The BFSI industry is currently amidst a profound transformation as it prepares to embrace the new stage of taking its services in a digital-first era. The challenges are significant as competition is stiff. Rising cost pressures, customer demands, rapid action, and response are imperative; financial institutions need to modernize their tech to remain sustainable and continue expanding their business.
And the road to internet transformation begins with the adoption of technologically-developed workplaces, where teams collaborate, assisted by technology rather than a physical location. In the last 18 months, visits to banks have dropped, with the increase in smartphone penetration across income groups in India.
Is Online banking here to stay?
This trend in banking behavior is expected to continue among existing users and attract new users to adopt online and mobile banking. A closer look into reports indicates that 68% of Indians use online and mobile banking, and 51% will continue using this for the long term. The country recorded a staggering 40 billion internet transactions worth quadrillion rupees in fiscal 2021.
Adapt, adapt, and evolve.
While different industries will adapt differently, banks and financial services are the first to adopt these new trends to provide a better and seamless service to customers. Adapting to cloud-based services makes the system more economical and agile, allowing customers to gain access to view and transact anywhere without the need to visit a branch. And these services can be accessed from mobile phones and are instant.
Banks are no more stressed about expanding their reach physically with a brick-and-mortar presence. They are keen on promoting online assets, digital kiosks, and channels to reduce costs and continuously engage with customers by providing them with access to their services 24×7. Thus, opening a digital bank account has become a crucial step for financial institutions as well as their customers.
Customer acquisition 2.0
In the post-pandemic era, Online Acquisition is becoming the new model of customer acquisition and growing financial services, and the numbers are mind-boggling. What used to be 30-40% pre-pandemic is now more than 90% owing to seamless customer onboarding and transparent communication about offerings and services. The adoption of online technological modes also saw a surge in customer engagement as well. Numbers show that it is now 70-75% compared to 40% pre-pandemic.
Enter the fintech
Existing and established banks and financial institutions face threats from upcoming technology-first startups, completely digitally adopted with no physical branches. These technology-savvy start-ups now offer convenient online services like opening a digital bank account, online money transfer, etc. These companies are offering banking services that challenge the status quo of how established banks offer services.
Companies like Fi Money are disrupting the BFSI and fintech sectors with their frictionless onboarding and seamless services through their app, which otherwise requires one to visit a bank branch to open an account. On Fi Money, this takes all of 3 minutes, and with no human interaction along the process. Added to this, users on Fi Money get a whole bunch of services or ‘features’ that provide users with intelligence on their financial habits.
The future of banking and financial services
The future of banking will predominantly be service- and value-led rather than product-led. The demand for customers is dynamic, and banks need to adapt if they want to stay ahead in the game. Although every industry is going through digitization, banking is the first to adopt changes. The new era of customer banking and financial services focuses on the experience, design, and reducing friction by using technology.
New services like “Buy Now Pay Later” are also rising, despite the RBI’s apprehensions around them, adding to contextual credit built into the purchasing experience.
On the technology side, the use of machine learning and artificial intelligence in the financial sector will elevate user experience to a level comparable to social media in terms of engagement and delight.
Banks will look at increasing tech spending, which includes developing the app, new and improved websites, and more engaging systems where banks will offer enhanced experiences at all customer touchpoints and a more collaborative and interactive experience instead of a one-way push communication.