Mumbai, October 31: Indian retail banks are struggling in an era when rising consumer expectations have challenged such financial institutions to offer a consistent experience across all segments. This is apparent from the fact that as much as 14 per cent Indian banks’ payments revenue or $9 Billion is expected to be displaced by the growth of digital payments and rising competition from non-banks, as payments become more instant, invisible and free, states a report published by multinational professional services company Accenture.
“With the digital boom, as payments become more instant, invisible and free, banks need to reinvent themselves to grow customer loyalty, revenues and profitability,” says Rishi Arora, MD at Accenture, who leads its financial services practice in India. “To succeed in the post digital era, banks need to redefine innovation strategies around scaling technology and adding value to address the payments challenges,” mentioned Arora.
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The report titled Banking Pulse Survey: Two Ways To Win is based on a revenue-risk analysis model that the company has developed, which measures trends on how consumers pay and the projected changes in merchant behaviour, technology and regulation that are expected to shape the sector going further. The research findings were based on a survey of 240 payments executives at banks across 22 countries to determine their plans on how to capitalise on the disruption in payments to grow customer loyalty, revenues and profitability.
“Over the next six years, banks will face further pressure on income from card transactions and fees, with free payments putting 8.4 per cent of payment revenue at risk in India. In addition, competition from non-banks in invisible payments — where payments are completed in a ‘virtual wallet’ on a mobile app or device — will put 3.6 per cent of bank revenues at risk,” highlights the report.
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