India is on the cusp of a digital revolution with rapidly increasing mobile and internet penetration. Internet users are going beyond search and social networking and moving to more mature activities including online financial transactions and mobile payments. Payments represent the lifeblood of the banking system. As per BCG estimates, the global payments market is expected to reach $2.1 trillion by 2026 and will be primarily led by India and China. Numbers aside, payment transactions serve banks with the most valued resource – the transaction data, which can be used to decipher behavioural insights of consumers and help banks cross-sell a variety of products, reduce churn and easily detect fraud.

This important stream of business for banks has seen encroachment by new players in the technology and telecom space. Paytm has acquired millions of merchants and is leading the way in P2P (peer-to-peer) payments. Airtel Payments Bank is fast catching up and has reported more than 2 million consumers for its online prepaid card. Facebook, Amazon, Google and Apple are also eyeing a share of this lucrative market.

With the ongoing digital influx in the Indian financial system, banks need to take a fresh look at their existing consumer journeys and must endeavour to deliver an immersive and seamless customer experience to stay relevant. To make the customer journey smooth, banks can start by implementing innovations across multiple touch points and identify the pain points.

To begin with, onboarding of a new customer should ensure minimum trouble by converting this multi-day, multi-step process into an automated self-service. Banks also need to allow consumers a spending limit across categories such as fuel station, retail, online and travel. Additionally, instant redemption of reward points will prove vital to ensure loyalty.

Digital wallets have made inroads into the payments business by becoming a one-stop shop for a variety of payments to ensure smooth user experience. Especially noteworthy is smooth P2P payments enabled by wallets. Banks should aim at simplifying P2P transfers by enabling them through e-mail or mobile number. Lastly, increasing digital penetration has increased the risk of fraud manifold. A superior analytical model can be developed to interpret data and flag suspicious transactions, to optimize efficiency and gain customer trust.

Developing a responsive consumer journey

Customers today are looking for an on-demand and customised experience from brands across verticals. Financial institutions need to rethink their solutions from customers’ perspective and be a part of the complete customer journey rather than provide conventional offerings through a product-centric view. Any step towards revisiting consumer experience needs to involve multiple stakeholders including user experience designers, product managers, sales people, software professionals, strategic partners and an executive sponsor. Multiple ideation sessions would be required to define the most relevant consumer experience after discussing current pain points.

Here are some key steps which can help banks make the consumer journey a breeze:

Open APIs to third-party developers: Payments are among the fastest growing categories of APIs. Major Indian banks including SBI and ICICI have taken steps to become more open by launching hackathons. However, the best practices from world leaders need to be followed quickly for real impact. For example, Singapore-based DBS Bank launched the world’s largest API developer platform in November 2017. It has introduced 155 APIs across 20 categories including onboarding, fund transfer, rewards, P2P transfer and real time payments. Major brands have started tapping into some of these APIs already to enhance consumer experience – McDonald’s has started using DBS’ payment API to enable cashless and faster payment processing for its consumers. Homage, a social enterprise, tapped into DBS rewards’ API for instant points’ redemption, ensuring painless payment experience for seniors.

Partnerships: Banks need to shorten the innovation curve in payments. The best way to do that is by striking partnerships. Partnership with fintechs is a rapidly growing and mutually beneficial scenario; up and coming digital wallets can also be brought on board. Apart from that, card networks such as Visa and Mastercard could prove willing partners as they are not direct competitors, and being payment-only experts, they can provide superior insights on payments and recommend the most appropriate solutions.

Analytics: Analytics can serve the twin purpose of engagement through personalisation and prevention of fraud. Data across the consumer journey can be analysed to determine better ways of engagement through marketing campaigns. Use cases can be repeat use of card, increase in transaction amount, and alert on accumulated reward points. Increasing incidence of cybercrime brings to focus the urgent need to have a robust fraud prevention system. A real-time analytical model that is able to detect fraud at the time of transaction would be the most desirable to prevent loss of money and face.

In the wake of the current upheaval in the payments world, banks need to pull out all stops to become the chosen consumer interface. A keen focus on the payments business is vital to deepen their relationship with consumers. Banks that still don’t read the signals run the risk of being relegated to the lower end of value chain.

Chitranjan Sood is Senior Manager, SapientRazorfish.

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