The Future is Open

During the 90s the phrase “banking for cash deposits” conjured images of and was often associated with standing in long queues and waiting for one’s turn. Similarly, the process for getting a demand draft (DD) issued included going to a bank branch in the morning, filling a form, depositing cash and then collecting the DD hours later. Almost all banking services used to be like this. People would be required to go the bank to perform financial transactions. Today, every country is working towards a cashless economy and banking is becoming increasingly customer-centric.

Banks are the custodian of financial activities and data. With the objective of making financial transactions more and more transparent, removing obstacles in every banking activity, making banking activities customer friendly, welcoming non-financial services startups to increase competition and making the economy cashless, governments across the world are introducing several technology-led changes at a much faster pace than ever before.

Banks and financial services firms are facing deep disruption and threat of existence from current regulatory and market related changes. The reach of smartphones and the Internet has led to several changes across banking. Digital transformation is underway in full swing, and all banks, large and small, are adopting digital technologies.

According to the new regulatory mandates, banks today are required to expose their services in the form of APIs. Since banking activities like funds transfers, account opening, balance check can be done on any third-party mobile apps, banks have to expose almost all their services in the form of API’s. Open banking has been introduced in a lot of countries – PSD-2 in the EU, UPI in India, and several other countries are following suit.

Type of API’s which banks are exposing-

  • Public/Open API’s
  • Partner API’s

Public APIs are the APIs consumed by FinTechs, and other financial institutions providing services to customers. Partner APIs are consumed by business partners, customers, vendors, and supplier of a bank.

APIfication – How does it impact banks?

  • Rapid change in the decade-old architecture to enable services in form of APIs
  • Adherence to new privacy laws like GDPR as customer data is exposed to other parties
  • Increase in competition, pressure on top and bottom lines
  • Need for increased agility, more digitization and higher productivity

APIfication – How does it impact end customers?

  • Increase in competition means more benefits to customers in the form of better and fast services
  • Real time information, payments, reconciliations, modifications
  • Increased data privacy concerns as customer data is exposed to the external world

What API’s banking mean now for Banks

As part of this APIfication of banking services, banks are transitioning towards a platform business model and are providing banking and non-banking services by collaborating with partners, FinTechs, service providers, etc. Since APIfication and Open Banking are the way forward, banks must approach these changes with a thorough strategy of cultivating the right ecosystems and participating in networks that aid their business strategy. Banks that fail to do so will soon be pushed to the corner in the absence of the right customer data for enriching and personalizing solutions for their clients. Data is the new currency for banks and the right ecosystems extremely crucial for effective data-driven outcomes.

Building customer relationships in the era of digital dialogues

“The world needs banking but it does not need banks” – Bill Gates

When Bills Gates made this statement in the 1990s, he was far sighted about how technology will impact banking.

I believe what the business guru possibly meant is that while banking-as-a-service will continue to be a necessity, the brick-and-mortar model will gradually reduce.

I understood this statement better when I recently visited my bank’s website.

I was wonderstruck with what I read …… “Ways to Bank”!!!

I explored and here is an image of what I saw.

While the “Ways to bank” page of my bank’s website offered multiple options to perform banking, what surprised me was that there was no mention of “Branch banking” or “Bank in person” as a way to bank.

I mused on the missing part of the “Branch”.

The statement of Bill Gates echoed in my mind.

And then I realized it has been more than a year since I had any dialogue with my bank.

I paused and thought over why I had stopped calling or visiting my bank.

Did I stop performing banking transactions altogether? No!

I continued to avail banking services but through digital channels; with a silent digital dialogue.

I pondered and compared my digital interactions with the lively human conversations I used to enjoy during my bank visits.

Given below are few thoughts from my experience of banking digitally.

My account number is my new identity

In the years of branch banking, in the interest of saving time, getting proper service and completing my transactions smoothly I’d ensure that I was there when the bank branch opened. My banker greeted me and knew my personal and professional background.

In contradiction, my bank in digital avatar is 24 /7 accessible.

And my digital bank greets me, with a digital identity vide an account number!

My digital bank is now my one-stop financial shop

My bank used to have simple personal banking products that met my banking needs of having a savings account, a term deposit, and may be a loan.

