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The Rise Of The Better Indian Bank

With a variety of alternative providers ranging from retailers to mobile operators to tech giants to financial startups snapping at their heels, India's banks cannot take their incumbency for granted

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Every month your bank reminds you that your credit card payment is due. But on the rare occasion that you forget to pay, I really doubt anyone bothers to check with you once more before slapping that late fee. Isn't that strange considering your bank knows you intimately - your bank balance, creditworthiness, the fact that you always pay on time - and therefore knows with reasonable certainty that this is a one-off slip up? Shouldn't the bank have at least shown you the courtesy of a call?

A bank that truly worked for the wellbeing of its customers certainly would have. This is what separates the better bank from the rest of the field. Unfortunately most banks do not live up to their promise of customer-centricity, or to their customers' expectations. That leaves the door wide open for non-banking players, such as Fintech companies, to take a quick share of the market by offering products, services, solutions and experiences that really work in their customers' favor.

This is doubling the pressure on our financial services providers to shape up into better banks, distinguished by their commitment to offering contextual, relevant and proactive services to customers. Even if it means aggregating - and then suggesting and supporting - products and services from other institutions when they are better suited to a customer's requirements. For instance, think about a scenario where ICICI Bank recommends a deposit product from Axis Bank, which suits your requirement better.

No doubt, this would call for a sizeable shift in the mindset of the Indian banking industry, not to mention time, effort and commitment. However, they can take heart from the fact that a number of helpful environmental factors are making this transformation into better banks easier.

Technologies, such as cloud, analytics and artificial intelligence have come of age in the past two or three years, bringing down the barriers to product personalization. Innovations in mobility and consumer touch points are converging to enable extreme personalization of the banking experience, to the extent that a bank can send a customer a unique offering crafted based on demographic, transactional, social and even Internet search behavior, on the time, device and channel of choice.

Today's Indian consumers are open to change. The telecom experience holds a valuable lesson for India's banks. Industry estimates suggest that nearly 75 percent of the subscribers signing up with a new wireless carrier every year are actually switching from another wireless provider. Never before have customers been this willing to switch providers when their demands aren't met. Once plans for e-KYC take off, it will become really easy to open, close and move bank accounts for the fickle millennial consumer. A bank can look at this as a threat, or as an opportunity to wean customers away from its rivals by being the better bank.

Even regulators are playing a supportive role by pushing for reformative change in the form of initiatives like Aadhaar e-KYC and Unified Payment Interface. An example of the change in regulatory attitude from "controlling" to "catalyzing" is visible in the RBI's policies on payment banks and small finance banks, as well as their inclination to make banking licenses available on tap in the future. Similarly, the Government's focus on the troika of Jan Dhan, Aadhaar and Mobility (JAM) is proving transformational for financial inclusion. Banks should view the authorities' proactive and benevolent interest in new, technology-led models of banking as boding well for the better, more progressive players among them.

But while banks should be glad of these tailwinds, the truth is they have no choice but to transform into better banks. With a variety of alternative providers ranging from retailers to mobile operators to tech giants to financial startups snapping at their heels, India's banks cannot take their incumbency for granted. Their only way to beat these rivals is to better them.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Puneet Chhahira

The author is global head of marketing at Infosys Finacle

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