mslgroup india fincomm imperatives 2017

FINCOMM IMPERATIVES 2017



CONTENTS

04FOREWORD

05EXECUTIVE SUMMARY

06ABOUT THE REPORT

07WELCOME TO THE ERA OF DIGITAL DEMOCRATISATION

09DIGITAL DEMOCRATISATION OF FINANCE

15HOW THE NATURE OFCOMMUNICATIONS CHANGES

20POWERING DIGITAL DEMOCRATISATION OFFINANCE THROUGH COMMUNICATION

26WAY FORWARD

4

FOREWORD

If you had to narrate the 21st century story of human progress, you will most likely talk about the progress we have made in making products and services more accessible and affordable. Personal and mobile computing, long-distance communications, energy storage and air travel are just a few of the things that have been democratised in the past decades, creating new possibilities for billions of people.

And today, the financial services sector has primed for the same technological transformation that has revolutionised many other industries to usher in a democratic growth. The digitisation of money, the rapid proliferation of internet access and mobile phones have all created the perfect conditions to make it easier to welcome the wave of digital democracy into financial services.

This new vision for the banking and financial sector is also likely to make way for a succinct understanding of evolving lifestyles by streamlining how people connect to the things they need or want. Democratisation of this sector will therefore have to be powered by insight-driven communications to bring adaptability. This will help organisations to be both - consumer and shareholder-friendly – by re-imagining possibilities and creating opportunities for real social change.

In this report, we take a comprehensive look at various trends, thoughts and ideas that can drive business opportunities for the Banking, Financial services and Insurance (BFSI) industry in an upcoming digitally-democratic economy. This study culminates observations of an informed audience, industry insights and analysis with key communication trends to appraise the future of the Indian BFSI in the face of rapid digital democratisation of services. This paper therefore summarises how India’s BFSI industry is being influenced by digital democratisation: the factors driving the change in business, the evolution in customer expectations, the specific opportunities and the massive role of communication in the realisation of digitalisation’s full potential.

The future of the banking and finance industry is brought to life through forward-looking scenarios to highlight how social consumer attitudes, connectivity and technology are shaping the potential of digital democracy in the sector. Insights learned from a specially commissioned study of a closed group of the country’s top think tanks from BFSI sector and from a range of current research have been compiled to help form roadmaps for the sector to transform their businesses with new levels of services and powerful communications.

Amit Misra CEO, MSLGROUP INDIA


EXECUTIVE SUMMARY

The Fourth Industrial Revolution is taking hold in financial services, characterised by a fusion of technologies that are blurring the lines between the physical and digital. Advent of such technologies and a booming millennial consumer base is characteristically redefining the way consumers interact with BFSI brands. These technologies have not just enabled access of their services to larger groups of people, but made it easier to be used more frequently ushering the era of digital democratisation.

Demonetisation was one of the many exogenous factors that fuelled the ongoing trend – of wider access and frequent usage. Furthermore, it catalysed the upsurge of mobile wallets and awareness of digital banking, which became near necessities overnight. It gave more reasons to BFSI companies to integrate digital ecosystems within their consumer interaction value chain. On one end of this spectrum are the consumers who are rapidly embracing digital platforms for utility – the bottom of the smart pyramid, and on the other - are these companies eager to innovate their digital interaction with them.

The expectations of consumers from financial service providers have also magnified in this regard. Increasingly, it’s not just the quality of service that matters, but whether the service providers are able to pre-empt the requirement and address it quickly over platforms, occasions and manners most favoured by their audiences.

There is also evidently a direct linkage of this proactive thinking of BFSI institutions with the trust they inspire in their customers. As trust is one of the fundamental pillars of reputation of financial institutions, it becomes crucial for them to study their consumers’ preferences, and innovate their engagement with them. And that may require willingness, nimbleness, and consumer intelligence driven approaches to replace traditional practices with disruptive ones. Therein lies a tremendous opportunity for BFSI industry. This report presents strategies and capabilities which will be crucial to harnessing these opportunities.

6

The survey was fielded by an independent research firm and employed

closed-group interactions among 50 CXOs from the Indian BFSI industry as

the study methodology. For the analyses, the report classifies the industry

into 3 key sectors – Banking (retail and corporate), Insurance (and other

investment instruments) and Others (transaction services etc.). This is done

to compartmentalise the communications issues by their causes, moving

parts and the nature of attention that must be given to them. These domains

ABOUT THE REPORT

The Survey Participants:

are clustered by homogeneity of consumers therein. Open and closed ended

questions in the research explore linkages between shifts in industrial and

consumer behaviour – extensively in the context of digital ecosystems.

