Leveraging analytics to personalise retail banking experience

MUMBAI, INDIA: IBM announced the launch of a banking study conducted by IDC and commissioned by IBM to understand the evolving banking landscape in India. The study helps in analyzing the changes in investment behavior of domestic retail customers.

The study titled ‘Understanding the Indian Retail Banking Customer' is based on findings from over 5000 customers spanning across 10 banks (five public and five private sector banks) which highlights the banking landscape in the country as well as evolving change in customer behavior and preferences. According to the findings, there is great opportunity for the sector to deploy new age technologies which can help innovate, grow, connect and sustain customers.

According to the study, 30 percent of banking customers transact with more than one bank with 2.4 percent of churn expected among primary bank customers within one year. Private sector banks fare slightly better in customer penetration due to a larger portfolio of account offerings and their ability to leverage process capabilities to unlock higher revenue opportunities.

The study shows that 87 percent of customers have only one account with their primary bank and only 58 percent of their investments lie with them. This provides potential business opportunities for other banks to take advantage of the remaining 42 percent of customer investments with the help of analytics backed personalization. This clearly indicates the growing need of banks in understanding the nuances of investment behavior and preferences of their customers.

An interesting finding describes that while multi-banking is picking up - reflecting customers' desire to diversify deposits and associated risks, private sector banks are at a higher risk of losing their customers to others as compared to PSU banks due to non-satisfactory customer services. Ensuring quality experience is critical for customer acquisition and retention.

The findings further reveals that 41 percent of private bank (as primary) customers transact with more than 1 bank, versus 24 percent of PSU Bank customers and 86 percent of the 41 percent customers of private banks possess accounts at PSU banks as well.