Accelerating change in Cooperative Banks: A technology perspective
“The world of payments is changing! Wallets will take over Banks! Transform or be left out!!”
We keep hearing about institutional changes in every forum and every thought leadership sessions where bankers and fintech experts meet. Even before we could spell “Demonetization”, Banking and Financial institutions were being bombarded with a variety of technology options.
But the main question that needs to be asked is- Is big transformation really happening with other banks? If yes, is it benefiting the customers? What is the end consumer really thinking? To seek answers to these questions, FIS did a survey that gathered a keen understanding into people’s expectation from banking and their behaviour towards the same. The Performance Against Customer Expectations (PACE) report provides a snapshot of a unique time when the banking industry was under intense stress. Some of the very interesting insights that came out of the report are as follows: More than 60% of the respondents used
u mobile devices to check their balances, view recent transactions, pay one or more bills, transfer funds between accounts or receive bank notifications. This figure is almost double than the 35% number that was reported on the same parameter a couple of years back. More than 30% of common payments
u are done with mobile apps compared to cash, cheque or credit/debit cards
As we commonly see, the Gen Y (18-36 years) has adopted technology very rapidly and inputs provided by them are remarkable: They want to better connect with their
u banks at their convenience, at any time and from anywhere.
The biggest challenge, according to
u banked Gen Y Consumer, is getting time to physically visit a branch.
Gen Y are far less satisfied with their
u current banking providers and are willing to change their Banking partner.
The writing is on the wall! Customers are not thinking about physical branches anymore! Just like we are entering the age of home delivery for grocery and gadgets, banking needs to be home delivered as well. As more and more people are getting used to mobile apps from the ecommerce sites, same expectation in increasing from banks as well.
We no longer need to queue up to pay utility bills, nor do we visit our dear ones to stay in touch. Thanks to mobile phone penetration strategies of the telecom companies and the government’s push towards Digital India, online mobile access is reaching every corner of India. With every passing year, this connectivity will get better, faster and more stable.
The generation of adults getting categorised next year will all be born in the current millennium. This is a milestone shift over all adults today who are all born in the last millennium. Their behaviour will be significantly different than the older generation. They will be categorised as native Digital Citizens – irrespective of where they are born - in big towns or small villages
How can we prepare Cooperative Banks to cope with this change and that too at a rapid pace? Below are a few recommendations:
1. Get a robust core banking software:
A state of the art CBS is mandatory for accelerating change in the cooperative banks. Core does not change much it needs to be robust enough to add additional channels. Unfortunately, the cores that have evolved in the last few decades have focussed around branch banking rather than online banking. Though online banking has been enabled in these older CBS, its initial architecture was never meant to support online channels. One should always look at a CBS architecture and if it is designed to support the next generation channels and their ability to add them as and when required. 2. Migration from old CBS to new:
For any migration to be successful, it needs to be as pain-less as possible for the endconsumer. “Banking is living”; and life cannot go down for a micro-second. The migration needs to be rapid and it cannot go on forever. Change management needs to really smooth for the consumer as well as the bank staff. 3. Enabling channels on the CBS:
Channels are the home delivery system of Banking. New technologies such as UPI, IMPS and mobile banking need to be enabled and available for people to bank with. A robust EFT Switch is also needed for routing transactions. With current CBS, many smaller banks are finding it difficult to integrate new and evolving technologies.
With boundaries between consumer banking and technology getting dissolved, it is important for Bank to build a strong technology mindset. A strong and stable technology partner will play an important role in every step of the technology journey with the Bank. With local customer understanding from the Bank, combined with deep technical knowledge and skills from a technology partner, even the smallest banks can chart their course steadily through the waves of technology.