These relationships are crucial to projecting the communications dynamics

of BFSI in the near future. Subsequently, we chart approaches and

capabilities with which BFSI brands must equip themselves.

20%

CXO level (CEO, COO, CTO, CIO, CMO)10%

Head of technology /

IT

14%

Others

38%

Board level

18%

Head of marketing /

communication

29%Bank (national / private / scheduled / co-operative)

4%

IT / Consulting

4%

Private equity / Investment bank

14%

Payment services - Mobile wallet / Fin tech

company

18%Others

22%

Mutual Fund / Alternate investment funds

18%

Insurance

20%

Public

80%

Private

2/3rd of the respondents

belong to the C-suite or

the board

Designation2/3rd of the respondents are

from the private sectorSector

1/3rd of the respondents are from

banking sector, followed by

insurance and mutual

funds/alternate investment

Industry


WELCOME TO THE ERA OF DIGITAL DEMOCRATISATION

Over the last decade, BFSI has seen a tremendously dynamic period of growth spurts and recessions. Much of this volatility arose from increasing complexity of financial markets and the instruments that float therein. Globally, the biggest goal of product structuring has been to continuously understand and respond to changing needs of financial services consumers. A deeper look into the Indian context would reveal that a majority of this product structuring need delved in providing the most basic banking and investment needs, for the most part of this decade. Lately, servicing the transaction needs appears to be gaining prominence.

In India, though the percentage of internet penetration is far low but, in absolute values the country shows some astounding figures. Coupled with the growth rate that is largely propelled on the back of a booming economy, the outlook is of a boom in internet and technology enabled services.

India has shown a steady increase in the internet users from 2014 to 2017 with 1 billion projected internet users by the end of 20211. Isolating just the internet-enabled smartphone users, a whopping 960 million is projected till 2021 end. The government’s much touted Digital India Initiative is expected to bring broadband connectivity to 2.5 lakh villages and aims to achieve net zero imports by the year 20201. Even tech giants

like Google, Microsoft and Facebook are building chief projects to capitalise on Digital India Initiative. This is happening at the time of increasing disposable incomes across tiers – which grew at a CAGR of 10.3% over the last decade2.


1 The annual FICCI-KPMG Indian Media and Entertainment Industry Report 20162 Trade Economics – Data on Personal Disposable Income 2007-2016

`

8

But the more notable aspect that the demographic and geographic dividend of India reveals is that of the narrowing urban and rural divide – 69% of BFSI companies we spoke to experience narrowing urban-rural divide of customer expectations. Therein lies opportunities for financial sector players to create differentiated strategies. While a chunk of it would have to address the price sensitivity of the Indian marketplace, a set of factors inherent to financial services will play a significant role – reputation and trust.

Digital transformations are not only bringing the financial services within the reach of all tiers, but are also redefining how reputation and trust are built between the service provider and the consumers. These ecosystems have brought the consumers closer to the provider, and now the nature of accountability of the latter has changed. In the subsequent sections, we study the observable trends in the consumer behaviour online, and the interface of the brand and the consumer.

90.5%Developed

49.4%World

40.9%Developing

19.4%Least Developed Country (LCDs)

Mobile Broadband

Subscriptions (%)

Source: ICT Facts and Figures, International Telecommunications Union, May 2016

81%Developed

47%World

40.1%Developing

15.2%Least Developed Country (LCDs)

Individuals Using the Internet (%)

Source: ICT Facts and Figures, International Telecommunications Union, May 2016

Semi urban and rural areas have gained confidence, new

customers are joining digital platforms, which is helping

increasing the business at the low cost

Ashish Nundy, Director,

DAYCO SECURITIES P LTD


DIGITAL DEMOCRATISATION OF FINANCE

With digital democracy, India's relationship with money is changing dramatically. Digital finance offers a transformational solution, and one that could be implemented rapidly and without the need for major investment of costly additional infrastructure. This section highlights the enablers of this transformation.