My digital bank is now a one-stop financial shop. It offers me every financial product I could wish to have. I could avail it as a package too! For example, I could apply for a savings account with a debit or credit card or say linked insurance or a demat account.

All information on the products is readily available digitally, but what I could still miss out could be the hidden fees or penalty. My bank branch will have harped on this key information a few times before I make a decision to apply.

I need to “bank safe”

I chose my brick-and-mortar bank branch on the merits of its transparency in dealing with public monies. As a regulated entity, I trusted my bank as a care-taker of my money with a guarantee of getting it back in case of a future meltdown. I read to understand how banks are responsible for safe-guard its customers’ monies.

The new digital avatar however empowers me to educate myself on what safe banking is. Below is an image of how my digital bank advocates safe banking.

But I necessarily need to do my bit of learning to ensure my money is safe.

Wasn’t it simpler in brick-and-mortar branch banking?

A silent digital conversation defines my customer journey

A fortnightly visit to my bank branch ensured that my banking transactions were complete. I would withdraw cash, deposit cheques, operate my locker and have my usual human conversation with my bankers. And that was my customer journey!!!

In the digital avatar, a customer journey relates to a seamless cross channel experience that is frictionless.

I am not tied to a single channel; I can start with internet banking later switch to mobile for completing a transaction. All my banking transactions can be performed digitally without need for visiting a branch. Through silent digital conversation!!!

In the process my banking was completed but not my innate need for getting attended as a customer.

Can banks add “human” to “digital”?

I compared every single experience in my bank premise vs. the digital avatar of my bank.

I rarely visited my Bank. But how I wished I still got the same treatment as I used to get in a bank branch.

The missing aspect of the silent digital conversation was the “human” interaction.

No qualms that digital is going to drive the future of banking.

Hence building customer relationship is imperative in the era of digital dialogues.

Few steps towards this could be

  • Calling and wishing your customer on occasion of important events such as birthdays or anniversaries instead of sending automated mails
  • Productively utilizing the excess workforce as result of automation; towards fostering better customer relationships
  • Staying in touch with personalized mails and messages
  • Inviting customers for customer meets and other related events

To conclude, banks need to make deliberate effort to maintain the personal contact with their digital banking customers. Ultimately, it is the human connection that fuels long term customer relationships and loyalty.

Else digital banking customers will remain stateless numbers stored in banking software systems.

Analytics for the New-Age Customer

Who is a new-age customer? Is it my son, who thinks an internet breakdown resulting in Netflix breakdown is more severe than a bubonic plague? Or is it my mom, who still uses mobile like a landline telephone (“only in case of emergencies”) and does not have a smart phone yet? Or is it me, who works to build state-of-the-art digital systems for banks and convince customers to adapt to the same while at the same time, thinks twice before registering for an UPI address? (“Fear of online fraud”)! Well, it is a culmination of all these three and much more.

Words like Digital, State-of-the-Art, Ubiquitous, 24*7, etc. were the buzz words of the era gone by. These are considered the bare minimum now. With such a tremendous change in customer experience and expectations, we need to up our game by putting the customer at the center of everything we do. We need to personalize content in such a manner that the customer does not go looking for a product or service elsewhere. This is where analytics comes into the picture. Data can be leveraged for figuring out the likes and dislikes of the end customer and in turn playing on their preferences to fine tune the end product to cater to their needs.

Over the past few months, every Monday morning, I receive an email which tells me how I have spent my time the previous week. It gives a detailed split into time spent over calls, communicator, meetings, etc. It also suggests behavior patterns like how I schedule my meetings with others (“always at the last minute” of course!). Initially, I did not realize what I would achieve from this, but over time, I have taught myself how I can use this data to better utilize my time. And these kind of insights do not stop here. My banking mobile app now suggests how to round off my transactions and invest that rounded off portion into a deposit account. My food delivery app notifies me whenever my favorite restaurant has good offers and so on and so forth. Data is everywhere. Tapping into this data has already begun at a tremendous pace.

