Digital banking in India yet to gain popularity, Oracle study reveals

online banking
online banking

Despite the impetus provided by demonetization, digital banking is not yet a pervasive experience in India, according to the 2017 Oracle J.D. Power India Retail Banking Study.

The branch continues to dominate banking channels, with 94 percent of retail banking customers having visited the branch/store at least once in the past 12 months.

“Most banking relationships still begin and continue at the branch,” said Gordon Shields, senior director J.D. Power. “However, there is great potential for banks to move more into the digital space.”

Only 51 percent of retail banking customers have a reliable online banking experience with their main financial institution. If this is the alternative to in-person banking at the branch, a stronger emphasis must be placed on improving overall service.

Overall customer satisfaction with banking in India is lagging significantly behind other key markets at 672 index points, compared to the industry average score reported in other J.D. Power studies in China (806), the USA (793) and Australia (748), thus, underlining the need for banks in India to improve their overall service and offerings to a growing banking populace.

While overall customer satisfaction with mobile banking is markedly higher (693) than with In-Person Branch interaction (676),  only 9 percent of India retail banking customers use mobile banking for everyday transactions. It is vital that retail banks ensure that customers feel at ease with using digital banking channels.

“Amongst the 48 percent of customers who have yet to download a banking app, one-fourth state lack of security is a key reason for non-usage,” said Shields.

“The success of digital banking rests clearly on its ability not only to engage with customers but to do so in a secure and trusted manner. Once such concerns are addressed, there is scope for huge improvement on this front. It is essential that content, user experience and security be revisited holistically as opposed to launching digital assets in a piecemeal manner.”

Kiran Kumar Kesavarapu, APAC Leader, Industry Innovation Advisors – Financial Services Oracle noted that digitisation results on ground exhibit a contrary reality.

“A large majority of India’s urban retail banking consumers still prefer to go to a bank—our study estimates this to be as high as 94 percent.”

Further, the study found that private banks are rated higher in overall satisfaction (680) than public banks (666). Private banking customers are more likely to recommend their bank to friends and relatives (89 percent) than public banks (86 percent).

With regard to the use of  mobile wallet,  the study revealed that 42 out of 78 percent of smartphone users, use at least one mobile wallet. Of the main mobile wallets, the vast majority (59 percent) use PayTM.