Backbase, the global pioneer of Engagement Banking, today announced the release of the APAC-focused IDC Infobrief, “Accelerating Customer-Centric Transformation by Balancing Build and Buy – A Collaborative Approach Towards Sustainable Digital Banking Architecture.” This in-depth report draws insights from 125 banks and 316 CIOs in APAC, including the Indian market, and offers a regional perspective on digital transformation.
From the Infobrief, a staggering 80% of digital engagement platforms built in-house with budgets over USD10M face underperformance and have not yielded the desired ROE in their digital initiatives. Online banking and the shift to a cashless society started approximately three decades ago in India and this year, 91 billion digital payment transactions have been recorded; today India ranks first in the number of digital payments made globally. This transition showcases the country’s rapid embrace of digital financial services and underscores the importance of a customer-centric digital banking ecosystem.
“In India, we have been working with established and modern banks like HDFC as early as 2016. Our Engagement Banking Platform equips them with the agility to address swiftly evolving retail banking needs, a challenge compounded by the extensive customer base they serve. Today banking in India goes beyond delivering a comprehensive portfolio of banking services; consumers expect banking experiences to be on par with familiar lifestyle e-commerce and social media platforms. This is in the wheelhouse of our platform – to empower banks to continuously calibrate new journeys and experiences around their customers,” said Riddhi Dutta, Regional Vice President, Asia of Backbase.
The Shortfalls in Digital Experiences
Despite having embarked on digital transformation since the 2000s, many banks in APAC remain at an early stage, failing to fully capitalise on its benefits and deliver compelling digital customer engagements.
“Building in-house has been a de-facto strategy by banks, but it’s no longer feasible to deliver to the pace and scale that is required to be competitive. The complexities that come with the extensive amount of data layers, channels, features, upstream and downstream integration that needs to support legacy and modern systems to manage and orchestrate sophisticatedly is where in-house implementation breaks apart,” said Ashish Kakar, Senior Director of Research, APAC of IDC.
The IDC Infobrief highlights a crucial disconnect between banks and their customers, where most banking products and offerings are deemed “me-too” and limited. Within the matrix extracted from the Infobrief, medium to large-sized banks in India are categorized under the ‘Legacy’ quadrant, together with Philippines and Malaysia. India is quickly moving towards the Champion quadrant, however, there is still a significant number of banks in the country that adheres to the traditional approach with IT, positioning IT as a cost center instead of a transformation differentiator.
Customers face challenges accessing multiple services through disparate interfaces, lack a unified view of their portfolios, and endure lengthy onboarding processes. The demand for instantaneous approvals and streamlined digital processes remains unmet, while personalized experiences, segmentation, and relevant promotions based on customers’ lifestyles, life moments, and goals continue to elude them. Additionally, backend operations suffer due to the lack of intelligent assistance in contact centers, leaving customers repeating information to different service officers due to the absence of a 360-degree unified customer view. This is a result of banks focusing on locking in a high amount of resources getting banking platforms into shape instead of prioritizing the creation of differentiated upstream customer journeys and experiences.
“Over 150 modern and forward-looking banks have adopted and built on top of Backbase’s Engagement Banking Platform to accelerate their go-to-market visions and prioritize innovating differentiated digital customer engagement and experiences. A true platform comes with all the hygiene requirements from market fit, to security and regulatory compliance, to being versatile and customizable to support each bank’s unique customer needs. The platform is a compassable fabric providing modularity and reusable data and journeys for banks to help banks future-proof at scale, said Riddhi Dutta, Regional Vice President, Asia of Backbase.
Trends in banking platform technology investments in India:
Multiple examples of in-house build failures have been observed, including cases where top consultants were engaged. For example, a leading bank enlisted a top consultant to build a digital corporate bank, but the project has been ongoing for the last three years.
Digital transformation and CX are important, and India’s central bank (RBI) is actively supporting these initiatives. RBI allows registered banks to open new digital centers without explicit approval from RBI. Additionally, RBI is facilitating digital lending by providing a Default Loss Guarantee