Consumers adopting digital rapidly but satisfaction remains low: Mckinsey

By Joel Rebello

Indian consumers have leaped higher than their emerging Asian counterparts in adoption of digital banking services in the last four years, however, customer satisfaction for digital banking still remains lower than brick and mortar services, a quadrennial survey by global management consultancy Mckinsey & Co says.

More and more consumers are using digital mediums for their banking transactions as a result digital banking penetration has doubled since the last survey in 2014 popping up to 56% of customers higher than the emerging Asia average of 52%. The median for developed Asia is around 97%.

McKinsey surveyed 17,000 people across 15 countries in Asia through personal interviews that lasted 90 minutes. In India the firm surveyed 4000 people in December through 70 questions in Tier I to Tier III towns and cities.

“Digital customers are more revenue accretive for banks but it is the branch banking customers which are loyal in India because unlike abroad services in the branches are free, so though digital banking has picked up consumers in India tend to shift between banks very quickly.

Customers tend to compare their banking user experience with e-commerce and other websites which leads to disappointment,” said Renny Thomas, senior partner, financial services at Mckinsey.

The sharp rise in smartphone penetration has also supported the increase in digital transactions and so has the use of e-commerce websites.

“Digitally active consumers bought around 4 times products compared to non-digital consumers in the past 12 months and own around 1.5 times products indicating a strong correlation between digital engagement and value generation.

Thomas said instead of trying to do all things in digital channels, banks should focus on certain key areas to sway customers. “Putting up a nice website with a great interface is great but if banks do not follow it up it is like putting lipstick on a pig.

Attrition is high in digital services and banks have to be careful in investing otherwise it will be a losing proposition,” Thomas said.

 However, there is a significant opportunity for digital banking entities as approximately 70% of customers in India would consider opening an account with a branchless digital-only bank and those willing to bank digitally would be willing to shift around 35% of their total wallets to the digital account.

“Though affluent customers are more digitally savvy, the gap between them and the mass market is shrinking.

Judicious use of customer data to provide a differentiated proposition and embedding banking in customers’ daily lives for seamless transactions is the key,” Thomas said.