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Aparna Mittal FORE
The document discusses a study conducted on digital banking in India. It analyzes growth drivers and trends, identifies customer segments, and examines the strengths, weaknesses, opportunities and threats associated with digital banking. Based on the findings, the summary recommends that ING Bank target aspiring and affluent customer segments who are more open to digital banking. It also suggests leveraging analytics to improve customer experiences across channels and strengthen the bank's brand image. A cornerstone channel optimization strategy is advised to create seamless customer experiences and an efficient operating model.
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Aparna Mittal FORE
- 1. APARANA MITTAL FORESchool of Management Hunt for the Lions –The ING way
- 2. Digital Banking Outlook Consumer Survey and SWOT Road MapObjectives AnalysisInsights Recommendations To study the digital banking industry, growth drivers, trends and challengesDigital banking is registering a steady growth but the adoption rate is still poor Growth Drivers –Rise in young population, high internet and smart phone penetration. To understand the demographics of digital banking users and non- users and segment them. The average age of digital banking users is fairly young and security tops the concerns of non-usersLarge number of respondents are still not using digital banking channels, it is advisable to target them. Tablets are seen to be emerging. To suggest a suitable roadmap for the enterprise as well as product offerings. Cross-channel collaboration and use of analytics to predict consumer preferences is an area of interest. Bank-end CRM systems have to be in place to integrate data from various channels. Market ING as the safest bank to work with. Advisable to educate the branch visitors and alleviate their security concerns and get them to adopt digital banking channels. Work towards cross channel optimization strategy.
- 3. 353 430 464 458 2001 20112021 2026 Youth Population (in millions) •By 2020, the average age of India will be 29 years . •64% will be in the working age group 68.5 99 130.4 137 141 15856.5 80 108 116120 136 Jun-11 Jun-12 Jun-13 Oct-13 Dec-13 (est) Jun-14 (Est) Overall Internet Users (in millions) Claimed Active What does young India want? Real time online information Convenience Ease of engagement Digital Banking – Growth Drivers Penetration rate = 17% 48 91 110 130 349Jun-12 Jun-13 Oct-13 Dec-13Jul-14 Social Media Apps11% Youtube16% Game Apps11% Location based Apps5% Banking or Finance Apps7% Others50% Smart Phone Usage Mobile Phone Penetration –28% Smart Phone Penetration –13% Mobile Phone Users (in millions)
- 4. Internet Banking -Growing 35 17.5 10 352011 Public Domestic Private Foreign Increase in registered users in % 2012201332 31 90 68 6910Public Domestic Private Foreign Internet Banking -Active v Inactive Users in % Active Inactive But the active users are still very less. 95.2 3.8 0.5 0.582.713.9 0.9 2.5 97.8 1.8 0.4 0.1 Branch Banking Online Banking Mobile Banking Phone Banking Average daily number of requests services in % All banks PrivatePublicAs per industry researches the key reasons cited for low adoption rates are : Deep rooted faith in paper transactions Belief that branch is where all banking happens Fear of transacting online. There exists a significant opportunity to migrate more customers to the digital banking channel.
- 5. Demographic Gender–62% Males,38% Females Average household Income –Rs 6.5 LPA Average Age –22.5 years Employment Status –50% employed, 50% students Education Level–75% Graduate, 25% High School Top 3 uses of digital banking #1 –Account balances tracking (48%) #2 –Transaction history (23%) #3 –Funds transfer (14%) Importance of security feature 71 23 4 2 Highly ImportantImportantSomewhat ImportantNot Important Security of digital transactions is a major concern among banking customers. Deterrents to Digital Banking Usage Lower Transaction Fee for other payment option3% Lack of Knowledge7% Interface not user friendly15% Security of Transaction25% Prefer other options such as debit card/credit card50% Tablet v Smart phones 42% -Tablet32% -Smart phones
- 6. Disinclined Conservatives AspiringBloomersLiberal UsersArdent AffluentsCautious Senior High Low Income-level Relative-usage of digital banking High Low AspiringBloomers:Digitallyinclined,usedigitalbankingatleastamonth,willingtotryandadoptadvancedfeatureslikee-wallet ArdentAffluents:Highlyengagedwithmobiledevices,seekvalue-addedservicessuchasspendingpatternanalysis,rewards/points.Thissegmentwillrespondstronglytotab-banking. LiberalUsers:Theyusedigitalbankingbutnotextensively. CautiousSenior:Valueseekers,interestedinproductsofferingtangiblerewards,highlysensitivetosecurityconcerns DisinclinedConservative:Seriousconcernsaboutsafetyandsecurity.Relymoreonbranchbanking,bankscangainfrominformingthemaboutthebenefitsofmobilebankingandalleviatingtheirsecurityconcerns.Thiscouldencouragethissegmenttotrymobilebanking. Who to target ? (Highlighted in Red) Size of the circle denotes the number of respondents identified to be from that segment
