Banking on tech

A paradigm shift in consumer habit has driven banks to look inward

Much has been said about digital transformation in banking over the last few years. But what does it really mean? Let me start by sharing my perspective.
 
Five-hundred years ago, banks came into existence. Fifty years ago, computers were invented. Yet, in just five years banking has been transformed by the ubiquity of mobile devices. Today, clients expect banking transactions to be done in five seconds, so if we want to be around in the next 500 years, we have to meet that.
 
Consumers are spending a lot more time on mobile devices to socialise and run daily lives. This requires changes across industries, particularly for things to be faster, more convenient and easier than ever. This paradigm shift has driven banks to look from outside inward, starting with the customer.

 

All customers have a few asks of their bank — somewhere secure to store and grow wealth, to have access to widely available payment systems, and a place to borrow money at fair rates whenever required. What has changed is how customers want to be served.
 
A large part of the user experience will be improved by understanding customer preferences and needs through analytics and predictive models. Banks will be able to guide clients real-time, helping them reach financial objectives and rewarding them for deeper relationships.
 
Thus, in the digital era banks need to reinvent themselves to serve customers better and give them the most compelling offer. While banking can be complex, the ultimate goal should be to simplify the steps and present a neat digital interface for a seamless, quick experience that fulfils customer needs. Yet when something goes wrong or when they feel insecure, they are able to talk to a real human.

 
Machine learning, Internet of Things, artificial intelligence and many other technologies are reshaping banking, While the future of banking is digital, the key to digitisation is putting people first, technology second. When it comes to banking, the human touch is extremely critical. People may choose to conduct their transactions online or through an app, with no human interaction. But one simply cannot discount the role of human interaction, especially when it comes to making complex financial decisions or during a crisis.
 
The focus is (or should be) always the customer. Customers don’t care about technology in the back end but they care about their experience of engaging with the bank. Was I able to conduct transactions on my phone without any hassle? Do I feel secure while transferring money online? How convenient is it to switch from the physical branch to online? This experience, coupled with trust, is often the biggest differentiator.

 
Banking has a unique set of challenges mainly due to security and regulatory constraints. While customer experience is important, the quantum of trust sets banking apart from other sectors. Because customers need to trust you enough to literally put their life’s earnings into your hands, trust and security are paramount.
 
Robust security measures, such as passwords or biometrics, can boost users’ confidence. Also, it is important to ensure security processes have a minimal impact on user experience. This is especially important in India, which is at the cusp of a digital revolution and where consumer adoption of banking technology has huge potential to grow.

 
Similarly, there is often a fine balance between control and convenience. Greater customisation and a differentiated experience can mean less control over personal data. So, it all boils down to consent. While it is easier to overlook privacy of retail or travel data to get a better offer, banking is a different ball game. It is not just about convenience and security, but also about customer preferences.