Any new analytics use case design and implementation need to take care of the following:

  • Integration with the underlying systems should be seamless (embedded or not?)
  • It should be relevant today and in the immediate future
  • Time to market should be kept to a minimum
  • Insights provided should be further customizable
  • User Interface and User Experience should be exemplary
  • Value provided by these insights should impact business/profits (wherever applicable)
  • Insights should lead to better management of existing portfolio like creation/sunset of required businesses

Proper implementation of analytics in the financial industry could lead to better business outcomes for the institutions and at the same time, more satisfaction for the end customers. From the customer’s perspective, there can be many small delights in the user experience like reminding the customer to order a new cheque book when the old one is about to run out of leaves, appreciating the customer for maintaining a good credit score, or suggesting a better credit card with more benefits based on the user profile which will improve their loyalty and hence ensure continuation of business.

Similarly, from the perspective of a financial institute, suggestions to prevent approving loans to customers with certain predetermined combination factors, predicting when a customer is likely to default (and hence strengthening their collection mechanism), providing data on profitability of various products and hence aiding the decision making about products at a sunset, can help do significantly better business.

Digital Transformation – Aligning banks and customer journeys

All banks across the world have embarked on their digital transformation journey to be competitive and technologically sound in these rapidly changing times. Each bank has a different way of looking at digitization. It is safe to say that digital transformation is the process of digitizing a bank’s business to suit the evolving customer needs and demands. APIs, open banking, integration with Fintechs are some of the keys areas in the journey. By becoming digital, banks’ resources are put to use effectively at lower costs and quicker turnaround. With holistic digitization banks can provide seamless and enriching experiences to their customers. Digital transformation does not happen in a day, it takes effort and time to transform an organization for new digital realities. However, there is no upper limit for being digital as technology is a moving target and advancements are made each day where banks are put under tremendous pressure to keep innovating and upgrading.

Some of the challenges banks commonly face during their digital transformation journey are –

  • Mundane processes – Some processes which have been in place for years are difficult to replace quickly. For e.g. filling out forms at a branch for cash deposit, withdrawal. Although the introduction of cash deposit machines and ATMs has reduced the need for customers to go to a branch, but these processes are still prevalent.
  • Legacy systems – Banks run their businesses in both legacy as well as modern age systems. This creates challenges when they want to digitally transform.
  • Culture within the organization – People are the greatest assets for any organization. Generally, we find that people are reluctant to change. Since digital transformation is not a one-click process, it requires the support of all within the organization and demands a wholesome effort.

Whilst banks have their own challenges as they embark on the journey, the customers of the banks also face the heat during the transformation journey. Banks have a diverse customer base comprising silent generation, baby boomers, generation X, millennials and generation Z. Additionally, their customer base comprises people from urban and rural areas. A bank’s customers face challenges in terms of knowledge, interest and access to digital applications. As not all customers fall under these three areas, it becomes the responsibility of the bank to ensure their strategy is covers all the customers. Some points to invoke interest and knowledge among the customers include:

  • Interactive sessions with the customers to help them use digital applications and understand the journey banks have undertaken. Meaningful interactions can also help banks understand customers’ challenges, satisfaction and dissatisfaction, and thus serve to increase customer retention. It is well known that, acquiring a new customer is more expensive than retaining an existing customer.
  • Bank kiosks at prominent places to give first-hand experience to customers also enables acquiring new customers.

Banks today also provide their customers the access to banking services vide agent banking where agents are deployed to provide doorstep banking to the customers. This includes both urban and rural customers. With newer technologies like AI, automation, blockchain for payments, trade, loans, robotics in a disruptive mode, banks face newer challenges each day. They may have to come up with newer ways to combat the challenges and at the same time keep progressing on their journey of digital transformation.

References –

Women in Tech

The name and the corresponding hashtag provides a very good view of what is in focus this current month the world over! With the just concluded women’s day, the global focus has mainly been on a few key themes like better balance, more empowerment, equal pay, more presence in STEM (Science, Technology, Engineering and Math) and most importantly, more women in Tech.

In the recent years, especially in India, we have seen the appointment of Women CEOs (and leaders) across many major banks (both private and public sector). But at IT companies which serve these banks, the ratio of women leaders is quite low. It is high time we take aggressive action and try to improve this gender imbalance.

