In my last post, I briefly discussed the historic evolution of non-branch banking channels in the Indian context. Almost every channel has a tremendous potential for growth, albeit from a small base. Going forward, banks will have to focus as much on the distinct financial needs of vast swathes of the population as on technology and innovation in order to accelerate the uptake of alternative and digital channels.
One of the biggest challenges and opportunities for the Indian banking sector, which is still predominantly focused on the urban customer, is the vast numbers of un- and under-banked in the country. Government and regulatory mandates on financial inclusion coupled with the increasing saturation of urban centers is already compelling banks to look at rural markets where banking penetration is still sorely lacking. Even today, approximately 40 percent of adult Indians do not have access to even basic banking services. Though a strategic combination of banking correspondents, kiosks, low cost ATMs, and even mobile/ tablet banking has made some inroads, bringing underserved markets into the mainstream will be an important facet of the sector’s overall channel development strategy.
In terms of innovation, the pace and intensity of automation will be accelerated driven by the demands of an increasingly discerning and digital customer. Mobile apps, for instance, will move beyond enabling transactions to empowering holistic financial management. Next generation ATMs will come with a broader range of automated possibilities, like dispensing demand drafts.
As channels evolve, in terms of type and sophistication, the omnichannel experience will become a key competitive differentiator among banks. Banking customers across the globe – and India is not an exception – use multiple channels often even for a single transaction. This trend is also fueling customer expectations that transcend transactions into the realm of experience. Customers expect a banking experience that is seamless, consistent and contextually and personally relevant.
If Indian banks are to empower their customers with an omnichannel experience, they will have to start with the right multichannel framework as the foundation. They need to find an enterprise class solution that acts as a conduit between their core banking platform and all their channels. More importantly, the solution should be capable of reducing time-to-market for channels and new products and services, and generate insights into customer preferences and behaviors that will help banks individualize the experience.