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Next-gen digital banking

Rishi Vijay & Harish Veligandla, Capgemini Consulting India on what the next level of ‘going digital’ means for Indian banking

India with 31 million middle class households presents an immense untapped potential for players in consumer focused industries like banking. In terms of digitization, the overall teledensity in India is 76.86% (December 2011). While the broadband subscriber base is approximately 12.83 million, the Internet density recently crossed the 10% mark. Customer-reach through the use of digital technologies is now both easier and the preferred way.

An emerging force
With one of the most under-penetrated retail lending markets in the Asia Pacific as more than half of its 1.2 billion population is yet to be covered under the formal banking system, India promises a great future potential for banking in the country.

The penetration of digital banking services in India has so far been correlated to the availability of alternate service points including ATMs, kiosks and to Internet-enabled customers. Looking at aspects such as access, channels and demographic alignment, leads one to consider certain banking facts from the perspectives of operations, customers and business. Digital platforms are important for banks, as a staggering volume and frequency of daily transactions are executed electronically.

Digitization will lead to an overall reduction of operational costs and transactional overheads. Technology results in sustainability and continuity in the progressive amelioration of service quality, anytime or anywhere banking, focused product delivery, cross-selling opportunities, multi-channel touchpoints, etc. Moreover, services like distance banking, branch free banking, client-empowered demat accounts, virtual banking, etc. have now started coming into play. Some examples of this are:

  • SBI’s Green channel initiative at branches for paperless and quick banking transactions
  • ICICI Bank’s ‘b2’ branch-free banking and direct access from Facebook
  • Axis Bank’s online approval of car loans
  • Standard Chartered’s credit card approvals, breeze banking and breeze mobile application

Such initiatives are still few in number, a clear indication that a lot more needs to be done.

The winner’s correlation
The digerati among banks are the elite among the users of online systems and mobile technologies, aiming towards performance, productivity and cost-management. Leading digital practices around the world under three major categories—digital customer experience, digital operational processes and a digital business model—can help Indian banks learn from their best practices.

  • Digital customer experience: Barclays was the first bank in Europe to pilot Microsoft interface where it digitally transformed the branch concepts through touchscreen technology and digitally transformed its ‘staff’. Dutch financier ING also, through its analytic capabilities, delivers personalized product offers in real-time across channels. Talking of real-time updates, New York-based Citibank is well known for its tablet banking strategy.
  • Digital operational process: German financial services provider Allianz digitized its processes to reduce costs where they combined LEAN techniques and digital operating models. Further, BNP Paribas envisions ‘digital’ to support its internationalization, rationalize process, and maintain trust with customers in a crisis environment. It has spent the last decade setting up a strong multi-channel strategy and is today in a transition phase to reach the next step of  integrating channel transactions and building a social CRM solution.
  • Digital business model: Mobile banking is also catching up on the digital bandwagon; Lloyds TSB plans to provide NFC-enabled phone payments from the  London Olympic Games.

Future directions

Digitization can bring in all-pervasive advantages. Customer-experience digitization includes making the customers’ touchpoints channel agnostic. Two broad aspects of banking can be considered for digitization:

  • Social Media & Business/Process Analytics: The industry’s dependence on interactions across its ecosystem makes it imperative for banks to examine ways to leverage social media. Banking executives can use advanced CRM tools and SQL platforms to analyze data from the profiles of customers’ social networking sites for better decision-making during Portfolio Management, as well as while handling priority accounts. Besides, they can also study customer searches and purchase decisions to deliver better service and ensure loyalty.
  • Business Intelligence (BI) and handling big data: The implementation of BI tools can be instrumental in updating the information available with the bank and also streamlining information flow across departments. Also Cloud-based platforms now make scalability far easier for banks.

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