DIGITIZING INDIA : Evolving Banking Ecosystem & Rising Customer Expectations
By 2020 an estimated 50 billion devices will be connected to the internet.Updated: Jul 01, 2015 13:17 IST
By 2020 an estimated 50 billion devices will be connected to the internet. The Cisco Visual Networking Index Global Mobile Data Traffic Forecast (Cisco VNI) for 2014 to 2019 indicates there will be 5.3 billion mobile users and 11.5 billion mobile-ready devices, including 8.3 billion personal mobile devices and 3.2 billion M2M connections by 2019.
By 2019, smartphones in India will attain largest share to reach nearly 54 percent of mobile device growth. India is set to become the world’s second largest smartphone market (after China) with more than 200 million users. By 2019, the world will see 10 times more data traffic owning largely to persistent growth in smartphones and wearable devices. The Cisco VNI forecast further reveals that India will have 896 million more mobile users and 1200 million more mobile connections by 2019.
This means that customers empowered by devices and connectivity, will have newer expectations from their banks. They will want to transact with their bank at their convenience, through their devices of choice with information and advice at their fingertips. Customers — and not just tech-savvy Gen Y ones — who expect ever higher levels of services and value feel disconnected if their financial services institutions are not on par with technology.
Optimizing Customer Experience
Growing customer demands will need unique approaches to provide services as apps become an integral part of customer communication. The emergence of the Internet of Everything (IoE) — the networked connection of people, process, data, and things — means that numerous new connections will generate huge amounts of data. As big data grows, the challenge to achieve better business outcomes and deliver better customer experience will become necessary. Banks must leverage the power of data and analytics to improve processes and profits or to reduce costs and risk.
As we move into an IoE era, solutions that leverage video, mobility, and social media can enable banks to conduct customer transactions seamlessly irrespective of their physical location in real-time. According to Cisco, the upside for a typical bank that becomes as digitized while aligning with its customer expectations can see a 5.6 percent bottom-line increase. For India, IoE will result in 11 percent increase in bottom-line improvement for banks.
The Cisco study also predicts that $14.4 trillion of value (net profits) will be at stake globally for private-sector companies over the next decade, based on their ability to harness IoE — with $3.7 trillion of this value arising from improved customer experience. For retail banks, this includes various levels of personalized interactions.
For governments in both developed and emerging markets, banking the unbanked (urban and rural) has been a primary objective. In August 2014, the Indian government launched Pradhan Mantri Jan DhanYojana scheme for comprehensive financial inclusion with the goal of opening a bank account for every household. One of the visions of the government’s Digital India campaign states that “mobile phone and bank account would enable participation in digital and financial space at individual level”.
This push will drive new products and business models, and will become the primary focus of governmental or state-sponsored institutions, particularly where the private sector is unable to fulfill the need. To make this happen, the government is committed to connecting all the 250,000 gram panchayats in India with broadband internet by 2016.
In order for banks to make the most of the IoE opportunity they must:
» Dynamically apply IoE-enabling technologies to better address behavior of new, digitally driven customer segments
» Deliver more personalized and convenient services to meet “anytime, anywhere” demands of customers
» Integrate physical and digital channels to deliver services on-demand
To begin the process of transformation, banks need to evaluate their existing strengths and weaknesses, analyse the consequences, and see the market opportunities. There by, they can determine where new investments will have the greatest impact. Banks would also need a robust information management system capable of handling large amounts of data in a secure and reliable manner with the ability to scale based on the demand.
First Published: Jul 01, 2015 10:24 IST