My personal observation has been that at the entry level, there are a good number of women with a computer science background who get into Tech Jobs and manage to maintain this good ratio for the next few years or so. But as they progress and get to the junior management level, this number starts dwindling. There are many reasons for this decline and the most common ones which come to mind are:

  • Lack of a good support system to take care of the family (especially baby care and toddler care)
  • The belief that a job is not a primary need for a woman and hence the low priority of financial independence of women
  • Insufficient quantification of women’s contributions and hence a lack of clarity on their way forward (career growth)
  • Ineffective work-life balance and clarity of work and personal priorities affecting daily life
  • A prejudice that men always end up with better opportunity and better career growth thanks to the current statistics

In this day of instant judgment, I am not here to discuss what’s right or what’s wrong but WHAT CAN WE DO to make this situation better? How can we encourage more women to continue their journey or inspire more women to stay in Tech?

We have to think radically and try to see how we can help make women’s lives better so that they are able to balance work and family and at the same time contribute their best at work. Few thoughts from observing trends around the world are:

  • Flexi hours including work from home or part time for certain periods of time
  • Options to have an inbuilt day care with provision to visit the kid(s) frequently / as needed
  • Mentorship at every stage so that guidance is available through any rough patches
  • A visible career growth plan so that women know what to expect and how to grow to achieve the same
  • Management / business acumen training to train women into senior roles
  • Custom roles most suited for women

We can try to list down many options but until the change is reflected in the actual numbers, it will still end up on the to-do List rather than an achiever’s list. Everyone needs to work together to create a better work environment for women. Now. The time is up. If every individual can think towards the same and try to inspire and motivate any women in their life, pretty soon, the boundaries ought to disappear and the balance ought to get better! Go girl!

Customer Experience – The new business attitude

Last weekend I was looking for a fast broadband connectivity service for my home as my current service provider was unable to provide an upgrade in spite of multiple escalations. I found the answer in a new market entrant which offered the fastest, the cheapest and the most feature-rich service with the most convenient and fast onboarding process of less than 10 minutes. This was the experience I was looking for – completely personalized service, smooth and frictionless cross-channel onboarding process without any hassles.

I think for a truly engaging customer experience, the right product offered at the right moment and through the best channel creates a wow moment. This ensures a satisfied customer who can advocate and promote your product.

Today, customer experience is the most powerful force a business could use to win in the market. I believe in a customer-centric approach rather than a product-centric approach. Winning companies put their customers at the center, and this has time and again been proven by companies like Google in the search engine space, Apple in smartphone market, and Uber which has stunned the taxi-service market.

Creating a truly customer engagement experience is a necessity for any company today. If you achieve an engaging customer experience, you gain customer loyalty which can be a major competitive differentiator for your business instead of competing just on price. However, it is important for a company to understand any pain points and remove any systemic or process issues faced by customers while interacting with your company. In case of banking services, the gap in customer experience can be closed by introducing self-service application to address routine questions instead of making the customer wait in contact center queues. Also one can explore launching chat-bots to address customer questions. The main hurdle is to improve your customers’ chosen way of interacting with you.

With all this in mind, here are a few suggestions for anyone looking to develop a strategy for new business attitude called customer experience.

  • Experience is always personal. So think carefully before introducing a new technology-driven feature or removing process steps, and understand how different customer segments will react to the variation. Not all customers have an up-to-date technology to take advantage of frictionless experience built around the latest mobile apps or devices. You have to offer contextual experiences on preferred channels to early adopters as well as other customers who could be fast-followers of technology or even laggards. You need to plan for training and support when introducing changes to ensure that there are no surprises.
  • Just do it right. In the name of providing frictionless experience your organization should not move away from the customer. You may eliminate or automate some steps in the process but it should not distance a company from its customers by removing human touch. It is absolutely important to give an opportunity to your customers to interact with humans who understand their needs and can empathize with them. Automation is necessary but it should support human interaction. Human touch should not be removed completely.
  • Be flexible. In any industry, you create ‘wow’ moments when you help people with uncommon requests, or surpass their expectations by going beyond the norm. It is important to not have rigid approaches which can work against employees and prevent them from using their own creativity to deliver the best service. You need to create an eco-system to allow your employees to do things differently when required.