- 7. Strengths Online -Nolimit about time and domain (89% of the respondents prefer 24*7 fulfillment of their banking needs) -Reach Globally -Economies of Scale Branch -Strong Management -Higher sales Weakness Online -Technologically efficient staff shortage. -Lack of Security (64% of those who do not use digital banking cited security as the biggest concern) Branch -Lack of scaleOpportunityDigital-Use of social networking sites (77% of respondents would like to use social networking portal to carry out banking activities) -Tab–banking (64% respondents said they prefer using tabs to mobile) -Increased demand for financial products (72 % Customers use Internet as the source of information about financial products) Branch-Expanding value added servicesThreats Digital-Law is not sufficient-Lack of follow up supervision-Foreign Banks hitBranch-Political RiskOnline v Digital
- 8. Marketing and Sales Customer On boarding and account opening ServicingCross-channel collaboration and sales force enablement Cross-channel customer, 360-degree, lead and insight capture and deliveryCross-channel marketing and sales enablementInsight –driven organization Status-tracking, status- reporting and customer communicationsCross-channel application management Personalization and self service Customer experience management Cross channel service management Cross channel Process, Case and Data ManagementMulti-mode channel listenersAnalytics modeling and insight deliveryReporting and DashboardingA cornerstone channel optimization strategy is critical as it will create : •Seamless, integrated customer experiencesING should leverage analytics for changing customer behavior across all touch points. •Fortify ING brand and reinforce ‘Safest Banker’and ‘Top 5 trusted brand’image
- 9. Key Partners : 1.Digital Partners 2.Merchants 3.Payment Networks 4.Telcos 5.Technology Partners 6.Logistic PartnersKey Activities: 1.Payments 2.Lending 3.DepositsKey Resources : 1.Capital 2.Sales Channel 3.Branches 4.Employees 5.Sales brokers (Lending) Cost Structure 1.Credit pricing/Lower credit volumes 2.Cost of compliance 3.Cost of capital (lower interest rates so lower deposit volumes) 4.Broker FeesValue Proposition: 1.Convenience 2.Self-service 3.Trust 4.LiquidityCustomer Relationship 1.Customer lifetime value 2.Improved customer engagement 3.Loyalty 4.Repeat transactionsChannel Value to BankSales ServiceBranch H LWeb HHMobile HHChatLLSocial H LATM H LCustomer Segment 1.Convenience 2.Self-service 3.Trust 4.Liquidity Revenue Structure 1.Subscription (Annual Fee) 2.Bait and hook (free checking, debit card- based payments, transactions using checks) 3.Free channel services promoting bill pay, etc. 4.Merchant-funded offers. Digital Banking –Multi dimensional Attributes for ING H=High, L=Low
- 10. OnlineMobileSMS Phone SocialMedia Why should ING leverage the digital channels? Digital Banking will offer the best of two worlds Fair price with transparency and comparability Immediate high quality interaction Fast and secure processing Rich Spectrum of Products and ServicesLean channel and organization structureStreamlined Governance and agile cultureIntegrate IT infrastructureEnhanced revenue modelBest of Both WorldsOutside –New Customer ExperienceInside –Efficient and effective operating model 11% of total population is using social media platforms. Facebookis the most frequently used platform. Integrate the data with bank- end CRM systemsTablet
- 11. Product CurrentSituation Proposed Channeltobeleveraged OtherComments PreferredBanking Reliesuponthebranchstaff– RelationshipManagers(RMs) •UseofSkype/FacetimetogetintouchwiththeRM. •ThroughDecisionSupportSystems,INGcanusepurchasedecisionsofpeerstohelpcustomersmakeadecisions,giveautomatedproductrecommendations, etc. •Adddemostohelpineasieraccess. •Internet–bycreatingadedicatedplatform. •Mobile– throughINGMobileApp 78%ofthesurveyedpeoplepreferselfserviceratherthansomebodyattheirdisposalallthetime. ForexSolutions 6currencies– 1card TC–Validitybound Singlemerchantpartner(VISA) •Increasenumberofcurrenciesofthecard(AED, SGD,SEK,CHF) •UnlimitedTCvalidity. •Partnerwithmastercard. •Makethecardvirtual, createaworlde-walletserviceofthe23currencynotestomakepaymentsworldwide. •Mobile–AddForexSolutionstotheINGMobileApp. •Giverewardpointsformakingapurchaseabroadthroughe-wallet. 62%ofthesurveyedpeopleprefertousemobilephonesfornetbankingwhentravellingabroad.
