Blending high-tech and high-touch approaches in financial services

Customer engagement and retention are the core tenets of any successful business, and they’ve been all the rage in 2022. Every company is a software company today, and digital products shape last-mile behavioral changes like instant gratification, shortened attention span, and product experience armed with data. Thus, it’s ever more crucial for BFSI organizations to blend the best of both worlds – the digital-first experiences and the high-touch processes to delight customers.

Post the first lockdown, RBI took a lot of initiatives to ensure that the financial services operations of the country did not come to a standstill. Thanks to the various measures around digital transformation, India was able to clock ~8.32B mobile-based transactions and close to 1B net banking transactions in a single quarter of 2021. These changes prompted the banks to take a lot of new initiatives to navigate this shift.

Impact of the pandemic on accelerating the pace of digital transformation

Actionable insights from the panel discussion

The pandemic has benefited the banking and financial services space in the following three ways →
- It helped in organization-wide alignment on data compliance and security. When digital was the only mode of transaction, many of the challenges that came with it had to be solved in priority.
- Regulators were initially skeptical about it but thought through and helped here. India stack came to the rescue here as it helped with faster customer onboarding with authentication.
- Organizations started reimagining their offerings from a customer-first lens to deliver most of them via a smartphone interface.
Previously, organizations believed that customers wouldn’t want to go through multi-step processes and hence, hadn’t rolled out services, while customers have always been up for consuming digital financial services.
In addition, organizations had digital departments tasked with bringing digital reforms inside an organization. However, the pandemic flipped the narrative, requiring customer-driven digital transformation.

Comments and insights from the experts on the panel:

Raveesh Bhatnagar (SVP, Digital Business of IndusInd Bank)

The pandemic was a boon for digital transformation in the sector.
Customers could be thought of as two segments: digital natives and digital adapters.
The natives used digital-first transactions predominantly for their banking needs, but the pandemic pushed the digital adapters.

Jishnu Chakraborty (VP, Digital Banking Kotak Bank)

The rate of digitization during the pandemic exposed some systemic and behavioral issues in the organization.
Organizations needed to rethink how to deliver digital financial services to the customers and delight them.

NK Purohit (Chief Digital Officer, IIFL)

The entire customer lifecycle and value chain have always been digital, but the pandemic pushed companies to move from high touch to digital.
The demand for digital transformation was anchored around customer needs, which helped the incumbents adopt the best of the breed technologies while also helping the digital natives learn more from the customers.
It’s no longer a push motion.

Anuj Prakash (Head of Growth, Ok Credit)

Digital products, features, and experiences were already designed. The pandemic helped push a few to adopt a better and faster way.
For instance, 80% of their customers are from tier 3 – tier 4 towns, and small retail store owners were using the product to record all of the transactions as a record of receivables from their customers.
The settlement used to be done in cash on the customer’s next visit to the store.
However, the pandemic meant that customers couldn’t visit the stores, leading to an uptick in adopting their payments platform.

Vishal Gupta (Head of Products, PhonePe)

Payments were the first step for the customer to start a digital transaction journey.
Both the fence-sitters and non-digital consumers transformed into digital adopters.
Demonetization was the first event that sensitized consumers to open their minds toward digital payments.
It pushed it to the extreme as customers opened up to transacting online (for yourself, your family, and the staff) and other asynchronous payments.
This has enabled everyone who has done a digital transaction to move up the value chain and think about other offerings on the platform, such as investing digitally or buying insurance products.

How to engage with customers across different channels at that volume?

Actionable insights and key takeaways from the panel

Brands today are interacting with customers across a wide range of channels. And given the sheer number of channels at play, there’s an efficiency element depending upon where the customer is and when the analyze is used.
Omnichannel customer engagement has to be a default way for brands to engage their customers, but this strategy has to be anchored around the product roadmap and product analytics data.
The lines between a product and engagement are also blurring. The end-users are already interacting with unique consumer products like Amazon, Spotify, and Netflix. So their expectations from any other digital product have only gone up.

