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REPORT

Communication Challenges in BFSI & NBFC Sectors

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Exotel Industry Report - 2019Communication challenges in BFSI and NBFC sectors

Table of Contents

Summary

Market overview

Bottlenecks in the industry

Challenges & areas of growth

a) Financial Literacyb) Poor response timesc) Timely due repaymentsd) Customer communicatione) Visibility into agent conversations

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Executive SummaryThe finance industry in India has a remarkable history- from traditional banking practices to nationalization of banks to privatization and now an increasing presence of foreign banks in India. Financial institutions are undergoing a radical shift while still working under a lot of constraints such as government regulations, wavering customer loyalties and competition from changing business models.The use of technology has brought about a great change in the working style of banks. Nevertheless, fundamental aspects such as customer experience and trust of the customers on the institution remain instrumental for this vertical.

This report is an overview on the existing market structure, identifying opportunities for growth, challenges that are limiting these growth opportunities and how BFSI and NBFCs can tackle these challenges while customer experience still taking the prime focus.

1Communication challenges in BFSI and NBFC sectors

Unfolding of the developmentof BFSI and NBFCs

2000-2009Bank BranchCustomer walks in to the bank branchfor any account dealings

2010-2019Digitized Bank BranchFace-to-face interactions slowly moves towards digital and multiple touchpoints

2020-2025Low Rental ProcessingCentre BranchesVideo call RM, Digital debit card, biometric verification, Robotics-enabled transactions

BANK

2Communication challenges in BFSI and NBFC sectors

Market overview: Why the timeis right for NBFC and BFSIs

3Communication challenges in BFSI and NBFC sectors

BSFI & NBFCADVANTAGE

D I

PP

DEMAND

PENETRATION: POLICIES:

INNOVATIONGrowing incomes are pushing the demand for financial services across all income brackets.

Financial inclusion drive from the RBI has expanded the target market from urban cities to semi-urban and rural areas.

Investment corpus in Indian insurance sector is estimated to rise to 1 trillion USD by 2025.

India has a large cross-utilisa-tion of channels to expand the reach of finance services. For instance, many states are launching their own mobile wallets and allowing the transfer of funds from other wallets.

Many technologies such as cloud telephony, blockchain

etc. are adding efficiency to the BFSI and NBFC

operations.

Credit, insurance and investment penetration is rising in rural areas.

Mutual fund penetration of a meagre 5–6% in the country reflects latent growth oppor-tunities.

Government has approved new banking

licenses and increased the FDI limit in the insurance sector.

Insurance and NBFCs have grownsignificantly over the years.

Non-Life Insurance Premium (US$ billion)Life Insurance Premium (US$ billion)

FY13FY12FY11FY10FY09

0.29 0.42 0.61 0.82 1.061.61

4.31

5.656.10

4.95

FY14 FY15 FY16 FY17 FY18

Number of NBFCs in India

NBFCs are rapidly gaining prominence as intermediaries in the retail finance space. They finance more than 80% of equipment leasing and purchase activities in the country.

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0

1

2

3

4

5

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7

FY13 FY14 FY15 FY16 FY17 FY18

10

20

30

40

50

60

70

11.05 12.03 13.14 14.9519.89

23.38

53.6456.06

62.4567.12

52.71 51.9

4Communication challenges in BFSI and NBFC sectors

Source

Bottlenecks challenging the growthof the Indian Finance Industry

Significant complexity of products, associated processes and legacy infrastructure

Hidden expenses creeping from the non-automation of organisation functions

Consumer fears about data security and privacy

Late and non-payment of dues and insurance premiums from customersRegulatory requirements need organizations to spend a large part of their budget on compliance and building systems to keep up with the requirements

Acquisition, on-boarding, engagement and retention involves a great deal of resources in terms of manpower, time and money

...and ensuring that the customer experience is not compromised while looking out for solutions for all these challenges.

5Communication challenges in BFSI and NBFC sectors

BFSI and NBFCs can focus on the followingareas of growth to address

the challenges

Financial literacy Poor response times

Timely due repayments Customer communication

Visibility into agent (RM) conversations

6Communication challenges in BFSI and NBFC sectors

Challenges

Financial literacyIn simple terms, financial literacy refers to a set of skills that allow people to manage their money wisely along with some understanding of essential financial concepts. Financial literacy is essential for enabling people to make the right financial choices and India has a huge problem to solve.

SOLUTIONS

The Standard & Poor survey from 2014 found that over76% of adults in India lack basic financial literacy.- Source

According to the World Bank’s Global Findex database, 48% of the 180 billion bank accounts in India have seen no transactions in the last one year. - Source

It is impossible for banks to distribute physical material to improve financial literacy. Instead, introducing a toll-free number where customers can call to get basic FAQs answered will be a first step to seeing a marked improvement in financial literacy rates. New product or policy launch can be communicated with customers via automated calls or SMS for a better response.

