Is Intelligent Banking A Far Cry For India?
Banks worldwide are evolving to become more customer-centric by leveraging emerging technologies such as AI and Big Data. Digitization of core banking processes over the last two decades has contributed significantly to business growth, reduction in operational cost, and enhanced customer experience, at least from the transaction front and customer support perspective. With digitization, banks have come closer to customers – right into their mobile devices and internet browsers. For an internet savvy customer – each transaction is a swipe or a click away. However, rapid digitization has pushed banks to adopt products from multiple vendors who typically lack common interface and unified view. This setup of disparate technology systems, combined with high switching cost of legacy products, has made it cumbersome for banks to experiment and they are thus limited to ‘incremental innovation' despite the intent. Global banks have taken the route of ‘Innovation Labs' to prototype new technologies but there are both technological and cultural challenges to incorporate these innovations back into the mainstream business.
Fintech ventures sensed this opportunity and have taken a full-stack approach to provide a personalized experience like consumer internet ventures. Furthermore, these fintech ventures have created platforms to not only provide core services in-house but also enable plug-n-play for other fintechs to offer innovative products to bank customers. Challenger banks in Europe such as Starling, Revolut, and N26 have built digital-only platforms and have partnered with multiple fintech partners to enrich offerings to end customers. These firms together have roped in close to 3 million customers over the last couple of years.
(source: https://www.cbinsights.com/research/challenger-bank-strategy/)
Similarly, Virtual Banking License application process in Hong Kong has experienced a rush from global banks, fintech and technology companies. Participation of TechFin companies such as Tencent and Ant Financial could be the harbinger of financial service innovations that the millennial digital-savvy customers have been expecting.
India has experienced its first virtual and intelligent banking product-Digibank from DBS. The product is expected to have 5 million customer base by 2021. Payment banks are also expected to take the technology route to build large distribution networks. But, the standalone business model for payment banks is still exposed to challenges. RBI is currently not granting licenses similar to virtual banking licenses being issued in Hong Kong and the UK.
The only opportunity for Indian customers to experience ‘Intelligent Banking' still rests in the hands of the Indian banks. Indian banks would certainly need fintech partners to amplify their intelligence with the new age tools and technologies to offer more contextually relevant services to their customers. Customization and relevance are the keys to a more joyful customer experience. Customized brand offers, innovative credit products, personalized Robo-Advisory – if done right, would hugely benefit banks and customers. However, on their part, banks need to act fast; otherwise, digital-first companies such as PayTM, Airtel and many others will rapidly acquire a larger customer base by providing more personalized financial services.
Though India is still catching up on intelligent banking as compared to global peers, it is very critical for Indian banks to prepare for the future which is changing more rapidly than ever. India presents a huge opportunity for banks with its mobile internet base of over 450+ million customers. If paired with the right unified fintech solutions, Indian banks have the power to supersede all expectations and create a truly world-class new age banking experience for each Indian customer.