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A. NEW DEMOGRAPHIC TRANSFORMATIONS

We are witnessing remarkable shifts in consumers’ behaviour towards

financial services that are enabled by digital transformations:

46%of affluent millennials perform their own research

Involvement:Globally about 46% of affluent millennials perform their own research, make decisions, and execute trades. Our studies too indicate rising number of discerning customers of financial services5

of consumersown a mobilephone

160 MNSale of smartphones

90%

Reach: While less than half the population may have a bank account; over 90% of consumers own a mobile phone. Sale of smartphones in the country is likely to touch 160 million units in financial year 2016-173

440 MNMillennials

390 MNGen Z

Drivers: 440 million millennials and 390 millionGen Z individuals constitute an unparalleled demographic dividend, contributed significantly from all tiers4

3 http://timesofindia.indiatimes.com/city/mumbai/Smartphone-sales-likely-to-touch-160-mn-units-in-FY17Assocham/articleshow/51527612.cms4 Analysts Joshu Lu, Anita Yiu and Aditya Soman note in the report titled 'India Consumer Close-Up - http://bsmedia.business-standard.com/_media/bs/data/general-file-

upload/2016-06/060216_01.pdf5 https://hootsuite.com/webinars/enterprise/how-millennials-changing-financial-services


Experimental:Along with a high adoption of about 40%,over 76% of global affluent millennials areopen to trying financial offerings fromnon-financial brands. Indian millennialsdemonstrate this trend in openness toalternate, mobile payment methods6

Across the world, 70% of millennialconsumers prefer to interact with their bankonline. Several brands are already responding to this trait by instating grievance redressal systems through mobile apps & social media7

Affluent millennials are 2x more likely touse social media to inform their financialinvestments and decisions. This could leadto an emergence of influences of peerreviews on decisions made on investmentand financial service providers8

Social:

high adoption40%

76%global affluent

more likelyto use socialmedia

2x

Online:

millennial consumersprefer to interact withtheir bank online

7O%

6 https://www.aciworldwide.com/news-and-events/press-releases/2016/june/nearly-70-percent-of-indian-millennials-in-financial-technology-sector-purchase-goods-on-mobile#sthash.9UC4zeTJ.dpuf7 Banking Customer 2020 - Accenture8 https://hootsuite.com/webinars/enterprise/how-millennials-changing-financial-services

1212

B. SURVIVAL OF THE NIMBLEST

Our study of the banking sector reveals the implications of these

observations – quick acknowledgement of these trends and readjustments

accordingly will be key differentiators. About 38% firmly believe that

there is a growing demand by consumers today for newer services, and

about 28% also stated that customers today demand instant responses.

This further establishes the fact that it is now the time to focus on

what the financial services industry can do best to capitalise on digital

democratisation: stimulate innovation, investment and productivity.

Evidently, better times lie ahead for the more adaptable players, who can

wade through the rising competition from fintech and start-ups and meet

customers where they want to be met: in the new digital environment.

The democratisation of finance and digital banking will force virtually all

players to fundamentally revise their business models or even define new

ones. Successful BFSI players will be characterized by the ones with strong

30%

25%

22%28%

38%

Trust on institutions and

services providers

Demand more

serviceCreate impact Social media presence

Increased technology knowledge and access

Demand for instant

response / time saving

88%

Our customers started to attach high importance to convenience and response time

87%

Our customers' expectations have changed drastically

75%

Our customers have become much more discerning

FINCOMM IMPERATIVES 2017FINCOMM IMPERATIVES 2017

technological awareness, which can utilize the interplay of social media,

mobile IT, analytics and cloud computing intelligently for the creation of

their service offering.

Specifically, this digitally led innovation must manifest to improve services

deliveries. About 88% of the survey respondents say that in the last five

years, BFSI customers have attributed most importance to convenience and

response time. About 87% say their customers’ expectations have changed

drastically and 75% believe customers have become much more discerning.

Furthermore, its biggest driving force is believed to be a strengthening

of the fundamental ecosystem – an increasingly high penetration with

prominence of social platforms, not without significant government

intervention.

Consequently, many banking executives consider it a tactical priority

to devise the perfect customer experience—an experience that takes

advantage of digitisation to provide customers with cross-channel, targeted,

just-in-time product or service information in an effective and seamless way.

Presence on multiple networks Facebook, Twitter 84%

79%

77%

75%

75%

69%

67%

65%

58%

58%

High penetration of mobile internet and smartphones

Ownership of more than single device – smartphone, laptop, tablet etc.