Comments and insights from the experts on the panel:

Vishal Gupta (Head of Products, PhonePe)

PhonePe has 375M registered customers and 150M MAUs (Monthly Active Users) who do 100M transactions daily.
The newly created digital footprint allows customers to overcome traditional thinking barriers.
Let’s take the example of insurance – traditionally, it’s been an agent-driven, last-mile driven industry that has been high-touch as insurance is a technical product that needs a lot of customer education.
This is the beginning of a new insurance transaction with the vendor. And once this barrier has been crossed, it is a lot easier to move up the value chain and buy other forms of insurance as well.
As the growth and demand come from the consumer side, the industry reaches an inflection point.

Anuj Prakash (Head of Growth, Ok Credit)

Channels that brands use for customer interaction would be different for different use-cases. For example, when the product is trying to make adoption and onboarding instead of more habit-building loops.
There’s also an element of customer persona. For small business owners, WhatsApp and Push Notifications has a solid engagement rate, whereas a prominent manufacturer might have a better engagement on emails.
As channels mature, they are being used for different things. For example, engagement channels like WhatsApp only used to be a medium for brands to send notifications about customer transactions. Today, the same medium is used for customer support and KYC.

Jishnu Chakraborty (VP, Digital Banking Kotak Bank)

In his mental model, BFSI was always about more acquisition and conversion, but engagement has assumed much importance in the last few years.
The core product delivery experience for most players in this region has been commoditized – getting loans, policies, and opening accounts are very similar across banks.
This means that it is very tough for players to stand out. Moreover, consumers are exposed to brilliant products like Amazon, Netflix, Spotify, etc. Omnichannel engagement is to build out a proper customer journey with planned touchpoints and good nudges to provide a seamless experience.
Things like Call To Action (CTA) and Color must be figured out using A/B testing. But technologies like AI/ML can be deployed for personalization and customization at scale.
For this to happen, we’d need to marry the behavioral data across browsers, offline data, and backend data to build a customer profile.
Using this, marketing can be done on the usual offers and schemes they have as a team in the DIY journey.
He also believes in using the product and the customer journey not as a targeted funnel but as a customer experience journey that will allow the customer to explore and come back with greater intent to buy.
There might be some drops, but the conversion will be better. Additionally, he feels this can be an untapped opportunity for established institutions to build deeper relationships with the customers.

Raveesh Bhatnagar (SVP, Digital Business of IndusInd Bank)

The medium where the brand targets the customer is the most important.
On the smartphone’s digital real estate, they’re competing with the Netflixes, Amazons, and Facebooks of the world. Additionally, the rising importance of privacy and security means brands must be careful about not crossing their lines.
This is where the ability to hone streaming data to get the engagement data of the customer on the channel helps brands reach/engage the customers in a better manner.
Put another way, the key is to reach/engage the customer in the medium they are in at that particular time. For instance, if the customer is on the app, the best way to reach/engage them is via notifications. If the same customer is on social media, it’s essential to understand what to communicate and tap into that channel’s nuance.
For this, it’s super critical to have the latest information about the customer in the particular channel.

NK Purohit (Chief Digital Officer, IIFL)

IIFL operates in a very high engagement industry while other companies are consumption-driven.
Consumption here means that the customer does one transaction, and the business is about fulfilling the transaction.
Thus, for IIFL, customer engagement becomes very important as the money grows or reduces every second, and the operations are 8 hours daily from Monday to Friday.
In such a high-involvement industry, there are three essential things, according to NK →
- Product-led engagement is crucial since everything is moving all the time.
- The industry has moved from execution to engagement. Earlier, customers used to do a phone call to initiate a transaction, but today, all of it is digital.
- Personalization in the context of the end-user is essential.
He also believes that the days are gone when customers used microphones to acquire, convert and service customers.
He thinks of sales and marketing as microphones as they’re static and have a broadcast element. He says he needs to create a product that can constantly engage with the end-user — he likes to think of them as magnets.

Blending high-tech and high-touch approaches in financial services

Customer engagement and retention are the core tenets of any successful business and they’ve been all the rage in 2022. Every company is a software company today and digital products shape last-mile behavioral changes like instant gratification, shortened attention span, and product experience armed with data. Thus, it’s ever more crucial for BFSI organizations to blend the best of both worlds – the digital-first experiences and the high-touch processes to delight customers.

