Rajnish Khare

Banking in the digital era: Challenges and opportunities


Banking is considered by most as the business of money. However, talk to a banking veteran and he or she will categorically instruct you that banking is a business of customers. This realisation is what ensured that customer centricity is an important value adopted by banks; and it has stood us in good stead. It then follows, that if we are in the business of customer, then our business is shaped by evolving changes in customer behaviour.

I recently wrote that 2017 was considered by many to be the gloomiest year. However, the year has gone by and the year ahead has been presenting us with both challenges and opportunities.


Sustainable competitive advantage
One of the most important challenges that has been thrown into focus is the amount of digital banking initiatives that have incremental to no impact on business. Don’t get me wrong; I am the fiercest advocate of experimentation; however, I believe that this effort should not be focused solely on cost and features. Cost and product provided competitive advance in the previous era. Our attempts need to be centred on experience. Poor experience leads to poor adoption and eventual failure of digital initiatives.

Convenience and the death of loyalty
My earlier point above is further exemplified by the fact that we have moved into a post-loyalty world. Consumers are not tied down by the traditional bonds with their service providers. The uber-isation of everything is also forcing banks to change the way they engage customers, who are now exposed to superior digital offerings from technology giants like Google, Facebook, and Amazon. We will need to learn from them, match up to them, partner with them, or perish in front of them.

Understanding customer context
The other area where organisations have suffered is trying to superimpose digital solutions on traditional customers. We were fortunate to identify this challenge early and craft a tech centric consumer segmentation approach called DISC (Digital Native, Intelligent, Social, Connected). This allowed us to think of fresh, agile, and relevant solutions that are helping us consolidate our digital leadership.

Automation and the future of work
One of the most important sociological challenges that has been thrown around is the impact of AI and Robotic Process Automation on traditional workforce. India has a proud legacy of a large service sector, with the likes of Indian Railways, India Post, and SBI being some of the largest employers in the world. Therefore, echoing the thoughts of my earlier articles; as technologist, we need to proceed with care when we adopt automation. It is incumbent on us to understand the impact on jobs and help the workforce transition to newer roles. This will not only be responsible growth, but will have an exponential positive impact in the future.


DISC Customers
The benefits of the DISC customers (mentioned above) is that they are ready sponges for digital solutions. We are no longer in an era where we have to explain the basic technologies that drive our digital offerings. The post-loyalty DISC customer is also seeking to reduce human-based help in favour of digital: self-help. This once again opens up the canvas for banks across product design, service delivery, and customer support.

Leveraging the power of Social
When I read that Facebook has 2.2 billion monthly active customers, my jaws dropped. What’s more incredible is that Facebook is only the tip of the iceberg when it comes to social. The gold mine is using social technology for leveraging internal capabilities. Organisations that are able to identify this and organise efforts around this, will see huge dividends.

The right time and the right place
While there is so much more to be said about the challenges and opportunities for banking in the digital era, especially in India, here are some important opportunities that we should seize:

  • We have the largest penetration of mobile infrastructure than ever before.
  • We have a government and regulator that have been promoting the development of a strong digital economy.
  • The start-up machinery of India, especially the FinTech boom, has given a chance to all banks and NBFC to connect with agile and brilliant start-ups and take these solutions to their customers.

Authors of our destiny
I would like to close with saying that there hasn’t been a better time to be in digital banking than now. There will always be challenges, but a tidal wave of opportunities is waiting for those who are willing to head out. Many of today’s digital ideas will power large businesses of tomorrow. I wish you all the very best for your digital sojourn.


The views expressed in this article belong to the author alone. They do not represent the official position of HDFC Bank.

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.

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Rajnish Khare

Rajnish Khare

Rajnish Khare is the head of digital transformation, social business & new media, and mobility banking at HDFC Bank. He specializes in digital, mobile, social strategy formulations and execution and has a versatile domain knowledge in BFSI sector encompassing almost areas except treasury operations.

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