If an organization wears an attitude of customer experience as a business strategy at all touch points, it can deliver wonders in customer service. To deliver the right experience, technology is an important enabler that companies can use to define flexible processes accurately and design services such that they are not devoid of a human touch.

Open Banking APIs to uncover new possibilities for banks and customers


Banks started adopting technology as a means to achieve the ends of more business at lesser costs, higher customer engagement, greater retention and satisfaction levels, and very importantly, avoiding the drudgery of manual transactions. Unlike other products and domains which immediately see a profusion of latest technology interventions, banks were always circumspect and conservative with leveraging technology, because banks deal with their customers’ money. In a way, banks seemed to be initially cautious about adopting new technologies, but eventually seeing the merits of the adoption as well as evaluating the robustness of the technologies on offer, banks started making technology choices.

The concept of open banking

As the name Open Banking implies, there is something apparently “closed” about banks that makes a case for making them “open”. Banks by their very nature tend to be restrictive or closed to sharing of customer information with third parties, as customer privacy is sacrosanct. That said, in a digital world, everyone is meant to be connected and everything is accessible including data. What if the individual customer data which is otherwise available only to the particular customer is made available for third parties in real-time to probe, aggregate, analyze, and then form useful patterns for the customer or bank to make informed decisions? This in essence is the concept of open banking.

Constraints of Legacy systems

In terms of technology infusion, primarily it has been the product-centric model that has historically dominated the banking landscape. From a continuity, safety and ease-of-adoption perspective, it made sense to have a central monolith of a software product that undergoes periodic revisions in line with latest technologies that enter the horizon. However, not all banking software products can be designed with so much foresight to be modular and scalable to adopt or adapt all new technologies in times to come. This means somewhere down the line, banks are compelled to do away with their existing software products and adopt altogether new products which is sometimes not feasible due to cost and disruption issues.

Open Banking APIs – The Benefits

As the name implies, Open API’s address the inherent issues of traditional banking software products by mandating that the banking software product be open to external querying and access. Coming to think of the possibilities with Open Banking, there are many! A customer may hold accounts in many banks, and a 3rd party app can generate a “consolidated” account statement to the customer giving a view of his overall assets. A credit card statement of multiple cards can be generated which can be used to assess spend patterns. Bill payments can be automated if the customer can consent to a 3rd party and schedule payments. Loans can be availed with consolidation of present liabilities and determination of creditworthiness from past loan history instantly. Funds can be moved to and from fixed deposits or other investment products automatically which can help manage customer wealth efficiently.
For banks, open APIs help them generate new revenue streams based on data sharing models with FinTechs. Further, by exposing customers to third party products and services, banks can benefit from commission-based earning. So far, banks have been passive about the money that customer chooses to park with in their accounts, but with open banking, banks can precisely inform and advise the customer on efficiently redeploying the funds for higher and better returns.

The Trends

Open API’s are still evolving and their widespread adoption much expected and foreseen the in coming days. The European Union set the ball rolling with Payment Services Directive 2 (PSD 2) which basically mandates banks to let their customers use Payment Initiation services and Account Information services from third parties. More and more larger and smaller banks have started collaborating with start-ups and FinTechs by building open APIs to enhance business value and customer experience.


On the face of it, it looks like a security hazard to make customer data available to anyone outside of the bank. But if the security challenges can be addressed satisfactorily, the benefits outweigh the risks and both banks and customers will greatly benefit from a whole lot of new possibilities. A lot of third parties can now write software applications that enhance user experience, and create AI-based tools using the bank’s data. What will please the banks is that these apps do not need the bank’s involvement in effort and costs, though certification from the bank for authenticity and usage could be a good idea. It opens up new business model possibilities for the bank to capitalize on its own data while putting to use the imagination and innovative powers of third parties. It is now up to the banks, to opt for Open API’s immediately as an early adopter or delay it till it becomes inevitable.

Privacy and ethics in banking in the open banking world

Banks around the world are preparing themselves for open banking and the primary need to share customer data with accredited data recipient creates the need for protecting customer’s privacy and personal information security.

Open banking has its own opportunities and threats for both customers and banks.

