On 24th March 2020 almost all economic activities in India, broadly covering manufacturing, services and agriculture witnessed an unprecedented stand still, just after the announcement of complete nationwide lockdown. It was all together a mixed feeling seeing all religious places shut the doors for public, educational institutions closed, aircrafts grounded, cruises/shipping vessels stranded in high seas, trains getting converted into isolation coaches and what not. Every passing day the epidemic was turning gruesome and rushing towards being declared as a pandemic by WHO. What should we call this Pandemic “The Boon or The Bane”?
On the contrary, nature on this earth was returning towards the genesis, pollution levels breaching ever lowest recorded levels, witnessing of endangered Gangetic fresh water dolphins on the riverbanks, people getting kind towards the destitute, people spending more time with family and getting back in touch with long forgotten friends and relatives.
The operations of almost all players delivering the services to the nation were put to halt, be it civil aviation, hotel &hospitality, travel and tourism. Of late things started crawling to attain or adjust to recently created “New Normal – The way of handing the life/business” post lockdown. Very few in the services sector carried on their usual operations by adopting and further refining of the newly set standards to serve their customers in the best and most effective way.
Financial services sector continued to be in the state of flux along with few others like medical services, gas stations, logistics etc. meant for providing essential services to the nation. Banking sector is committed to deliver services to the different strata of customers in the circumstances where the competition is intense, customer loyalty is mercurial, regulations are continuously transforming and the very fundamental way of engaging customers is impacted due to the global Pandemic.
Traditionally the revenue generated by the banks, was from targeting customers based on segmentation i.e. age, sex, place, religion, income, socio-economic status etc. and thereafter cross selling/upselling them the products and services. However, these income generating avenues are now drying up and replaced by studying the behavioural data of the customer, getting finer insights by identifying their spending and saving habits. Customer’s expectations from banks are to help them save, provide finer insights into their spending habits, suggest insurance solutions, extend wealth management advice and services, and reward them points for engaging with the bank. This level of personalization of services is currently driving the customer’s choice for the preferred bank. The extensive study of data by analyzing and deploying AI/ML can provide a customer with much desired finer insights for their ready reference.
Banks should also classify their customers based on preferred mode or channels through which products and services are offered to them. During Pandemic times, digital interaction with a unique blend of in-person branch banking is the latest crave among the customers. During pandemic, majority of the Indian Banks have witnessed increased usage of digital channels especially among the age group of fifties and mid-sixties, which is considered as a welcome sign of how the older generation is responsive and willing to adapt and evolve the digital usage of banking.
Customer centricity is deep rooted to every service industry and will continue to play a major role not only in customer retention but also in customer acquisition. At the outset of 2020, customer centricity has grown manifold due to the pandemic and so are the modes/channels which allow customers to reach out to banks. Latest in trend are AI intervention through chatbots, calling services, live chat through communication and interactive social media. Serving to a wider pool of customers through these channels will blur the traditional way of customer segmentation.
To give customer centricity a paramount importance, SBI has rolled out a complete digital package YONO by SBI in 2017, which is going to lead a customer centric business while providing an omni-channel service, a multiple touch point strategy and technology (AI/Data Analytics) driven approach. It has the potential of achieving scalability to offer products and services as per customer’s needs. It will automate whole banking operations/processes, digitize the (Assets/Liabilities) products and non-financial services, which will help us not only in retaining the customer but also in achieving growth in acquiring a new customer.
As per the recent study carried out by leading audit and consulting firm in India, around two third of the banks feel a customer centric business model is very imperative for their organization. But, on contrary only one sixth are fully prepared and have requisite infrastructure. The above fact reinforces the immediate need for banks to transform themselves into customer centric businesses.
There are numerous ways for the banks to increase the penetration and improve digitalization to boost profits, same time enabling their customers with the convenience they wish during the times of the pandemic.
Process automation and fostering innovation have the potential of significantly reducing the cost, helps minimising overheads by eliminating human error and streamlining complicated operations to deliver extra value to the customers. Automation not only saves time and money, but also reduces the risk of infection by eliminating the physical contact. Implementing decentralized systems (blockchains) for providing contactless payment solutions are highly safe and secure, which uses big data and AI for anomaly detection. As per McKinsey estimates, banks can automate up to one-third of their operations by leveraging on AI/ML technologies. YONO by SBI has changed the landscape for delivering banking services and continues to dominate the way. SBI is infusing heavy capital on the digital initiative undertaken in November 2017 and made its footprints visible in the digital arena of financial services. News are afloat that SBI is looking to hive off YONO into separate subsidiary very soon, which will be the biggest start-up by a legacy bank within just three years of start, stands tall with a valuation over $40 bn. Ongoing innovations in reaching out to customers and making them feel their technological requirements taken care off is pivotal to stay competitive and make customers loyal to the bank. A few measures which can be undertaken to improve on customer centricity are below:
- Providing differential interest rate bearing SB accounts on digital platform.
- Extending interest rate benefits to digital loan products.
- Extending the online transaction limits during Covid-19 times.
Collaborating with tech giants in the financial industry like Paytm, PhonePe, Google, Amazon opens new avenues by gaining access to the strong customer base of these firms, which otherwise struggles to handle the intricate banking processes at the back end. This arrangement enables banks to capture more data understanding their customer in an informed way and help introducing a higher degree of personalization with improved customer engagement. Banks can gradually learn to create an ecosystem of services required by their customers, which helps to add new revenue streams and prevent their customer base falling prey in the hands of emerging fintech companies and digital firms.
Focussing on available data by implementing better data management techniques to build on the personalized techniques to reach out to the existing customer base. Over last couple of years, there is a continued surge in the data of banking customers on account of digital transformation. A very small fraction of available data is utilized on account of then existing operational silos in different organisations, leaving behind numerous possibilities helping the businesses scale faster in a customer centric way.
Meeting current customer insights, identifying right customer performance indicators viz. financial security, responsiveness, transparency, convenience, empathy etc. and ability to deliver swift digital innovation will be the key to engaging customers and forging their loyalty in the current scenario and beyond.
Banks are witnessing the volatility in customer’s behaviour and expectations since the onset of Covid-19, which makes it more difficult to respond to their demands. Although the future remains bleak on expectations to return to the normalcy, most of us are settling with the “New Normal” looking at the current reality. One thing that allows the banks to deliver customer delight i.e., where and how they want, is delivering a differentiated customer experience.
Rajesh Dahiya
Chief Manager,
State Bank Institute of Learning and Development , Panchkula
