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Customer Behaviour Digital Adoption

INTRODUCTION

In today's emerging digital era, banks must be capable enough to come across with consistent andrelevant expertise in furnishing excellence for fulfilment of customer requirements. Many players areinnovating and experimenting with new products, delivery channels and analytics. Digitization hasenabled Banks to remove the limitations of Time and Geography.

With the evolution of new channels, we believe that behavioural analysis toohas a major part inproviding excellent customer experience and developing profitable customer relationships. One of themost effective ways to do this is by identifying, analysing and harnessing the knowledge within theorganization. To achieve this aim, banks can adopt the ABC approach:

  • Analyse the Customer
  • Build new approach
  • Creation of digital strategy

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TODAY'S CHALLENGES IN TRADITIONAL BANKING

Banks are considered richest, not only in terms of money, but also in terms of data. They have hugevolumes of data from various sources, generated at a high pace. The issues that pushed bankingindustry toward digitization are:

  • Highly regulated environment
  • High operating costs
  • Poor visualization
  • Low involvement of customers in operational process
  • Difficulty in upgrading or replacing legacy core banking infrastructure built over long period of time

The most important issue being, the traditional model lacks in addressing the fact that No Customer isalike. Rather than implementing a one-size-fits-all approach, financial institutions can respond to thepreferences of the different consumer groups that comprise their customer base.

For Example, Pentation Analytics segmented the banked consumer population into 7 segments, basedon their card usage.

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DRIVERS FOR ONLINE CHANNEL ADOPTION

Digital channels pave the way to develop new forms of relationships through interactivity, selfservice,direct communication and personalized offers and services.

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Digital transformation in Banking has led many players to adopt technologies like digital and mobilebanking. However, for better decision making and customized offerings, banks need to go further thanthat. This is where analytics steps in.

ANALYTICS REVOLUTIONIZING CONSERVATIVE BANKING

Analytics aren't new to the world of banking; many banks are gearing up for the next big analyticspush, propelled by a load of data and new sophisticated tools and technologies.

Analytics can be primarily used to drill down on existing data to extract valuable insights for enhanceddecision making. For example, in case of Customer Analytics, insights can be derived for:

  • Knowing your customer - understanding consumers and providing offerings and services tailoredto them
  • Identifying suitable channel -focuses on engaging the customer through suitable communicationmedium to predict and provide customers with what they want
  • Enhancing customer relationships - Enables creation of a centralized hub for accessingcustomerscomplete transactionalhistory, manage all of their finances and achieve all of their financial goals

The diagram below shows the various analytics application areas in banking:

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ANALYTICS REVOLUTIONIZING CONSERVATIVE BANKING

PREDICTIVE ANALYTICS

  • Study of present customers; Segmentation of the same
  • Statistical approaches to generate insights:
  • Transactional Behavioural traits and patterns
  • Demographic traits
  • Predictive model development for migration of customers from "Offline to Online" channels

Thus, we can see that customer demand, customer efficiency, and network effects play a significantrole in online banking adoption.Upon adoption of online banking, customers might significantlyincrease their transaction demand and their adoption of banking products by opening more accounts.As a result, they also increase their use of other bank channels, such as ATMs, customer support representatives(CSRs), and branch services. In addition, there is increased customer retention after onlinebanking adoption.

Banks can potentially increase their online banking adoption by working with customers to increasetheir service co-production efficiency.

ABOUT THE AUTHOR

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REFERENCES

1. Project experience & Banking Analytics collaterals at Pentation Analytics

2. Adoption of Internet banking :http://www.iosrjournals.org/iosr-jbm/papers/Vol11-issue2/G01124651.pdf?id=5020

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