These characteristics are certainly pushing banks and financial service institutions to accelerate the adoption of technology solutions that will help them deal with the millennial customer
Millennials’ use of technology and their behavior clearly sets them apart from previous generations.The average FS consumer behavior changes radically as Generation ‘Y' (today’s millennials, those born after 1980) assume more significant role in the global economy over the next decade along with the emergence of Generation ‘Z’ (tomorrow’s millennials, those born after 1992). They have grown up with broadband/wifi, smartphones, laptops and social media being the norm. They demand a much higher level of customer experience, with a much greater importance placed on speed and convenience. These characteristics are certainly pushing banks and financial service institutions to accelerate the adoption of technology solutions that will help them deal with the millennial customer.
Here are four things Indian banks are doing to serve millennials:
Increasing transparency, simplification andpersonalization
The benchmarks for best customer digital experiences are being re-defined every day with evolving expectations and behaviors of today’s millennials. The ability of the financial services firm to keep evolving and close to the millennials expectations is the only key to success and being relevant. To cater to this, financial technology products are focusing on providing solutions that are dynamic, self-evolutionary - giving direct access and control to the consumer to ‘create their own’ product/solution service needs. Banks today need to manage security, user experience, and customer connectivity at the point of purchase. For example, Backbase, a prominent player in the omni-channel digital banking space, develops systems that are all about making complex tasks simple and creating in the customer a feeling of trust towards their banks. By using transactional data and AI technology banks can enhance the customer journey with relevant personal virtual assistant capabilities, making the whole process personalized and simple.
Establishing the right customer touch-points and communication preferences
FICO’s Millennial Banking Insights and Opportunities report demonstrated how important it is to give millennials a choice when it comes to communication preferences. It was reported that 43% of millennials weren’t being communicated with in their preferred method. Banks need to ensure they engage millennial customers in a dynamic way, by making optimal use of behavioral statistics and data analytics. It becomes more relevant, as the preference also changes fast depending on multiple factors viz, particular timing of interaction (what time of the day), purpose of interaction (notification vs. query resolution), mode of interaction (phone banking vs. online chats), etc.
Faster response time using technology
Financial institutions are using big data analytics to monitor for covert threats and embed the controls subtly within the front-office customer facing processes to provide a real-time response to customer transactions and interactions. The challenge will be to strike a balance of safety (information security) with customer convenience. Successful disruptors offer a better customer experience and greater convenience at a much lower price. For example, Bank of Baroda has partnered with FundsTiger, to improve small business’ access to capital and leverage technology to lower the cost of loan application processing.
Automation of services with advanced analytics (bots and artificial intelligence)
Advanced Analytics (Artificial Intelligence, Machine Learning and Deep Learning) is a force that is disrupting the financial services market behaviors, business operating models, stakeholder’s role and inclusive environment in which they operate. Chatbots that self-learn, evolve based on guided learning principles, provide information to customers’ queries and are proficient with customer emotion. It mimics human cognitive abilities in reading, comprehending, interpreting, and conversing.
The use of advanced analytics is also giving birth to the new ‘normal’. Periodic (quarterly or semi-annually) recalibration of any analytical model has so far been the key criteria for successful analytics process implementation i.e. ‘the old normal’. However, with AI & machine learning put to use along with big-data, the models can now be self-recalibrated relentlessly almost every minute and with negligible cost impact i.e. ‘the new normal’.
Major Indian banks do see the advantage of partnering with FinTech start-ups as a key success driver for creating a great consumer experience. Take HDFC’s partnership with Senseforth technology, an AI based startup that provides a conversation platform where the special purpose bots answer queries; the banks receive every day from their customers and/or prospects. Beyond direct partnership, banks are also looking at Investments in Innovation initiatives, such as hosting a Hackathon (Axis Bank with NASSCOM) or establishing a multi-crore fund for investment in FinTech companies (SBI).
To quote The Millennial Disruption Index, One in three millennials is open to switching banks in the next 90 days and that’s just going to become more and more competitive and dynamic with the new millennials soon acquiring the market place. Large Indian banks have begun to put in place the technology to offer the millennials seamless experience across multiple digital touch points. But we must remember that this is a continuous journey and we have just taken the first step.
The article is written by Vivek Belgavi, Leader - FinTech, PwC India with inputs from Amit Lundia, Associate Director, PwC India