Toll free numbers Automated Calls

Automated SMS Website Chatbots

Smart IVRKnow More Learn More Know More

CHALLENGE-1

7Communication challenges in BFSI and NBFC sectors

Poor response timesWith the growing digital and fast paced banking, engagement becomes even more important. Today digital consumers demand more than just a response for their problems, they demand speed and simplicity.

SOLUTIONS

Reports suggest that 85% of all customer interactions are going to be handled without the need of a human agent.

59% of customers say tailored engagement based on past interactions is very important to winning their business.

With a boost in the financial literacy, banks are going to receive more queries that can be handled by agents. Call center automation is the only way forward to manage a large number of calls with minimum workforce. In addition, banks can undertake an omnichannel approach and introduce chatbot and Click on Call on their website to improve response times.

Customer experience represents a recognized priority for financial organizations, and 65% of those surveyed for our research indicates that CX is at least a top 3 priority.

Genesys found that after a poor experience, 71% of customers will end their relationship with you. Worse, 61% will go to a competitor after you mess up.

Call CentreAutomation Click to Call AI Chatbots Learn More Know More

CHALLENGE-2

8Communication challenges in BFSI and NBFC sectors

- Source

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Timely due repaymentsDelayed loan repayments increase the cost of lending for financial institutions.

SOLUTIONSWith a boost in the financial literacy, banks are going to receive more queries that can be handled by agents. Call center automation is the only way forward to manage a large number of calls with minimum workforce. In addition, banks can undertake an omnichannel approach and introduce chatbot and Click on Call on their website to improve response times.

CHALLENGE-3

The results of a study suggest that SMS reminders led to 7-9% increase in the probability of borrowers paying their dues on time.

This was comparable to giving borrowers a 25% reduction in the interest rate on a future loan, or giving a lump sum rebate equivalent to a 25% interest rate reduction on the current loan.

AutomatedVoice Calls

In AppReminders

Know More

SMSReminders

EmailReminders

9Communication challenges in BFSI and NBFC sectors

- Source

Customer communicationThe simplest way to ensure great customer experience every single time is to keep the customer apprised of the developments of their transaction/interaction with your financial organization.

SOLUTIONSCustomers often complain that insurance companies are not proactive when it comes to communications, especially regarding claims. With increasing competition and customer experience being the only differentiator, it is imperative for financial institutions to keep customers informed about the status of claims, application status, credit card status via SMS or IVR.

VoiceKnow More

CHALLENGE-4

An insurance survey conducted by Ernst & Young of Indian life insurance study shows that company trustworthiness (69%), customer service (43%) and convenience (38%) overtook price as an important factor (33%) in provider selection.

According to a report by Microsoft, over 95% of the customers surveyed, mentioned customer service significantly affects their purchase decisions & brand loyalty.

SMSLearn More

Email

In-AppCommunication

10Communication challenges in BFSI and NBFC sectors

Call Recordings Automated Feedback Calls

Know More

11Communication challenges in BFSI and NBFC sectors

CHALLENGE-5Visibility into agent (RM)conversations The simplest way to ensure great customer experience every single time is to keep the customer apprised of the developments of their transaction/interaction with your financial organization.

SOLUTIONSRM has the crucial job of upselling and cross-selling, but since the bank doesn’t have insights into RM conversations with the customers, their performance is not being monitored. All the calls made from a cloud communications provider like Exotel are recorded, thereby making it easy for the bank to gauge and monitor RM’s activities.

Technology adoption

At the end of the day, moving to the cloud isn’t a risk, but a necessity.The sooner financial organizations understand this, the better it will be for them and the customers.

Conclusion

A research by IDC Financial Insights for Reuters shows that the biggest global banks can save upto $15 billion from cloud adoption, cutting down technology infrastructure costs by 25%.

According to a report, 73% people agree that banks should deliver the latest technologies to their customers.

12Communication challenges in BFSI and NBFC sectors

Most of the finance operations have moved to the cloud. Some companies are reluctant because of the misinformed notions about security and regulatory compliance. It is also because of the existing infrastructure and the associated large capital expenditure.

Exotel is Asia's leading cloud telephony platform. We empower over 2500 businesses including Ola, Uber, Ekart, Tokopedia, Lazada, Redbus, Redmart, etc. to efficiently handle their customer conversations over calls and SMS. In the 7+ years we've been around, we have grown from handling 1000 customer conversations a day to nearly 5 million conversations every single day.

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Communication challenges in BFSI and NBFC sectors