For customers, allowing sharing of their personal data with third parties, and Fintechs will make it easier to do banking and allow access to more products, more choices, features and benefits, and better deals. More competition will lead to reduced rates across banking products i.e. deposits or credit cards, loans etc. Consumer advocates, community groups and government agencies’ expectations are nebulous around privacy, and industry standards are still to be finalised in some markets.

For consumers, allowing their personal and financial data to be shared with other financial institutions would mean more transparency by the lenders on customers’ financial situations, income, expenses, assets, liabilities. For banks, meeting the responsible lending obligations under the law may result in access to credit being reduced. Banks would move to risk-based pricing models for credit underwriting and true cost of loan or getting a credit would increase, for home loans LVR (Loan to Valuation Ratio) would increase resulting in higher deposits required from the borrower to obtain a loan.

Conversely data sharing also imposes threats to privacy and financial information. Hence information and cyber security risks will need to be considered further and managed better by banks participating in the digital ecosystem.

In Australia banks have recently faced Royal Commission for ethical practices, governance and misconduct in the financial services. There is an ongoing need to increase the importance of ethical use of data as more and more channels are used by the banking industry such as social media i.e. Facebook.

Privacy and Security

The key factor for open banking from consumer’s perspective is data security and banks will need to gain greater consumer confidence around data privacy and security.

In Australia, Consumer Data Rights Rules will enable open banking from July 2019. In New Zealand, Payments NZ in March 2019 released standards to allow banks opt-in to share consumers account information and payment initiation with accredited third parties. Both jurisdictions have factored security and privacy risk as paramount and the rules have been derived to provide security of consumer financial data and personal information. Banks have been progressively working towards ethical disclosures, sharing and use of customer data through open banking conduct provisions.

Access to banks’ customer data can only be provided and specific information shared with registered third parties, only if a customer has given consent under the open banking regime.

Banks will also need to ensure that their customers’ data is not compromised by unauthorised access or cyber-attacks.

Ethics and Evolution

The use and disclosure of customer data has business implications and requires an ethical model and practices to be considered for information security, privacy and data governance.

As we march towards digitisation, organisations participating in open banking will use more and more customer data through the use of APIs and Fintechs will evolve using AI and IOT, providing enhanced customer experience. This is likely to have an impact on direct marketing as banks would want to use customer information to cross-sell products. Banks will need to scrutinize how the customer data is used and disclosed and also enhance their information security and data controls for governance.

Digital economy will further evolve with open banking and will introduce new channels for product distribution, imposing a limit on use of certain data. Banks may also start distributing other services such as utilities (electricity/gas/internet). This evolution will potentially also introduce new global entrants providing banking and payments services such as Google, Amazon and banks acquiring Fintechs to use their algorithms to capitalise on their existing infrastructure and product distribution strategy.

The banks will need to implement ethical model and data governance framework regarding how data is ethically used across business operation, put limits on certain data sets and build data controls and principles that goes beyond information security and governance.

The revolution in different global markets has been guided by regulations and the emerging digital economy will further transform the way banking is done in the open banking world.

PRODUCT DNA: How successful product companies innovate

A popular perception is that companies can drive innovation and build great products by talking to and seeking regular and timely feedback from potential and existing customers. While this may sound reasonable, unfortunately it is not true. Building a great market-leading product requires more than that. It needs something called “a product DNA”.

Most of us love music. But can most of us describe music in a manner that if someone composes it as per our liking or interest, then we will like it for sure? All we do is develop fondness (or dislike) for certain kind of music once someone composes it.

Similarly, most customers cannot describe how your product should look like or what they really need. If you create a product, then they may like it or dislike it.

If mobile phone manufacturers had conducted a survey about the features customers want in their mobile phones in the 90s, the most probable answers/requests would have been: Increase in battery power, more storage for address/contacts, Increased size of text messages and address book retrieval if the phone is lost. In all likelihood, a smart phone wouldn’t have been a preference or suggestion as part of the survey findings. Not by any single customer. Not by the entire set of survey respondents collectively.

Similarly, if a survey of customers of dot matrix printer was carried out they would have in all probability come up with demands like faster printing rate, multiple paper sizes, printing on both sides of paper or color printing. None of them would have come up with a description of laser printer.