- 12. Product CurrentSituation Proposed Channeltobeleveraged OtherComments FD DigitalizedthroughSMSandphone. •Add“BookFDoption”totheINGmobileApp. •NominationfacilitythroughNetBanking,MobileApp. Bothinternetandmobile -- BillPayment 150+Billers Reminders Canaddregisteredbills •Makeasuiteofbill-managementactivities. •Providecapabilitiestoorganizebillsasadashboard,INGAppwillwarncustomersofunusuallylargebillsorinsufficientfunds. Thesuitetobemadecompatiblewithcomputers, tabletaswellasmobile. 32%oftherespondentsusedigitalbankingtopaytheirbills. Contd.. OtherSuggestions: LinkAccounts:Completecontrolandseamlessaccesstoloan,dematandcreditcardaccountsheldwithINGBankbylinkingthemwiththeoneaccountaccessibleviamobileandinternetplatform. CreateanAppwhichspecificallyusesfacebookcredentialstologinandofferscustomerstheconvenienceofbankingthroughfacebook. Tablet-specificAppsshouldbemade.
- 13. INGVysyaBankservices2millioncustomersonaPANIndiabasis(Source:INGInvestorPresentation) Outofthese7%arealreadyusingnetbanking.(StudybyMcKinsey&Company,http://www.business- standard.com/article/finance/7-account-holders-in-india-use-net-banking-study-111072000193_1.html)Asareferencepointwebeginwith140,000customersalreadyusingdigitalbankingatINGVysyaBankAdoptionrate=Assuming10%ofthenon-onlinecustomersbecomeonlinecustomerseveryyearwegetInIndia,Costofservicingatthebranch=Re.1Costofservicingthroughinternet=10pCostofservicingthroughphone=35pCostofservicingthroughdebitcards=20p(Also,assumingallthechannelsaresimultaneouslyusedtoservicethecustomers)* CostSavingswillbeRs.11,84,541inthenextthreeyears. 2015 2016 2017 186000 167400 150660 ITEM Web Phone DebitCards 2015 167400 120900 148800 2016 150660 108810 133920 2017 135594 97929 120528 *Source : http://www.icmrindia.org/free%20resources/casestudies/banking3.htmThe bottom line:Based on these assumptions, a 10% increase in online banking adoption could reduce support costs by about Rs 1.1 million.
- 14. Digital Banking isto grow at an exponential rate till 2050 Adoption rate is low which is reflected in the survey undertaken also. Hence disinclined conservativesshould be targeted by educating them about digital banking experience to increase the adoption rate as well as retain them. Key is to market ING’s image as “Safest Bank” to work with. Currently, internet is the most commonly used channel for digital banking followed by mobile. But it is seen that customers are very inclined to use tablets for net banking. Hence tab-specific banking applications should be made. An emerging trend of using social media (like Facebook) to use carry out banking transaction is noticed. ING’s roadmap to go digital should provide a seamless experience that lets customers decide how and when they interact with the bank. 360-degree channel strategy should be adopted. •Key attributes to be considered are partner relationship, integrating customer data, creating value proposition and targeting customers based on that proposition
- 15. References : •http://wearesocial.net/tag/india/ •http://ingvysyabank.com/IngBlog/Media/PDF/Investor-Presentation_Q1-FY15.pdf •http://www.ingvysyabank.com/personal-banking/products/home.aspx •http://www.bain.com/publications/articles/digital-challenge-to-retail-banks.aspx •Growth and Development of Retail Banking in India: Drivers of Retail banking, Dr. SamikshaOjhaand VibhuBhandari •Internet Users in India Crosses 200 Million Mark , Internet and Mobile Association of India Report, 2013 •http://www.fmsi.com/-what-will-your-branch-transaction-volume-be-in-2025.xhtmlPRIMARY SOURCES : •Consumer Survey (Structured Information) •Conversation with the respondents (Unstructured Information)