Indian banks failing to grasp the opportunities from demonetisation

Indian banks failing to grasp the opportunities from demonetisation

Despite the impetus provided by demonetisation, Indian banks remain way behind the curve in tempting customers away from the bank branch to digital channels.

This is the conclusion of a survey of 5000 Indian consumers by JD Power on behalf of Oracle.

It finds that 94% of retail banking customers have visited the branch/store at least once in the past 12 months, reflecting a general dissatisfaction with the online and mobile experiences provided by the country's biggest banks.

“Most banking relationships still begin and continue at the branch,” says Gordon Shields, senior director JD Power. “ Only 51% of retail banking customers have a reliable online banking experience with their main financial institution. If this is the alternative to in-person banking at the branch, a stronger emphasis must be placed on improving overall service.”

While the study found overall customer satisfaction with mobile banking to be markedly higher than with face-to-face branch interaction, only nine percent of India retail banking customers use their mobile for everyday transactions.

“Amongst the 48% of customers who have yet to download a banking app, one-fourth state lack of security is a key reason for non-usage,” says Shields. “The success of digital banking rests clearly on its ability not only to engage with customers but to do so in a secure and trusted manner. Once such concerns are addressed, there is scope for huge improvement on this front.”

While the Indian Government aggressively pushes a digital agenda, and a new generation of tech-led Payments Banks emerge to challenge the incumbents, consumers continue to be turned off by the poor quality of service and communication provided by the nation's leading banks. Nearly three-fourths (73%) of customers believe their financial needs were not fully understood before they were offered new products, with only seven percent having had fees and pricing of products explained.

“As India embarks on its digitisation agenda, results on ground exhibit a contrary reality,” says Kiran Kumar Kesavarapu, Oracle APAC leader. “A large majority of India’s urban retail banking consumers still prefer to go to a bank at a time when digital banking is paving the way for a new economy and one that is going to be a dominant metric of success for the government, banks and citizens alike."

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 July, 2017, 13:01Be the first to give this comment the thumbs up 0 likes

Not sure what impetus was provided by demonetization to shun bank branches. Actually, demonetization perhaps made an entire generation of Indians visit the branch for the first ever time - to withdraw cash from tellers when ATMs went "cashless". Besides, demonetization itself is a bit of misnomer: It took out of circulation two old denomination notes (500, 1000) and replaced them at the time with two new new denomination notes (500, 2000) and last week we heard announcements of the introduction of one more new denomination note (200). With due respect to the sponsor of this survey and my ex-employer - Oracle - this survey has got a few basic premises wrong. Maybe it'll be able to grasp the real reasons for the prevailing channel mix by reading my blog post Why Branch And Digital Channels Will Coexist Forever