A few weeks ago, we sat down with a stellar panel to learn more about how the leaders in the space have gone about their execution around this theme. We focussed on two large themes with the panel →

Impact of the pandemic on accelerating the pace of digital transformation
How to engage with customers across different channels

Post the lockdown in the first wave of the pandemic, RBI took a lot of initiatives to ensure that the financial services operations of the country do not come to a standstill. Thanks to the various measures around digital transformation, India was able to clock ~8.32B mobile-based transactions and close to 1B net banking transactions in a single quarter of 2021. These changes prompted the banks to take a lot of new initiatives to navigate this shift.

Impact of the pandemic on accelerating the pace of digital transformation

Actionable insights from the panel discussion

The pandemic has benefited the banking & financial services space in the following three ways →
1. It helped in organization-wide alignment on data compliance and security. When digital was the only mode of operations, a lot of these challenges had to be solved in priority.
2. Regulators were skeptical about it at first but thought through and helped here. India stack came to the rescue here as it helped with faster user onboarding with authentication.
3. Organizations started reimagining all of their offerings from a customer-first lens with the aim of delivering most of them via a smartphone interface.
Previously, organizations believed that customers wouldn’t want to go through multi-step processes and hence, hadn’t rolled out services while customers and users have always been up for consuming financial services delivered digitally.
In addition to this, the organizations had digital departments that were tasked with bringing digital reforms inside an organization. However, the pandemic flipped the narrative on its head requiring customer-driven digital transformation.

Comments and insights from the experts on the panel →

Raveesh Bhatnagar (SVP, Digital Business of IndusInd Bank)

The pandemic was a boon for digital transformation in the sector.
Customers could be thought of as two segments: digital natives and digital adapters.
The natives were always using digital-first transactions predominantly for their banking needs but the pandemic pushed the digital adapters.

Jishnu Chakraborty (VP, Digital Banking Kotak Bank)

He jokingly credits COVID 19 more than the CEO and CTO for driving digital transformation in the bank.
The rate of digitization in the pandemic exposed some systemic and behavioral organizations in the organization.
Organizations needed to rethink how to deliver the digital financial services to the customers and delight them

NK Purohit (Chief Digital Officer, IIFL)

Entire customer lifecycle and value chain have always been digital but the pandemic pushed the companies to move from high touch to being digital.
The demand for digital transformation was anchored around customer needs and that helped the incumbents adopt the best of the breed technologies while also helping the digital natives to learn more from the customers.
It’s no longer a push motion.

Anuj Prakash (Head of Growth, Ok Credit)

Digital products, features, and experiences were already designed. The pandemic helped in pushing the adoption of a few in a better and faster way.
For instance, 80% of their users are from Tier 3/4 towns and small retail store owners is an important persona who were using the product to record all of the transactions as a record of receivables from their customers.
The settlement used to be done in cash on the next visit of the customer to the store.
However, the pandemic meant that customers weren’t able to visit the stores which meant that there was an uptick in the adoption of their payments platform.

Vishal Gupta (Head of Products, PhonePe)

Payments were the first step for the customer to start a digital transaction journey.
People who were sitting on the fences transformed into digital adopters but also people who were predominantly non-digital also started adopting digital.
Demonetization was the first event that sensitized people to open their minds toward digital payments and made them consider that as an option.
It pushed it to the extreme as customers opened up to the idea of doing other things from the offline world like recharges (be it for yourself, your family, and/or for the staff) and any other asynchronous payments, all had to be digital.
This has now enabled everyone who have done a digital transaction before to move up the value chain and think about other offerings available on the platform like investing digitally or buying insurance products digitally.

How to engage with customers across different channels at that volume?

Actionable insights and key takeaways from the panel

Brands today are interacting with customers across a wide range of channels. And given the sheer number of channels that are at play, there’s an efficiency element depending upon where the user is and when the channel is used.
Omnichannel customer engagement has to be a default way for brands to engage their customers but this strategy has to be anchored around the product roadmap and product analytics data.
The lines between a product and engagement are also blurring. The end-users are already interacting with amazing consumer products like Amazon, Spotify, and Netflix. So their expectations from any other digital product have only gone up.