Direct connect with bank and elimination of middlemen

Increased knowledge and quest for information

Participation in sharing economy models like Uber, Oyo

Cost management/ optimisation – digitisation has introduced the concept of e-branches. No need for physical offices

Increase in level of aggregators of services – loans, insurance policies etc.

Reach to rural areas – helps last mile connectivity to cities in which the financial institution has no physical presence

Promotion of digital services from Government

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C. BANKING 3.0

This is paving way for a remarkably newer way of banking in the years to

come. Bank 3.0 is set to bring a pioneering shift from a business-centric

financial model to a consumer-centric one, and in doing so completely

redefining the user experience. With the digital democratisation of finance,

the front office, at the point where customers interact with banks, there will

be a real-time awareness of changing needs and fully-customized services.

In the backend, banks will need to revamp their operational management

flow, and focus on integrating backstage platforms and resource sharing to

provide as powerful support to the critical front office as possible.

For banks to offer a fully customer-centric service, they will need to respond

to their consumers’ needs immediately. The race between challenger start-

ups and traditional banks will present the need to drive innovations in such

endeavours. Established banks with stronger fundamental infrastructures

of banking (security systems, established delivery channels, financial

expertise and experience in navigating the regulatory environment) will

find innovations on Digital Consumerism as the next major frontier. The

pertinent question is how these transformations will be realised.


HOW THE NATURE OF COMMUNICATIONS CHANGES

In the preceding section, we articulated the noteworthy shifts in consumer behaviour with respect to financial services, in the context of digital ecosystems. In this section, we rely on our studies to present how reputation managers in the banking space must adequately respond to these changes. Capabilities must be built which help make sense out of these changes and address them through digital platforms.


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A. CONSUMER INTELLIGENCE: AGGREGATING, ASSIMILATING AND DEPLOYING

About 43% of the survey respondents state that with technological

advancements BFSI could improve their customer relationship services.

Clearly, data driven intelligence is driving improved understanding of

consumer demographics and markets, and more efficient and personalised

customer services. Noticeably, the banking and insurance sector cannot let

the Big Data prize pass them by.

Rapid integration of technology and life has created a proliferation of data,

presenting unprecedented opportunities to use advanced analytics to

leverage new information – about individual consumer preferences, pain

points, opportunities and risks. Moreover, big data analytics can help

integrate omni-channel platforms (in-store, online, mobile) – to ultimately

elevate the overall consumer experience and likelihood of loyalty.

However, about 50%9 of financial services executives cite ineffective

coordination of Big Data and analytics teams as the biggest challenge in

Big Data implementation. This is where a CDO (Chief Data Officer) sets

in. CDOs can help create a compelling vision of the role that Big Data can

play – not just in optimising customer experiences, but also in managing

reputation with customers and other stakeholders in the ecosystem.

In addition, they can be crucial in outlining checks and scope of data

governance.

9 https://www.capgemini-consulting.com/why-financial-services-firms-need-a-cdo


B. DISCOVER, DESIGN AND DELIVERY: OPTIMISING DIGITAL CONSUMERISM

Digitally active consumers have embraced the internet, telecom, media,

and social space; changing the way they communicate, transact and

make purchase decisions, thus leading to the birth of an era of digital

consumerism. But, technology alone is not the point. What matters most

is the supercharged lifestyles of consumers – brands need to meet the

customers where they want to be met: in the new digital environment.

Because in the end, consumerism is still (and always will be) about people

and their fundamental needs and wants.

This is evident in the survey findings, as over 77% of respondents say

that Indian customers today take many of their services for granted, due to

the exposure to alternate service providers. About 88% also said that the

demand for personalised services has increased significantly. Moreover,

about 84% of respondents believe that Indian customers now give

importance to instant gratification when it comes to financial services.

18

This trend hence transcends into transformations such as graduating apps

from simply a banking or insurance service boutique to offering lifestyle

solutions, solve social issues, increase knowhow, and ultimately make

individual and community life better. Digital consumerism can therefore

be leveraged to keep up with rapid technology cycles and improve their

multiplatform marketing efforts. BFSI players need to take a different

approach to managing the consumer decision journey—one that embraces

the speed that digitisation brings and focuses on capabilities in three areas:

• Discovery

apply advanced analytics to gain a 360-degree view of their customers.

