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Digital in Banking: The Panacea for Customer Experience?

Digital has suddenly caught the world in storm. Every discussion on change/ transformation is centered on digital. We have been individually being involved in many such discussions in the financial services field, where we belong any way. There are reasons for such a strong affinity to ‘Go Digital’. The key driver seems is the ‘win-win’ situation as customers are increasingly getting addicted to digital while for banks also, the cost to serve becomes much lesser in digital channels.

  1. Wide scale adoption of smart phones among the masses
  2. So called Gen Y are mostly spending time on mobile surfing FB/ Tweeting or in some message applications, be it in classroom, work, playground, home….it is ubiquitous
  3. Cost to serve for the banks drops immensely in digital channels (from 30-40 rupees for branch transaction to a few paisa in mobile/ online channel)
  4. Faster & easier reach for banks to connect with both existing & new customers
  5. Technology advancements have made adoption/ implementation of ‘Digital’ roadmaps by banks easier

Why is digital access expected to transform the customer experience as well?

  1. Anytime, anywhere access is obviously the most critical. So no travel to branch for cash and lesser need for cash as you can transact/transfer fund through mobile/ web banking
  2. Ease of transaction! No queues, real time instant execution and all at finger tips

So will the branch remain? Yes. Primarily because:

  1. There will be still Gen X and an existing set of population who are not so digital savvy due to age/ demographic reasons and still needs branches for doing transactions
  2. Show ‘presence’; act as a ‘sales point’. Be a revenue driver! “branches will continue to play a key role in customer acquisition” (Axis Bank FY16 annual report)
  3. Physical presence instills trust and peace of mind for many. But this may not be so acute in India as Capgemini ‘World Retail Banking’ report FY1516 states that Indians trust with their primary bank is a whopping 76%, much better than most of the countries

Even the banks accept this! Hence we see nearly all banks still adding more branches in FY16:

  1. SBI opened 451 branches
  2. ICICI opened 450 branches
  3. HDFC opened 506 branches
  4. Axis opened  315 branches

While the digital channel’s efficacy in ease of transaction and omnipresence are no doubt is its biggest advantages, the effectiveness of ‘communication’ in digital channels is what will further influence the overall impact on ‘customer experience’. Here in lies the catch as well.

  1. A BCG report on Indian banking puts ‘branch’ significantly high in ‘quality’ of communication compared to the other channels
  2. The ease & low cost of reach of digital channels has also meant continuous streaming of push messages (primarily sales focused) causing discomfort to customers as well
  3. While branch persons (at least in earlier days) will know the customer and start interacting on some common aspects (e.g. sons education etc), digital channel will depend on a lot of data crunching to provide such points for discussion and may still lack the personal touch

Generally while customers are much better off with ease of access, the actual customer experience will depend on the quality of interactions as well, which for a customer will primarily be driven by:

  1. Knowledge of the agent (call centre, chat bots etc) for effective understanding of the real customer issue
  2. The time taken to resolve the issue i.e. how well do the back end process works to ensure that the resolution is fast
  3. Effectiveness of the communication between the bank & the customer
  4. Transparency in the communication (whether it is on terms & conditions of products being sold, rates & fees etc)

Now how are India/ Indian banks doing actually in terms of customer experience? We will look into 3 sets of data points for the same:

  1. Overall Indian retail banking ‘Customer Experience Index’ have improved from 70.9 in FY15 to 73.4 in FY16, as per Capgemini ‘World Retail Banking’ report FY1516


  1. Customer satisfaction index: ICSI (Indian Customer Satisfaction Index) launched recently. Quite expectedly, the MNC backs, e.g. SCB, HSBC, Citibank scores high (range of 75), the private banks are a notch below (range of 70s) and then the public sector banks (range of 65)


  1. A close analysis of the RBI ombudsmen report published every year for the last financial year. We will analyze the data for FY16. Key takeaways:
    1. 21%: Y-o-Y overall increase in number of complaints in FY16
    2. Private banks seems to score bad in card related complaints (average %age is 5% higher for private banks compared to PSU banks)
    3. The opposite is true for ‘Non observance to fair practice code’ where PSU banks fares worse than its private counterparts
    4. The private banks have seen significant spurt in complaints related to ‘Loans & Advances’
    5. The analysis and read through of some of these complaints indicates that banks have not been fair to the customers. These includes cases of customer penalized at a rate higher than the rate mentioned in T&C for FD’s, misselling of insurance products packaged under loans, non reversal of failed transactions at ATMs, false charges in cards & so on so forth

To conclude, digital has given a opportunity to really transform the way banks interact with customers and how customers accesses banks but the quality of interactions and behaving ‘fairly & transparently’ will still remain the key drivers of good ‘customer experience’ and that is much more beyond just being ‘Digital’!


  1. Capgemini World Retail Banking Report FY16 & FY15
  2. RBI Banking Ombudsmen Annual report FY16 & FY15
  3. Individual banks annual reports: FY16 & FY15
  4. ICSI website
  5. IBA BCG Banking 2020 report
  6. Featured Image: Microsoft Clipart

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