Face-to-face with the Future: Retail Banking today

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Much has changed and continues to happen in the banking sector. Fintech and digitization innovations coming into the scene with rapid-fire intensity, retail banking has no choice but to sit up and take notice.

The message is clear : perform or perish.

The focus is now more on improved customer services, product range and major overhaul and overview of performing or non-performing asset groups.

‘Understanding a customer’, what in India has been introduced as a procedure titled, Know Your Customer (KYC) has become the very Aadhaar  (benchmark; foundation) of customer relationship in the industry.

That apart, anticipating customer needs and wants, preferences on the basis of activity history, and accessibility and tech-savvy interactions over multiple channels have all become the order of the day for the average banking professional – whether he sits at a front-office desk or manages the back-room operations.

Deposit margins are under squeeze. Competition is increasing. Fee rates and service charges are under scrutiny be regulators. Bank managers have to maintain a balancing act to creative positive pictures in the balance sheet and yet maintain good CRM values.

Mortgages were once a source of margin characterised by minimal losses as housing prices escalated. Today, mortgages are more a game of micro-segments on the front book, constrained by funding and a desire to manage aggregate risk—with wider margins across the book.

The face-to-face contact with the customer still is the primary channel for acquiring and deepening relationships.

Today more than ever before, retail banks need well-developed and relatively narrow product ranges by category, the details of which are communicated in simple language. The key is to enable both frontline and back-office colleagues to develop deep product knowledge, which helps the bank increase conversion rates.

Some banks believe that customer choice should be maximized; the best balance is to optimize it —with a manageable number of choices that allow customers to make active and informed decisions about the products that best suit their needs.

More relationship managers will work remotely, presenting a management challenge for banks: recruiting and hiring people whose skill set fits the evolving role.

A variety of ‘branch models’ will emerge – transaction-only, advisory, “lite,” full-service, and flagship, to name a few. The objective will be put the right guy at the right place, to address the right type of service offered.

Several options have already reached the customer sitting at home or at the faraway location – balance and statement viewing, inter-account transfers of funds, basic info seeking, mobile-linked apps, and more.) All these and more, are now a reality within the palm of one’s hand, at the click of a few buttons.

Then there are the ATMs and Mobile Banking gateways, consumers are playing around with. To strive and thrive in these digitized marketplaces, institutions will need to take concerted action on numerous fronts.

Banks must align ‘customer data carefully, store the information safely, keep it current, and share it effectively to enable the frontline to meet customer needs proactively, improve the overall customer experience, and deepen relationships.’, says an industry-change observer.

Banking has come a long way. And, it is poised to go much more. Much further.

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