• Design

craft a compelling customer experience where all the interactions are

expressly tailored to a customer’s stage in the decision journey.

• Delivery:

“always-on” marketing and communication programs.

While most banks in India offer mobile banking services, it needs to

focus on making applications more agile and accessible for users who do

not have stronger data connectivity

90%

Our customers have started to attach high importance to convenience and response time

84%

Our customers have started to give importance to instant gratification when it comes to financial services

77%

Customers have started to take several services for granted because of their exposure to other service providers

88%

Demand for personalized services has increased significantly


C. INNOVATION

Digital platforms and technologies bring with them overabundance of

avenues to innovate at low investment of resources. Characteristically,

millennials are also relatively open to explore such innovations to see if

they have the capacity to enhance their productivity.

1. Mobile banking:

At the outset, financial institutions globally must be commended

for operationalising mobile provision of banking services as well as

integration of social & 3rd party tools. Kotak Mahindra Bank enabled

banking over Twitter via Hashtag Banking10 and Aditya Birla Finance

created a money management mobile application in India11. DenizBank

effectively launched a ‘Facebook branch’ in Turkey, bringing banking

and social media together through an app12. The Government of India

through their unified payment interface has propagated use of cashless

payments predominantly driven by mobile.

2. Predictive analytics:

With the wealth consumption data available to institutions about their

consumers, it is possible for them to pre-empt the need for certain kinds

of financial services or a change in style of availing an ongoing service.

In certain services industries, models are being tested of analytics

which can predict the onset of a crisis by detecting unusual spikes in

online consumer interactions.

3. Bots:

Application of bots in customer service, grievance redressal is being

extensively deployed, but their role in customer literacy is also being

explored. Content consumption can be optimised using bots, leading

to lower number of people dropping off from a brand’s engagement

activity. Financial institutions sceptical of 100% automation

are attempting a hybrid of human and machine driven redressal

infrastructure, exemplified by KLM Banks who are deploying similar

infrastructures into their customer service13.

4. Wearable tech:

A natural extension of smartphone will be through their display and

interactive periphery. Although interaction is limited, the possibilities

are many. The UK financial institution Nationwide was the first

to offer internet banking access directly from the Android-based

smartwatches14.

5. Security:

Another way of using tech as a competitive advantage for bankers is

improving security. RBS and NatWest have introduced a fingerprint

recognition technology to verify transactions in the UK15. Also in UK,

Halifax bank has gone as far as testing the unique customers’ heartbeat

pattern as a security verification16.

10 http://www.medianama.com/2015/01/223-kotak-bank-debuts-hashtag-banking-with-its-new-social-savings-account/11 http://tech.firstpost.com/news-analysis/myuniverse-must-money-management-app-237464.html12 http://www.denizbank.com/hakkimizda/_pdf/basin-bultenleri/2012/db-basinbulteni-facebook_24012012-en.pdf13 https://www.siliconrepublic.com/machines/klm-machine-learning-digitalgenius14 http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/11210474/Nationwide-offers-Android-Wear-wrist-watch-

for-bank-balance-checks.html15 http://www.thisismoney.co.uk/money/saving/article-2962991/For-concerns-security-fingerprint-technology-not-problem-

finger-pulse-mobile-banking.html16 http://www.wired.co.uk/article/halifax-ecg-logi

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POWERING DIGITAL DEMOCRATISATION OF FINANCE THROUGH COMMUNICATION

Shifting customer expectations are forcing banks to look for new sources of competitive differentiation and efficiency. Along with digital democratisation and disruptive new services, globally brands are now embracing communication and content to connect with their new-age consumers in a new way. The question is how can financial institutions breakthrough all the chaos to connect with these inhabitants of digital democracies?

After analysing data, researching and talking to real people, we have listed five areas of insights for reputation managers of financial institutions


1. Digital-first brand communications:

About 88% of our survey respondents agree that performance on digital

platforms has become an essential element in brand building. So, a

‘digital-only brand’ approach is crucial to engage customers, given

that more digitally savvy millennial customer-base will expect it. In

addition to DenizBank, for instance, AirBank launched itself in the Czech

Republic as the “first bank you will like” and promised that all customer

communications would be jargon-free and all fees clearly outlined in one

simple document. This might require financial institutions to evolve at

a fundamental level; and embrace the need for digitally drive, quick and

simplified communications17.

