Rise of ‘Transaction Experience’
Evolution of Banking
When was the last time you visited a bank? I am sure most of you have not visited a bank for a long time now and the current crisis has got nothing to do with it. Just to set some context, if you visit a bank now what you will find is a bunch of people who are sitting at the counters. These are the people whom we used to call ‘Tellers’ and now they wear multiple hats and are more commonly known as ‘Universal Bankers’, ‘Relationship Managers’, depending on your account status. But in essence, the soul of banking is still intact.
The primary role of a bank is to provide access to a deposit account or to provide a line of credit. And, above all ensuring that this is done in a prudent and efficient manner. Over the centuries, banking evolved from focusing on individual transactions to the creation of bank account. That led to the standardisation of services and enabled the evolution of banking as we know it today.
E-wallets and Trust Deficit
In the past few years, with the rise of digital, we are seeing a new set of customers entering the banking ecosystem. They are often called digital natives or digital-first. At the same time, there has been an explosion in the FinTech space. With the rise of challenger brands riding on technology, they are picking on individual products/services and building a superior customer experience as a differentiator.
The rise of digital wallets (e-wallets) way back in 2016 is a case in point. There was an explosion of peer to peer payments (micro-transactions) and an individual’s mobile number became their account number. This was a pivotal moment in Indian banking history and changed the entire landscape.
PayTm became the leader in e-wallets and turned into a serious challenger brand. Then came the UPI (United Payment Interface) revolution which upended the e-wallets. Today, Google Pay & PhonePe (a Flipkart company) together command a huge market share of the overall UPI transactions. UPI enabled them to address a critical problem, which revolved around customer’s trust in the e-wallets platform.
To use an e-wallet, customers had to load the money on the platform and then transact, which can be defined as a critical user journey. This was a huge deterrence for people to execute large transactions as there was a fear of losing money.
UPI solved this critical problem by directly connecting the bank accounts to the mobile number without the need to load the money into the wallet. The platform became the enabler of the transaction. Google Pay & PhonePe having lost the race of e-wallets, were quick to adopt this as a differentiator and the rest as they say is history. This also brought the banks back in the game as the e-wallets had eaten into their retail payment pie, as well.
Google Pay & PhonePe became the front-end, the banks became the back-end (settlement providers), which brought a paradigm shift in the banking services.
‘Transaction Experience’ is the way
So how do banks react to the changing dynamics? From the above case of e-wallets and UPI, it is critical for financial institutions of any kind to realise that the core of their relationship with their customers has to be redesigned. We are entering the age of ‘transaction experience’, which is focused on delivering personalised experience that is optimised in the way the customers want to transact.
I would like to end the article with two scenarios in which the transaction experience approach can be leveraged.
- When a digital-first customer visits the bank branch, it’s a moment of truth for the bank. For this type of customer, the branch visit is a continuation of their digital journey and this will define the overall customer experience for them.
- Another case is of a customer who has not used any of the online channels, but has transacted using UPI. With the access to the transaction data, the bank is now in a position to create a digital profile of this customer, which will be different from a digital-first customer.
The starting point of crafting a transaction experience is by understanding the emerging needs (articulated + unarticulated) of the customer and mapping them alongside their transaction journey. This will help in identifying the key moments of truth, which will in turn improve the efficacy of the desired intervention.
So, what’s your transaction experience story? Would love to hear it.
Until next time!
~ Sajid
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