With transactions increasingly migrating to the digital medium, lenders are transforming and scaling up their online offerings…
Sudhanshu Shekhar, a 30-year-old software executive in Bengaluru, has never been to a bank branch ever since he opened his account one-and-a-half-years ago. He prefers to bank online, depending on the digital medium for all his banking needs. Bankers admit that such instances are now fairly common, as new-age customers have neither the time nor the inclination to visit a bank branch.
The preference for digital banking now cuts across all customer segments. It is especially high in the young generation; in fact, for this group, the quality of the digital offering is a key factor in choosing their bank. Foreign and private-sector banks appear to lead the digital revolution in Indian banking. Consider this: Today, close to 85 per cent of all Citibank customers’ financial transactions take place through digital channels. Banks are also continuously upgrading their mobile applications, so as to be available to customers on the go.
ICICI Bank, for instance, launched as many as six next-generation mobile apps during July-September this financial year. State-run lenders have also been forced to transform and scale up their online offerings to stay relevant in this digital age.
“Going ahead, all routine transactions for banks will shift to the digital medium, and branches will be used only for more complex transactions or to maintain a relationship with a certain segment of customers,” B Sriram, managing director — national banking at State Bank of India, said. He believes that with the changing demography of India, lenders have no option but to go digital.
An Ernst & Young report estimates that by 2020 the average age of India will be 29 years, and internet-savvy young customers will want everything on a real-time basis. The country’s largest lender has launched an advertisement campaign — SBI ka branch ab aapki jeb main hai (SBI’s branch is now in your pocket) — that reflects its attempt to transform itself.
Digital branches offer many benefits. Experts believe that referrals from digital bank branches help improve the overall loan growth of lenders. Saurabh Tripathi, Boston Consulting Group’s partner and director, says: “We see banks being in a position to bring down cash in the system by as much as 30 per cent if they enable mobile-to-mobile fund transfers. Although 30 per cent may not sound like a big number, the impact is going to be huge on the profitability of banks. Today, most of the costs incurred by the banks are because of cash — whether it is because of cash transport, ATM or currency chest.” For consumers, digital offerings provide convenience and ease. As a result, it is fast becoming a preferred option for most customers…A few lenders are even allowing customers to open accounts or transfer money through Twitter and Facebook. Clearly, the disruptive potential of the digital medium appears to have forced lenders to turn themselves into everywhere banks.