2. Communicating to capture Micro-moments:

The consumer journey can be mapped into hundreds of real-time, intent-

driven micro-moments - each a critical opportunity to shape their decisions

and preferences. Google Think categorizes these scenarios as “I want”

or "I need" moments such as: I want to buy…, I need to learn…, I want

to know…, I need to go… and so on. In these fleeting moments which

are often on smartphones, customers are trying to circumvent traditional

methods of enquiries (log onto complex websites, talk with service people

or visit a branch office), and want to know something RIGHT NOW. 62% of

smartphone users are likely to act right away toward solving an unexpected

problem through smartphone18. This means that financial institutions can

engage their customers at the moments when they make pivotal financial

decisions by leveraging contextual signals like location, time of day,

keywords etc. Data driven digital approaches are becoming more efficient

as data mining & analyses methods evolve, implicating the need to start

sooner than later.

17 http://www.mckinsey.com/industries/financial-services/our-insights/building-a-digital-banking-business18 https://www.thinkwithgoogle.com/micromoments/intro.html

22

3. C-Suite Conversations:

A whopping 80% of consumers globally say they are more likely to trust

a company with a CEO who is active on social media. About 78% of

employees would rather work for an organization helmed by a CEO who

leverages social media19. In financial institutions where people trust

brands with their money, they expect to have a humanised connect with

the organisation. One CEO from this sector does a particularly good job of

humanising his organization: TD Ameritrade CEO Tim Hockey

(@TimHockey). With an active Twitter account and a LinkedIn presence,

Hockey’s witty humour reveals his personality and makes him relatable and

accessible to employees and investors alike. Essentially, direct and aptly

timed CxO communications can have the reach and impact that structured

social media approach cannot.

4. Thinking through Thought Leadership: Firms across financial services are striving to use thought leadership to

set themselves apart. Few, however, are being targeted enough in their

content strategy, or bold and compelling enough in their point of view, and

leaving room for much of it to be taken online. Delivering forward-looking

perspectives into topics affecting customers’ prosperity can have powerful

results – it can cut through clutter and more effectively take advantage of

digital platforms. It can:

Drive sales (& cross selling) with

compelling ideas

Differentiate their offerings and

value proposition by educating

customers

Demonstrate that they understand

the preferences of their top

customers

Increase ROI by better leveraging

content

Make content consumption easierMinimise cost of servicing by

educating customers

19 TheSocialCEO.org


Three Steps to Executing a Thought Leadership Program

Define a thought leadership

strategy that aligns with your

growth strategy

Strategize Monetize Productize

Publish thought leadership

assets that enable your

go-to-market process

Engage customers using

a mix of marketing, media

and sales channels

Three ways to integrate thought leadership in the financial services industry to boost success:

5. Content Marketing for the Millennials: Credit Suisse has been publishing its own magazine, The Bulletin,

since 1895. While its inherent purpose may be the same - to strengthen

relationships with prospects and customers by building trust, its nature and

delivery is remarkably different to serve the millennial customer. Global top

players embraced digital content marketing, launched robust newsrooms

and filled their webpages with stories. ANZ hired a team of journalists to

publish deep market analysis; and Merrill Lynch built an entire publication

to help financial advisors take their game to the next level. Barclays

announced that its marketing department would function more like a

newsroom, delivering relevant content within 72 hours of conception.

Today, about 78% of global financial marketers use content marketing.

These marketers spend 18% on average of their total marketing budget on

content marketing, and 57% plan to increase their spend. But what remains

the key to a content marketing strategy is simplifying and personalizing

24

Number of Content Pieces Avg Engagement Per Content

Podcast/Audio

73 2964

Infographic

133 271

Video

2533 311

Article

60059 221

Top Content Formats37

Number of Content Pieces Avg Engagement Per Content

Top Content Types38

Instructive

174

Listicle

Interview

109326

Guide

78410

Investigative

2171027

2125

2970 594

the experience for Millennials. This allows advisors to increase the

comfort level of millennial prospects, facilitating the digestion of complex

information20.

It becomes even more crucial given that millennials seek greater

involvement in the financial decision-making process and doing their

own research, engaging with thought leadership and investigating peer

opinions.