So, essentially neither the sum of all customer feedback would have helped produce an innovative product feature set nor individual feedback. The popular perception that customer feedback is the foundation of innovation is potentially false.

Sometimes a product is an outcome of an objective and sometimes it is a consequence of an unrelated objective. A classic example of objective-based outcome is the most efficient search engine on the block – Google – developed by Larry Page and Sergei Brin. Driverless car is also an example of objective-based outcome. A great example of consequence-based product is Amazon Web Services. It is a consequence of the technology Amazon built to run its flagship product – the Amazon e-commerce web site. Or consider the phenomenon that led Percy Spencer to the invention of a microwave. Percy was experimenting with a radar related vacuum tube when a candy bar in his pocket started melting and he applied this knowledge to build the prototype for a microwave.

To build a successful product, a company needs product-centricity in its DNA. It needs a product-mindset and skill. This influences the entire process of product creation right from ideation, calculation and estimation of market potential, through to execution. Let us see what “product DNA” really means and why it pays a key role in product development:

  • Ideation:

During the ideation phase, the ability to come up with product requirements is considered as the Product DNA. The idea may be an outcome of a general observation of a current problem, it may address future problems or it could be a technology innovation to improve the efficiency of an existing solution.

The ability to assess requirements based on general observation and come up with an innovative solution is best illustrated in Levi Strauss’s discovery and the consequent apparel invention. Strauss observed that the jeans of the gold mine workers were all tattered due to the weight of sand. He riveted the pockets and patented the same. Most of the times these kind of scenarios don’t require any major research investments.

On the other hand, driverless cars and most of the stuff Elon Musk does, fall under this category of potential solutions to “future problems”. These kind of problems usually require major research and sometimes infrastructure investments.

Job search portals, matrimony sites, auction marketplaces and other similar online platforms that came up after the world wide web gained popularity are classic examples of using new technologies to increase the efficiency of existing solutions.

The ability to see what customer needs without the customer explicitly telling you is an essential trait of what I call the “Product DNA”.

  • Calculating Market potential:

There is no free lunch in life and especially in business. Investors are driven by revenues. So whatever you build should generate revenue for the investors.
Calculating market potential and growth prospects becomes extremely difficult when there is no precedence for the product that you are developing. On top of it, need and want are two different things. Just because a customer needs something, doesn’t necessarily mean he wants it and he will pay for it.

The ability to see the impact of the product on the customers when there are no existing customers/precedence, and foreseeing how to transform the need of the customer to a want is one of the essential traits of “Product DNA”.

  • Execution:

While I do not undermine the value of an idea, conceiving an idea is the easiest thing. Ninety nine percent of the success of a product depends on execution.

The first mover advantage doesn’t really guarantee prolonged market leadership. There were several established search engines before google. Google beat them all by building a search engine that was technologically superior to others. The rise of Facebook and the demise of Orkut is also an example that proves this.

Customer feedback becomes effective once the product is in the market. Facebook started as a college bulletin board but morphed into social media platform based on the customer feedback/demand and their observation of customer needs.

Patience, constant and continuous meaningful innovation is integral to Product DNA traits during the execution phase.

Summarizing, the traits exhibited by an individual or company who successfully address the challenges mentioned above during the ideation, market potential estimation and execution phases is what Product DNA is. History is witness to the fact that all successful product companies have invariably displayed the above traits.

Branch of the future

The contemporary and emerging models of digital banking pose an important question to bankers: “Will the brick-and-mortar model of branches become history in a few years from now? Most of the banking transactions ranging from funds-transfers to product purchase have been digitzed and are now available at the click of a mouse or at the tap of a button on a smart phone. The waiting time for banking transactions has reduced exponentially and customers now demand to be served immediately and effectively. Traditional branches seem to be losing their sheen and the future generation seems to be more inclined to use the digital medium rather than branches.

However, a closer look at the customer and geographic segmentation tells a different story. Despite the tectonic digital shift at a rapid pace, branches still serve as one of the leading sales channels for banks. Reports also suggest that 30 to 60 percent of customers prefer doing at least some kind of banking transactions through branches. Further, services like cash deposit/withdrawal, issuance of demand drafts and deposition of cheques actually call for a physical branch or an ATM visit.

