Future banks will be digital-first, rapid to innovate, and laser-focused on customer requirements, despite being smaller in physical size but larger in distribution.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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Future banks will be digital-first, rapid to innovate, and laser-focused on customer requirements, despite being smaller in physical size but larger in distribution.

Himanshu Rajpal is the Senior Director of Industry Strategy & Development for Financial Services at Salesforce. In a conversation with ET Insights, he gives insightful analysis of new trends in the financial services industry, digital transactions, customer relationships, and more.

How has the financial services sector evolved throughout the pandemic? What are some of the key emerging trends?

The Financial Services sector globally is in the middle of a defining transformation that is largely being driven by its customers. India’s financial services industry has also experienced huge growth in the past few years fuelled by digital transactions; with the momentum only expected to grow further.

More than half of the world’s population will access banking services digitally in 2026, from 2.5 billion in 2021. In India, 22% of adults (205 million) say they have a digital-only bank account. And 63% of a YouGov survey said they are likely to switch to a digital-only bank in the next few years.

As digital banking becomes mainstream, digital experiences weigh heavily on the customer’s choice of bank. Yet, new-age customers expect harmony between physical and digital touchpoints. This simply means that the traditional brick-and-mortar banking structure must transform into a hybrid, click-and-mortar model.

The bank of the future is likely to look very different than it does today. Smaller in real estate but larger in terms of distribution, future banks will be digital-first, quick to innovate, and laser-focused on customer needs. As they compete with new-age digital disruptors, banks will leverage data and analytics to craft simpler, better, and more hyper-personalized customer journeys. The end goal? To be the bank that customers love.

Can you elaborate on the impact of these emerging trends on the BFSI sector?

The pandemic has also triggered changes in the business models of its customers and this in turn has forced the financial sector to take a hard look at the risks including cyber security and the existing credit evaluation and due diligence mechanisms for businesses. The sector has come to terms with a new paradigm of discovery, selling, and engagement which never existed before or seen slow growth. This in turn also led to a mindset re-calibration of the entire ecosystem -whether it is employees, partners, or vendors with all participants going through an overhaul of how they discharge their roles and the tools they use, and the customers use daily.

Last but not the least, this has been the test of the resilience of these entities – whether it was the ability to cope with this pandemic shock from a balance sheet standpoint or the impact on insurance companies who saw a sudden surge in claims or the increased interest in equities and capital markets for asset management and broking firms, the pandemic has tested the sector financially, operationally and culturally.

How are financial institutions reimagining customer relationships in a digital-first world?

During the pandemic, banks and other financial institutions witnessed the importance of real-time and personalized interactions but with a digital-first approach. Being customer-centric is a critical aspect of organizational success in terms of retaining and growing their customer base; this has never been more important than now. For instance, banks shifted focus from providing transaction-focused services to value-driven advisory services to their customers. The value addition perceived by the customers will further enable them to build long-lasting relationships with their customers.

Salesforce’s Financial Service Cloud helps banks with effortless customer engagement on all channels in real time and across any device. Banks that earn customer trust with stronger relationships can stay ahead of the competition. And the way to do this is by leveraging digital innovations across the industry to become nimble, futuristic banks. Additionally, banks can establish a personalised, needs-based approach to engaging with their customers.

How secure are digital transactions? How can organizations leverage data to minimize any potential threats?

While digital payments created the opportunity for financial services institutions to better understand their customers, the risk of customer data being exploited by fraudsters became a major concern, especially for those coming into the digital channels for the first time and who were used to cash payments, which leave no digital footprint. With the democratisation of data, consumers are much more aware of their digital footprints and are often left wondering: when making a purchase, who is using my data, and what are they using it for? Additionally, choosing the right technology and solutions is critical to collecting such internal data efficiently, while maintaining safety and security.

Banking analytics solutions such as Tableau powered by Einstein AI help organizations unify data to automate tasks and connect channels. It gives banks the power to personalize service through any channel while unifying the entire banking experience across sales, service, and marketing. Data-driven solutions can assist with risk management operations, enabling banks to operate with confidence. By using data analytics in banking, you can monitor trends, predict behaviors, prevent fraud, and better understand your customers. Ultimately, it can help boost your performance and reduce operating costs.

How are traditional banks embracing digital transformation?

There has been a tectonic shift in the Indian financial services sector. Howsoever, traditional banks are in the right position for this transformation because they have what few new age entities have been able to build so far – TRUST: they can build on the established credibility that comes with having a physical presence, vintage, local understanding and provide customer-first digital services to stay relevant. On the other hand, fintech firms are surging into the mainstream, transforming how scores of Indians pay, bank, borrow, invest, and insure themselves. Telecom networks and e-commerce platforms have caused digital disruptions that are accelerating this 360-degree transformation.

 Edited by Tanmoy Mitra

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members