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Increasing digitisation is bringing more awareness and power to modern customers who demand seamless experiences and instant fulfilment, writes Rajashekara V Maiya, vice president and head, business consulting group at Infosys Finacle.

Neo-banking is slowly becoming a global phenomenon. Millions of people opt to open an account with a challenger bank because the entire process takes only minutes to complete. The concept of instantaneous Unified Payments Interface (UPI)-based payments has been a runaway success because customers can carry out transactions easily and seamlessly using the channel of their choice. They could use apps such as Google Pay or pay directly on an eCommerce platform such as Amazon, or via the bank’s online portal at various times, depending on what’s most convenient to them at that point.

Increasing digitisation and virtualisation are bringing more awareness and power to the modern customer. Customers are less particular about who delivers the service, as long as they get it at their convenience. The customer is more demanding than ever and expects touchless experiences and instant fulfilment, which is the norm with digital-native challengers.

The Customer Acquisition and On-Boarding Challenge for Banks

In many cases, incumbent banks are nearing stagnation in terms of extracting business from their existing customer base. This opens them up to stiff competition from big tech, fintech, and challenger banks to be able to retain these customers. On the other hand, traditional banks must contend with lengthy legal processes for customer acquisition, which can put off customers with new-age expectations. By not focusing enough on innovation or relationship-based services such as personal financial management, they are unable to create sufficient differentiation in the market. They are losing ground to new-age players who are able to attract and engage customers with pioneering products and services.

In the meantime, the financial inclusion of the unbanked continues to elude the formal banking industry as millions across the globe are still unbanked and underbanked. This challenge can be converted by banks into an immense opportunity to financially include these masses while solidifying their own future. Their strategy must include avenues for creating wealth, employment, and wider markets.

It is, therefore, essential for banks to acquire and onboard these customers in a manner that is seamless, swift, and economically viable. They will need the kind of path-breaking approach that allowed India to create history with UPI, which brought large sections of its underserved population under the umbrella of digital finance. Open Network for Digital Commerce (ONDC) and Open Credit Enabled Network (OCEN) are also set to democratise access to financial solutions.

The bank’s challenges do not stop with acquiring account holders in huge volumes. From acquiring to onboarding, retaining, and creating differentiated experiences – banks need to make up for lost ground and regain their competitive edge. They need to plan on how to engage these new customers at scale.

Engaging with Empathy

Studies indicate that 40% of customers bring in more than 60% of the profit for any kind of organisation, including banks. Importantly, emotionally engaged customers generate 70% more business than rationally engaged customers. Emotional engagement also brings down attrition. Banks must, therefore, work towards building stronger emotional connections as they engage with customers and make every engagement count.

However, a mere 14% of banks are successfully engaging customers at scale. 13% are engaging in awareness building for employees, which can be pivotal for strengthening their rapport with customers. These findings were part of “Maximizing Digital Banking Engagement,” a report jointly produced by Infosys Finacle and Qorus.

Banks of the future have a more expansive role to play in engaging the customer holistically. They must aim to serve customers in ways that go beyond meeting their usual banking needs and are rooted in empathic principles. This means exploring new ways to add value in helping customers save, pay, borrow, invest, and insure better.

This is also the principle behind the holistic framework for customer engagement proposed in the Golden Engagement Circle by Infosys Finacle. The central idea here is to empower and engage customers throughout their onboarding journeys, touchpoints, interactions, and self-service transactions. Customer-facing employees need to be trained in multidisciplinary skills. They need to be supported with customer-related insights and analytics, which will help these employees understand and anticipate customer needs and modulate their communications and services better.

To sum up, all banking channels – traditional, contemporary, emerging, and open banking – must consistently maintain customer-centricity and empathic connection if they hope to build a profitable future.

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