Digital makes it possible for managing basic banking needs anytime and anywhere. Today’s consumer wants a banking experience that’s simple, quick, convenient, and available wherever they are. And as mobile technology evolves rapidly, customer expectations will evolve along with it, driving digital transformation. Digital banking isn’t just mobile banking but it’s the ability to push relevant products to customers not only via channels such as mobile and online but even when interacting with customer service at a branch. Customer relevance is thus, driven by real-time analysis of the customers’ preferences, their buying and banking behaviors and the financial products that could be offered irrespective of the medium of interaction. This contributes to customer experience that has a critical dependency on infrastructure (cloud and security), software (banking and analytics) and services (user experience, integration and channels) – all digital irrespective of the channel.
Digital in India holds the potential to transform the financial inclusion landscape the same way mobile phones changed the face of telecom connectivity in the last decade, sidestepping five decades of slow progress using traditional media. With its unique attributes such as low cost, ease of use, scalability and ubiquity, digital banking, when aligned with the right business model in an enabling ecosystem, can truly accelerate the integration of the unbanked segments into the mainstream.
The only avenue banks have looked upon to increase their reach to the rural and the underbanked is by opening more branches. However, this model has its own disadvantages with high capital expenditure and ongoing cost to serve is involved - making it financially unviable to build scale rapidly. Digital allows banks to significantly drive down the cost of physical infrastructure and cost to serve, and widen its reach far and wide, making the banking processes nimble. At the other end, digital has considerably reduced barriers into the financial services industry, making it easier for players from other industries to enter specific segments of the banking value chain. For instance, the digital wallet of nonfinancial services players, they are today challenging the status quo through differentiated offerings.
Traditional banks are therefore being forced to alter their strategy and focus on innovation in the digital space to remain relevant and competitive. Thereby, we should look at digital as an opportunity for revolutionizing the inclusion story as the adoption of digital has seen an unprecedented pace in many parts of the world. The mobile payments Industry is expected to process $1 trillion of transactions initiated by approximately 900 million users by the end of 2015. This highlights the room to experiment and mobile being the critical technology driving force behind the bigger strategy of going digital.
Most banks are investing heavily in apps for smartphones and digital tablets that make it easy for customers to conduct a wide range of banking activities while on the go. Some are developing interactive tools that help customers analyze their spending habits and strengthen their money management skills. Each of these initiatives marks a major effort to harness fast-moving digital technologies, unrestricted mobile access and vibrant social media to banks’ interactions with their customers.
Technology by itself will not deliver a competitive advantage; what banks do with it to develop a unique, personalized customer experience will matter most of all. Digital success will thus depend on ability to innovate, introduce new features, leverage analytics to personalize and position new products and have a supportive scalable infrastructure via cloud, analytics, mobility, social and security.