20 Fifth annual content marketing survey - http://contentmarketinginstitute.com/2015/08/finance-marketing-evolves-content


6. Tackling Reputation Risks Embracing these approaches can be instrumental in tackling reputational

risks that are inherent to the financial sector

a. Risk with biometrics/unique identity: The juggernaut of the world’s

largest social security enrolment programme (UIDAI) hit a speed-bump

with reports of doubts on data integrity21. At the time of publishing

this report, it was too soon to foresee if enrolments would get impacted

significantly in the long run. However, financial institutions as well as

reputation managers must be wary of the undercurrent of concerns of

identity theft and potential red flags getting raised.

b. Data integrity: Optimisation of user experience should not be seen

to be coming at the cost of integrity of consumer data. Data security

technologies and infrastructures have come a long way but are

debatably not full proof. Several Indian banks in 2016 faced hacking of

nearly 3.2 Million credit and debit cards between them22.

c. Stability of financial markets: In a sector in which trust deficit

between large institutions and their customers is already inherent,

2008 financial crisis put a large dent. Despite recovery of banks and

economies, general sentiment has repaired more gradually. Therefore,

introduction of new financial instruments may face scrutiny.

21 http://www.livemint.com/Industry/IKgrYL5pg3eTgfaP253XKI/Aadhaar-data-breach-triggers-privacy-concerns.html22 http://economictimes.indiatimes.com/industry/banking/finance/banking/3-2-million-debit-cards-compromised-sbi-hdfc-bank-

icici-yes-bank-and-axis-worst-hit/articleshow/54945561.cms

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WAY FORWARD:

The future of India’s BFSI industry in the age of digital democracy is being scripted with big data analysis combined with psychometrics to sharpen artificial intelligence to provide wealth management advice. But what we also see is customised services which still need an offline approach provided by human beings. Robots are not taking away our jobs yet. Yet technological integration will deepen enough to render the term ‘internet finance’ redundant. Ten years from now, it will just be finance.

And, to keep pace with all these, financial service firms can take several different measures to prepare for these transformational changes, such as building innovation labs, funding and collaborating with start-ups, and moving to open finance standards. By thoroughly and proactively studying consumer behaviour, the finance sector can pre-empt and address customer needs through education or innovation. Speed will be one of the biggest factors.


INCLUDE:

Inclusivity is the next growth frontier for banking and

finance in a digitally democratic world. More than

two billion people in the world remain unbanked or

under-banked. This represents a lost opportunity.

Information technology, big data and mobile

penetration have changed everything. Statistically

put, digital finance — financial services delivered

via mobile phones, the internet or cards linked to a

digital payment system —is $700 billion opportunity

for India23. It can bring an 11.8% increase in India’s

GDP by 2025 which could create up to 21 million new

jobs across all sectors in the country24. The reach and

scalability necessary to service those at the bottom

of the pyramid is now not only economically possible

- but profitable. But by ignoring those neglected

by the financial system, banks leave room for tech

companies to make financial inclusion a viable and

sustainable business model. They’ve since innovated

alternative, more efficient systems to provide banking

and financial services at scale to the unbanked. So,

the need of the hour is to support this democratisation

and acquire new customers by enrolling them into the

system.

ENGAGE:

With multiple platforms and increased connectivity,

it is time for BFSI players to grow in their role of

being service providers to being financial partners.

To build trust, you must create conversations that

ensures customers’ belief of your genuine interest in

understanding their preferences, ability to cater to

them and willingness to reward them for their loyalty.

These conversations can serve to educate customers

on the value that different offerings create (and not

just features). And that is what transcends into digital

brand building, social media conversations and

content marketing in a digitally democratic set up.

EMPOWER:

Although mobile devices are now nearly universally

available, we still need to close infrastructure gaps in

remote and underdeveloped regions where people still

lack access to communications networks. They will

also need to support efforts to provide everyone with

a reliable digital ID to use for financial transactions.

Working through all the technical, economic and

regulatory barriers to make this all possible will

require clarity of purpose and an unusual degree of

public and private collaboration across the financial

and business sectors. But it can be done — and the

effort will be worth it.

The roadmap to this future can hence be built on these three principles

23 http://indianexpress.com/article/business/companies/digital-finance-is-700-billion-opportunity-for-india-3048673/24 McKinsey Global Institute (MGI) report ‘Digital finance for all: Powering inclusive growth in emerging economies'

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