FSS (Financial Software and Systems), a global payments technology company, released a report titled – FSS Digital Banking Trends -- 2019, based on a study conducted among 12 banks in India. As part of the study, the company analysed transaction patterns of 4.9M unique customers between January and June 2019 to understand the current landscape for digital banking adoption patterns. The findings of the study would aid banks improve channel performance and identify areas for maximizing return on investment (ROI) and deepening consumer engagement.
Commenting on the study, Suresh Rajagopalan, President - Retail Payments, FSS stated, “As a leading provider of SaaS-based digital banking products, our aim is to equip banks with authentic, data-driven insights into customers’ mobile transactional patterns. With customers increasingly adopting the mobile as a channel for accessing accounts, our study indicates that banks have a significant opportunity to accelerate revenue momentum via tailored, easy-to-use digital offerings.”
Some key insights from the study –
- The impact of the mobile as a channel on banking transactions continues to grow with customers associating mobile with banking and payments. The mobile is now integral to customers’ financial lives with banks meeting most of their basic banking needs via the channel. Within 12 months, the company registered 42% growth in transaction. In the first half of 2019, FSS processed 294M transactions totalling USD 9B in value.
- Features tied to accessing and managing bank accounts are most sought-after by customers as per the study. This includes routine banking transactions such as PIN validation, balance enquiry and mini statement that comprise 75% of the traffic in terms of volume and frequency, reflecting customer comfort with accessing accounts and performing a range of informational tasks using digital banking apps. Whilst this is aiding banks deflect traffic from expensive branch-led and self-serve channels such as IVR and rationalizing the cost to serve, the revenue-generating up-sell and cross-sell capabilities offered by mobile as a tool need to be maximized.
- High transacting frequency does not translate into higher number of financial transactions per customer. The study grouped customers into five transactional segments basis monthly transactional frequency. This includes customers, who perform between 1-3 transactions (64%), customers who perform 3-5 transactions (11.5%), customers who performs 5-7 transactions (6.9%) and customers who perform 7-10 transactions (6.4%) and customers who perform 10 plus transactions (11.04%). An approximate 40% customers in low monthly transacting frequency category (1-5 transactions) enacted a transfer in comparison to 15% customers in the in the high transacting category (7-10 transactions).
- The convergence of digital banking and Faster Payment rails (IMPS) is propelling growth of financial transactions. Instant fund transfers leveraging IMPS rails remain an anchor service and is the most popular transaction set, contributing 97% to total financial transactions, reflecting customer need for speed and interoperability of money transfers. The average size of these transaction is approximate USD 73 compared to an approximate USD 26 over channels such as UPI. Quick transfers that do not require prior beneficiary registration are fast becoming a preferred fund transfer mode.
- Customer appetite for digital interactions varies by product. Banks have introduced a wide array of services, but financial product marketers need to strengthen monetization capabilities by moving away from a utility-driven, one-size fit all approach and introduce segmented tailored offerings. Most banks offer 200+ transaction sets and continue to expand through new use cases, technologies, and transaction types. As more features and functionality are added, currently customers use a mere 50% of available services. To encourage higher transactions and access new revenue streams, banks need to tailor offerings to transactional patterns of specific segments and make investments in customer journey analytics and improved services discovery.
- Data-driven win back campaigns and retention marketing strategies are as critical to digital banking growth as acquisition-driven strategies. An approximate 40% of customers who download the app and register for the service do not perform transactions, indicative that banks should be proactive in marketing the strong value of digital banking and need to channelize marketing dollars towards engagement and retention-driven marketing.
Going forward, digital banking will net a larger ROI for financial institutions that proactively work to build a robust mobile channel. FSS is rolling out new services that will help banks grow the transacting base such as in-apps payments using a digital banking app, open APIS to connect to third-party payment ecosystems such as Payment Gateway, biller networks and account aggregation services that enable users to view accounts across multiple banks using a single app.