digital disruption. Here, data-driven enterprises would be leveraging contextual public and internal enterprise data and use new-age technologies to generate deep insights that are both predictive and prescriptive to drive exponential business impact. Now, some 50% of the companies in the Forbes 2000 list were slotted for churn from the list because of the impact of the digital era.
Meanwhile, change is impacting India as well. Forrester’s revelation could not be better timed then when it quips that many Indian firms misunderstand what it means to be a digital business. As it outlines, digital businesses must succeed with digital CX, digital operational excellence, and extending their ecosystem of digitally connected partners and examples like ING Vysya Bank and CarIQ Technologies stood out for Forrester as "digital connectors".
Change is also being driven by technology giants like Microsoft. The company has been working with scores of financial institutions to help innovate and evolve its offerings and retain customers, drive business insight, manage enterprise risk, and streamline operations. What stands out in this ‘up, close and personal’ peek is that whether it is retail, corporate, and capital markets; customers are more informed than ever. Now that they are used to breakneck speeds of being mobile and ubiquitous themselves, they expect the same pace and 360 degree imprints from their firms and across myriad channels. Another notable instance is of Windows based devices being used by banks to expand their customer base in unbanked rural areas; particularly where Microsoft partners have brought out Windows device based ‘Door Step Banking’ and “tab banking’ solutions.

Such solutions are now very much on the ground, helping the banks for faster customer acquisition with required Aadhar based KYC validation. Talking of a personalized and contextual mobile banking customer experience to reach customers, Microsoft’s blue book offers many examples of well-timed, targeted, and relevant offers that encourage response and establish a relationship as well as for expediting customer service by enabling interaction when, where, and how customers prefer fosters preference and loyalty. There is even an advanced and apt CRM usage in progress, to enable marketing, sales, and service staff to identify new opportunities and build personalized relationships, with complete customer information, history, and social data in context.

Indeed, the transition to a digital avataar for any bank is made easy by the advent of cloud computing. Thanks to the range of options available online, banks can offer a slew of services to their customers, at a fraction of a cost. Cloud is at the very center of this digital change, powering the momentum.

Whether it is behavioral data and advanced lead scoring to help marketing teams understand how customers are engaged, or driving sales impact by delivering highly qualified leads straight to front-line staff, many players in BFSI sector in India are leveraging such solutions to dig deeper into customer’s share of mind, and that of wallet. Companies like Reliance life, SBI Digital Branch in India and ING bank or AXA internationally, have illustrated the smart and sharp use of technology brilliantly.

In the end, the past four decades since Future Shock was printed, the world has changed much. Can you recall the last time you visited a branch of your bank to withdraw money or order a cheque-book. The digital footprint of the bank, on the Internet and on your mobile, has more or less replaced the physical one on the ground. And this movement is only going to get stronger with time.

first published: Jan 9, 2015 12:07 pm

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