BANKING

Background:

The Banking industry in India entails 20 public sector banks, 22 private sector banks,44 regional
rural and foreign banks respectively, 1,542 urban cooperative banks, and 94,384 rural
cooperative banks in addition to cooperative credit institutions. As of May 31, 2020, the total
number of ATMs in India is 210, 415, and is expected to reach 407,000 by 2021. The digital
payments revolution has triggered massive changes in the way credit is disbursed in India.
Debit cards have drastically replaced credit cards as the preferred payment mode in India after
demonetisation. Payments on Unified Payments Interface (UPI) hit its peak of 1.49 billion in
terms of volume with transactions worth nearly Rs 2.90 lakh crore (US$ 41.22 billion) in July
2020.

Challenges:

COVID-19 has caused significant instability and high volatility in global capital markets. The
financial sector has been one of the most affected, In early March, before the announcement of
lockdown, the pandemic had already started to show its impact on all business establishments,
irrespective of their strength and type of industry. In order to prepare the banks for all kinds of
unforeseen events, RBI on March 16, 2020, came out with a notification called 'Operational and
Business Continuity Measures involving the following steps:

(a) Taking stock of critical processes and revisiting Business Continuity Plan (BCP) in the
emerging situations/scenarios with the aim of continuity in critical interfaces and preventing any
disruption of services, due to absenteeism either driven by the individual cases of
infections or preventive measures;

(b) Taking steps of sharing important instructions/ strategy with the staff members at all levels,
for soliciting better response and participation and sensitizing the staff members about
preventive measures/steps to be taken in suspected cases, based on the instructions received
from health authorities, from time-to-time; and

(c) Devising strategy and monitoring mechanism concerning the spread of the disease within
the organisation, making timely interventions for preventing further spread in case of detection
of infected employees including travel plans and quarantine requirements as well as avoiding
the spread of panic among staff and members of the public

(d) Encourage their customers to use digital banking facilities as far as possible.

Perhaps, the government had an intuition that the most devastating challenge was on its way.
Hence, these steps were presented by the central bank before the nationwide lockdown which
provided time to the banking sector to be prepared with the BCP and other measures in order to
help them face any kind of obstacles that they may face in the future.
COIVD-19 has caused the banking sector to face various challenges, it impacted the banking
stocks from 01 December 2019 to 30 April 2020. However, most banks saw a price fall in mid-
March. European banks were severely impacted as the Euro banks index saw a massive
decline of 40.18 % followed by North American banks index (31.23%) and Asia/Pacific Banks
Index (26.09%) for the given period.
Digital innovation in the banking industry and a change to a less-cash economy, has changed
the customer outlooks for banking services as well. These evolving expectations have not only
permitted FinTech start-ups to test the banks but also made well-known players familiar with
customer behaviour to enter the market.
It has caused a crisis in the real economy as well, the impact on the banking system and the
bank-customer relationship can also be defined as a 'positive discontinuity' for the digitization of
the sector and the ability to offer an excellent customer experience.

However, the pandemic has given the banking sector an opportunity to improve on their
operations and also modernize their solutions by going digital.

Opportunities:

Digitalization at Banks will further help build the bank- consumer relationship during and after
the pandemic as -

● Increase in the registration of banking accounts during the enforcement of their

respective movement control measures, there can be an increase in traditional small and
medium-sized enterprises (SMEs) opening online banking accounts to facilitate easy
transfer of funds rather than the hassle of depositing traditional cheques at their local
bank branches.
● Digital bank license applications can help provide better credit assessment as well as
lower servicing costs to micro-SMEs as they contribute up to 38.8% of the country’s
GDP and employs about 10 Mn workers who are negatively affected by the ongoing
pandemic and digital banking can help them
● Digitalization can also help in boosting financial literacy among people.

About the company:

The XYZ limited manages banks all over India. They were a pioneer in delivering top-notch
customer service when they visited the bank premises. The internal strategy teams have
ensured that the first three steps are taken care of, but their excellent in-bank experience never
made them advertise their digital banking solutions. However, during the pandemic, unlike most
businesses, banks were unable to give their employees the safety net of working from home,
and while they did try and encourage their customers to avail of their telebanking or net-banking
services, they still had to put on their masks, adhere to the required safety protocols and service
their invaluable customers. While everyone applauded healthcare workers and empathized with
the plight of lakhs of migrant workers, the banking sector went seemingly unnoticed.
XYZ although has a respectable digital banking structure but none of the people associated with
the bank are aware of these services. A survey conducted by the bank in Jan-March revealed
that 84% of its clients were unaware that XYZ has digital banking facilities. Out of the 16% that
knew, 94% still preferred the in-bank services because of the outstanding experience and hence
never tried digital solutions.

You are the General Manager of the bank and are responsible for the promotions of the digital
banking platform and the safety of your employees and customers. What can you do to help,
both your customers and clients to have safe and comfortable communication during the
pandemic?

Answer the questions below to help the bank pave its path ahead:

1. What are the key areas where the company should start building its capabilities in the coming
2 years?
● Should XYZ move forward in the direction of developing an Omni-Channel touchpoint
strategy? If yes then how? If no, then why?
● What strategic tools can be utilised to figure out the best future course of action?

2. Key steps to ensure a better footprint on their digital services.

● What should be the customer’s digital journey? Create a roadmap for the implementation
of the suggested plan.
● Outlining different customer personas, explain the customer journey and how can they
elevate the experience

3. Once XYZ is successful in bringing the majority of its customers to use their digital banking
services, what strategy should they follow to retain customers post Covid/Lockdown?
● Should they continue to promote the use of digital or encourage the customers to return
to the brick and mortar experience of the bank?
● What factors will lead to making this decision?
● Chalk down the roadmap of activities to be followed post-COVID/Lockdown.

4. Determine what would be the added expenditure in building digital capabilities and the entire
communication plan, what is the ROI of the proposed solution?

5. How can the company be positioned as a socially aware firm that looks at the society /
community as an important stakeholder?