Comments and insights from the experts on the panel →

Vishal Gupta (Head of Products, PhonePe)

PhonePe has 375M registered users and 150M MAUs (Monthly Active Users) who do 100M transactions daily.
The newly created digital footprint is now allowing customers to overcome traditional thinking barriers.
Let’s take the example of insurance – traditionally, it’s been an agent-driven, last-mile driven industry that has been high-touch as insurance is a technical product that needs a lot of user education.
Now there was a new risk called COVID that got a lot of people to think about ways in which they can protect themselves against the same. And if the same offering was made available on a digital channel, it can be bought in 10 seconds.
This is the beginning of a new, insurance transaction with the vendor. And once this barrier has been crossed, it is a lot easier to move up the value chain and buy other forms of insurance as well.
As the growth and demand come from the consumer side, the industry reaches an inflection point.

Anuj Prakash (Head of Growth, Ok Credit)

Channels brands use to interact with their users would be different for different use-cases. For example, when the product is trying to do adoption and onboarding as opposed to more habit-building loops.
There’s also an element of user persona too. For small business owners, WhatsApp and Push Notifications has a very strong engagement rate whereas a big manufacturer might have a better engagement on emails.
As the maturity of channels is increasing, the channels are being used for different things. For example, engagement channels like WhatsApp, only used to be a medium for brands to send notifications about customer transactions. Today, the same medium is used for customer support as well as user KYC.

Jishnu Chakraborty (VP, Digital Banking Kotak Bank)

In his mental model, BFSI was always about more acquisition and conversion but engagement has assumed a lot of importance in the last few years.
The core product delivery experience for most players in this region has been commoditized – getting loans, policies, and opening accounts are all very similar across banks.
This means that it is very tough for players to stand out. Moreover, consumers are exposed to brilliant products like Amazon, Netflix, Spotify, etc. Omni-channel engagement is to build out a proper user journey with planned touchpoints and proper nudges to provide a seamless experience.
Things like Call To Action (CTA) and Color have to be figured out using A/B testing. But technologies like AI/ML can be deployed for personalization and customization at scale.
For this to happen, we’d need to marry the behavioral data across browsers, offline data, and backend data to build a profile of the customer.
Using this, marketing can be done on the usual offers and schemes that they have as a team in the DIY journey.
He also believes in using the product and the user journey not as a targeted funnel but as a user experience journey that will allow the customer to explore and come back with greater intent to buy.
There might be some drops there but the conversion will be better. Additionally, he feels this can be an untapped opportunity for established institutions to build deeper relationships with the customers. Edelweiss has done a good job giving summaries of popular investment books.

Raveesh Bhatnagar (SVP, Digital Business of IndusInd Bank)

The medium where the brand is targeting the customer is the most important.
On the smartphone’s digital real estate, they’re competing with the Netflixes, Amazons, and Facebooks of the world. Additionally, the rising importance of privacy and security means brands also must be careful about not crossing their lines.
This is where the ability to hone streaming data to get the engagement data of the customer on the channel helps brands target the customers in a better manner.
Put another way, the key is to target the customer at that particular time in the medium they are in. For instance, if the customer is on the app, then the best way to target them is via notifications. If the same customer is on social media, it’s important to understand what to communicate and then tap into the nuance of that particular channel.
For this, it’s super critical for us to have the latest information about the customer in the particular channel.

NK Purohit (Chief Digital Officer, IIFL)

IIFL operates in a very high engagement industry while other companies are consumption-driven.
Consumption here means that the user does one transaction and the business is about the fulfillment of the transaction.
Thus, for IIFL customer engagement becomes very important as the money is either growing or reducing every second and the operations are 8 hours per day from Monday to Friday.
In such a high involvement industry, there are 3 very important things according to NK →
- Product-led engagement is crucial since everything is moving all the time.
- The industry has moved from execution to engagement. Earlier customers used to do a phone call to initiate a transaction but today all of it is digital.
- Personalization in the context of the end-user is very important.
He also believes that the days are gone when customers used microphones to acquire, convert and service customers.
He thinks of sales and marketing as microphones as they’re static in nature and have a broadcast element. He says that the need is to create a product that can constantly engage with the end-user — he likes to think of them as magnets.

Engagement