India is in the midst of a digital revolution with Internet users going beyond just search and social networking and moving to more mature activities like online shopping and banking. Already 70% urban internet users are digitally influenced during financial product purchase i.e. they use at least one digital channel during the purchase journey of a financial product.
The Boston Consulting Group (BCG) along with Facebook, today released a report titled “ENCASHING ON DIGITAL: Financial Services in 2020”, that focuses on the rising influence of digital in financial services and the transformation required to make the most of this revolution.
Speaking about the key findings of the report, Amit Kumar, Partner & Managing Director, The Boston Consulting Group, India said, “India could not be more ready for a digital revolution in financial services – with government interventions on one hand and growing consumer awareness on the other. Wide scale adoption of digital has the potential of reducing cost of acquisition and cost of servicing to 1/10th. This can substantially improve customer level profitability and can add to retail profit pool by $ 3 – 3.5 B by 2020.”
In terms of Digital adoption, Financial services is already much larger than other categories like consumer electronics or travel. Even more interesting is that the adoption of online banking fuelled by the ongoing digital drive by the Government, is expected to double to reach 150 million people by 2020 from the current 45 million active urban online banking users in India.
“As more and more Indians access the internet on their mobile phones, there is a big opportunity for financial companies to create a powerful digital experience that is intuitive and secure for their customers. The report confirms that consumers are leaning in towards digital adoption of financial services faster than previous estimates, and the time is now for the financial services industry to invest so we can help more people contribute to a digital future.” said Umang Bedi, Managing Director, Facebook India & South Asia.
According to the report, along with the new Indian consumer, the digital ecosystem of India has also evolved rapidly over the last few years. India is set to leapfrog many advanced economies in this space. From creating ‘Digital India’, to setting up open architecture layers such as Aadhar, India Stack, Bharat Bill Payment System and GST, the Indian government is actively developing the entire digital ecosystem.
The report highlights that in spite of a growing digital adoption by the consumer and increased government focus on digital infrastructure, financial institutions are yet to fully harness the opportunity. More than 50% of consumers are dissatisfied with their online banking and mobile app experience largely because of fear of hidden charges, lack of trust, complicated information provided among others. This is also indicated by the very low downloads of mobile apps of financial institutions when compared with e-commerce apps.
The report calls out to financial institutions to transform themselves to increase their appeal to customers in three steps. They are advised to first fix the basics through automation of most of their day to day tasks, next they should transform customer experience by leveraging data and analytics and finally support customers in their entire journey and go above and beyond just traditional products and services.