Banks therefore need to come up with a hybrid model of branches which would be a combination of digital banking technologies and analytical capabilities at a physical location. This model of branch would have fewer staff, will occupy lesser real estate and would be equipped with the latest gadgets to provide both sales and service capabilities.

Bank branches primarily serve two fold functions: sourcing and servicing. Future smart branches will provide servicing through automation and sourcing through analytics. The right mix of automation and analytics will define a smart branch of the future.

Automation will take over servicing

Approximately 60 to 80 percent of a branch’s transactions fall under servicing functions: cash deposits/withdrawal, funds transfer, DD printing, cheque clearance being the majority of repeat servicing functions. Banks today are focusing on automating these repeat servicing functions with hardware technologies like cash recyclers (cash deposit and withdrawal), kiosks (statement print, funds transfer), tab banking (service requests) and IVRS (grievances). It can be envisaged that in the coming time, almost all the servicing functions will be taken over by machines through automation technologies. This will lead to are fewer queries and a quicker resolution without any human intervention, an eventuality often termed as “quicker and fewer” in banking.

Analytics will take over sourcing

Sourcing however, will be more mobile than static. Branch staff will be able to navigate through the river of opportunities to scout for meat rather than being a static tree waiting for food to be fed. This means moving away from the traditional way of customers approaching the banks to buy products to proactively identifying the target customers through market segmentation and then pursue these opportunities by approaching these clients. This is where technologies like AI, ML and embedded analytics will be extensively used by the branch staff to identify the target market, perform customer profiling and decide the most appropriate and suitable product suggestion each customers. Not only this, analytics will also help branch staff define the probability of a customer buying a particular product at a particular time. Hence, an effective salesman will be defined not by being an aggressive pursuer or excellent communicator but by having the adeptness and sharpness of utilizing technology to the fullest. Banks will be able to perform the three critical tasks effectively: identify prospects and pitch the right product to the right customer at the right time.

Smart branches hence will be defined by the extent of automation gadgets like recyclers, tabs, kiosks and IVRS to service the customers and the by the use of smart applications for branch staff making use of technologies like AI, ML and embedded analytics. The greater the use of smart technologies and gadgets, the smarter the branch.

Size and geography – The Hub and Spoke Model

Physical presence of a branch provides an opportunity for a bank to acquire customers around an area and to boost brand presence of the bank. However, high capex and the opex costs of a traditional branch model make it increasingly difficult for banks to open several branches at a short distance from each other across the city. Smart branches of the future can potentially solve this problem by providing an opportunity to open smaller branches with lower costs at smaller distances, thereby covering a larger population and increasing the brand presence. This model will have a central hub branch which will cater to the smaller smart branches serving as ‘spokes’. Customers will have to travel less in order to reach a branch. Hub branch will provide all operational support of sales, service, documentation, staffing to the spoke branches.

Consider a hypothetical city of area 10 sq. km. A bank can open around 10 traditional branches of area approximately 1000 sq. feet. Thus, each branch would service an area of approx. 1 sq. km. An approximate calculation shows that as compared to a traditional branch, a smart branch can make opex drop by about 50 percent and the capex by around 30 to 40 percent. This means more branches per sq. km (0.5 sq km against 1 sq. km in the above example) and 2 smart branches can be opened in place of one traditional branch. Hence customers will have to travel less to visit a branch and yet get a quicker response due to shorter wait time.

Traditional model of branches

Hub and Spoke model- more branches at same cost

Staff and timings

Smart branches would have around 6 employees per branch as against 15-20 in traditional branches. Average working hours for smart branches would be 15-18 hours per day as against 6 to 8 hours per day for traditional branches. This means double the working hours at half the cost!! As stated earlier branch staff has to be adept at using technologies to their advantage to generate the best possible outcome. Whoever masters the technology will be a winner. However, it will have an increased cost on mobility of the bankers who may have to travel more to meet customers in the market rather than sit in branches to wait for deal.


Future smart branches will be enriched with a lot of automated machines like recyclers, kiosks and tab banking and their backend support will be provided by sophisticated algorithms providing real time analytics which will be powered by artificial intelligence and machine learning. They will be leaner, smarter and meaner and will target just the right functions and customers.