Future of consumer banking

One of the most transformed aspects of our daily lives is the evolution in the banking habits of people; from being arduous task very often requiring us to take a day’s leave to being available 24X7 on our fingertips. Mobile banking is a reality today with more than 50 million transactions a month. However, by the year 2030 most of today’s technology will be redundant and will be replaced by other more evolved modes.

Innovation is among the most powerful forces that continue to shape human society. Financial services industry is no different. The accelerating rate of technological change, combined with shifting customer preferences and an evolving regulatory landscape, have dramatic implications for the ways in which financial services are designed, delivered and disbursed today. Almost every type of financial activity - from banking to payments to wealth management and more - is being re-imagined by some tech savvy banking incumbents as well as by start-ups.

Meanwhile, the old guard is trying to solve a puzzle presented by the digital revolution: How can they benefit from the rise of digital, and how can they stay relevant? Banks must not only execute on today’s imperatives, but also radically innovate and transform themselves for the future.

Mobile first

Mobile phones especially smart phones have created more opportunities to the common man than any other technology in the recent past. Today mobile banking and mobile wallets are the two fastest growing segments in the Payments Industry. Evolution of mobile banking on the back of mobile phone revolution in India has helped clients make faster and secure banking transaction on the move. For banks mobile banking is the most cost efficient mode of offering banking services. It is a win-win situation for both banks and clients.

Consumer experience

Customer expectations for banking services (both offline and online) are being reset by the experiences being provided by retailers and online providers, elsewhere. Thanks to companies like Google, Amazon, Apple, Uber and our very own e-commerce firms; customers now expect every organisation to deliver products and services swiftly, with a seamless user experience. Therefore the customer has become the pivot around which Bank’s are recreating their business models. As it is has become inherently impossible to differentiate on products alone, banks are building around 4 broad themes – digital, convenience, mobility and security.

Opportunity for banks

There is an opportunity for Banks to differentiate themselves by valuing every moment that clients spend with them – either physically at our branches or virtually on Internet and mobile banking platforms. It is imperative to make every interaction simple, safe and client centric. They can be everyday transactions, like depositing a cheque, withdrawing cash, making a payment or even something as simple as a request for an account statement.

Then there are moments of truth – the more complex, less frequent and often the emotional ones - such as buying first home, starting a business, first foreign holiday or buying a car. And finally there are “Life Changing” moments – the times when we differentiate ourselves by helping customers succeed financially, planning for his retirement, securing his future and ensuring an overall financial well being for all our clients.

Creating digital ecosystems

The aim of creating a digital ecosystem needs to expand much beyond merely digitising processes; it will necessitate banks to re-imagine banking leading to a redesign of processes for the moments of truth. This is certain to lead to not only a sharp reduction in the turnaround times, but also enhance the customer experience. These benefits are not restricted to the virtual interactions and can be experienced in the entire gamut of the physical interactions at the Bank with things like instant account opening, replacement of debit cards etc.

Fintech start-ups are already accelerating innovation in financial markets by leveraging technology. But it will also be naïve to believe that technological advancement in Banking will only be done by Fintech firms. Over the next couple of years you will notice that incumbent banks will spearhead a lot of financial innovation – either independently or in partnership with new Fintech firms. We will increasingly see a trend where incumbents will be as good as Fintech firms at innovation. Today a lot of banks are partnering with Fintech firms for the mutual benefits. Some of the traditional players in banking have been very agile in experimenting with new age technologies such as Artificial Intelligence and Block chain as well as Smartwatches and Internet of Things. Banks and Non-banks are innovating and Indian ecosystem as a whole is gearing up for Digital. Players like Axis Bank have setup their own innovation labs to co-create newer solutions in partnerships with the Fintechs.

Rajiv Anand is Executive Director, Axis Bank

Read the concluding part of this article here: Meeting consumers' banking needs post demonetisation