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
Aspiring BloomersLiberal 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
-No limit 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
Social Media
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
14. Digital Banking is to 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)
