1.

Kotak’s 811 Banking App – Digital Customer On-boarding for

the first time in India
Venkat Rangan | April 17, 2017 |

Of late, there have been lot of talks on how financial institutions need to take steps to engage
and retain their customers. Once we have engaged them, how do we get them to stay interested?
In other words, how do we make their banking simpler? How do we transform their banking
experience to a whole new level? We, at Market Simplified, faced the same challenge when
our client ‘Kotak Bank’ approached us stating that they wanted to increase their customer base
up to 2 times. This was just about the time demonetization occurred. When the whole nation
was struggling to change their 500s and 1000 rupee notes, we were brainstorming for a solution
that could turn around things for Kotak.

Customer on-boarding is an important part of account set up process for any bank. On the down
side, this was the only area that was not automated since these were important details and
humanization was necessary to check for any discrepancies. But on the up side, automation of
this process also eliminates any man made errors resulting in fool proof on-boarding of new
customers. Customers will find this as a great value addition as they will not have to physically
be present at the bank for opening an account. This is all the more important in case of
millennial customers as they are looking for convenience banking and very little interaction
with brick and mortar bank.
Many banks and financial institutions have come up with various methods to simplify banking
for its customers by making mobile apps, bot based banking and so many others. We are among
the very few to think of a solution to on-board customers by just using the app that needs no
physical presence at the bank and which is also completely paperless. All the customer needs
is, an Aadhar and a Pan card to finish his account set up. This will be a major step forward for
customer service and very few banks have actually done this paperless customer on-boarding.

Uday Kotak, Executive Vice Chairman & Managing Director, Kotak Mahindra Bank
said,“We have always believed in value creation for our stakeholders. In pursuit of this, we
have implemented multiple strategies – both organic and inorganic – thereby establishing our
presence across the entire gamut of financial services. We aim to double our customer base in
18 months. 8/11 changed India. 811 aims to take our Prime Minister’s vision forward. It offers
access to over 100 features on mobile including completing financial transactions, managing
investments, fund transfer, and is an ideal lifestyle app for e-commerce on Flipkart, PVR,
Goibibo, etc. 811 is fully integrated with Bharat QR Code, India’s new digital payment system,
developed by the Government of India. The app is also Unified Payment Interface (UPI)
enabled, for instantly sending and receiving money. Further, 811 customers will enjoy all
digital transactions at zero cost, and get a free virtual debit card.”
2. HSBC to roll out robo-advice for small savers
Emma Dunkley JUNE 1, 2017 | The Financial Times

HSBC is to start offering online investment advice for thousands of UK

customers with small savings pots, as high street banks re-enter the market
following a string of mis-selling scandals and a regulatory clampdown.The
bank is preparing to burst into “robo-advice” with a personalised service in
the coming months, aimed at providing low-cost investment help online for
people with savings of less than £15,000.The move comes as all of the UK’s
high street banks are launching online advice sites — dubbed robo-advisers—
having withdrawn from providing face-to-face investment advice to the
masses a few years ago. The retreat followed a series of large fines on banks
for mis-selling investments and tough regulations from the City watchdog in
2013 designed to clarify the cost of gaining advice.

However, the exodus meant many savers with only small amounts to invest
were left without any guidance. The Treasury last year flagged concerns
over the number of people who do not understand investments and who do
not have access to advice because of the cost.

Taylan Turan, head of HSBC UK’s wealth management business, said

“the online site was aimed at providing fast and low-cost access to
investment advice that would be specifically tailored to individual
requirements.”

Customers must answer questions about their financial circumstances, such as their goals
and whether they have any debts. This will feed into algorithms that will then recommend
an investment from a range of risk-rated funds holding shares, bonds, or exchange traded
funds, for example.HSBC said it would select from a line-up of internal funds as well as
those managed by third parties, and would offer ISAs as a tax-free wrapper.
Mr Turan said: “The entry point is going to be significantly lower than £15,000, so any
customer with any kinds of savings, suitable to consider investments, can gain access to this
advice.
“It’s personalised as two customers with the same amount of potential investments will not
necessarily have the same recommendation, even if they have the same risk profile . . . we are
one of the first to do this.” The charges, which have not yet been disclosed, will be designed to
be transparent and competitive, partly through the use of low-cost passive investments, Mr
Turan said. Other banks are close to launching. NatWest recently said it was aiming to rollout
robo-advice later this year. Santander is among the lenders in the process of developing an
automated advice service and has invested in robo-adviser provider SigFig.

HSBC still has a fleet of 550 advisers for face-to-face sessions aimed at customers with more
than £50,000 and who need wider-ranging advice on issues such as tax and pension planning.
Santander UK re-entered the face-to-face advice market last year, with a force of 225 advisers
across the country.
4.The impact of personalization and compatibility with past
experience on e-banking usage
Emerald Publicaton Ltd.
May Wang, Stella Cho, Trey Denton, (2017)

Purpose
Banks and financial services providers are increasingly delivering their services via
electronic banking, also known as e-banking. Yet even though this type of delivery is now
common, the degree of personalization in the services provided via this channel exhibit
considerable variation. The purpose of this paper is to examine the impact of service
personalization on consumer reaction to the e-banking service. Based on research of
information and communication technology (ICT) service innovation and the Unified
Theory of Acceptance and Use of Technology (UTAUT) model, this study further
examines one contingent factor, compatibility with previous experience with e -banking.
This study focuses on the interactions effect of personalization and technology
compatibility on customer e-banking service usage.

Design/methodology/approach
A survey was conducted to investigate the impacts of personalization on e-banking usage
decision process and the interactions between personalization and compatibility with past
e-banking experience. Quota sampling was applied and different type of customers were
approached in 30 branches of the commercial bank. Data were collected from a sample of
181 banking customers in a metropolitan region in southern China.

Findings
The results indicated that personalization leads to increased performance expectancy and
decreased effort expectancy, which in turn lead to increasing intention to continue to use
e-banking services. In addition, compatibility with previous e-banking experience and
personalization produces an interaction effect on both performance expectancy and effort
expectancy.

Research limitations/implications
The theoretical contribution of this study is to demonstrate how the contingent factor of
compatibility moderates the impact of personalization, thus extending the UTAUT model
in the area of e-banking service adoption. Implications are twofold: personalization
influences evaluations of both utility and ease of use, and the effect is magnified when
compatibility with prior e-banking experience is factored into the model. This is an
important extension and future research should examine whether the same relationship
holds in other industries using new technologies to deliver services. The UTAUT model,
after extension by including the moderating impact of compatibility, works well in
demonstrating the impact of various factors on the adoption of a new technological
delivery system for a service.

Practical implications
This study has two significant implications for managerial practices. First, the study sheds
lights on the segmentation of e-banking customers. Modern marketers know that the best
way to engage with consumers is through personal messaging strategies and should make
great efforts to identify customers before trying to reach them. In the e-banking realm,
consumer banking preferences keep changing. With a clear understanding of the different
consumer banker segments, financial institutions can identify which channels appeal to
them. For example, some users are more likely than average to use e-banking. Second, this
study helps e-banking service provider design different personalized e-banking service for
different customers.

Social implications
This study sheds light on social value of personalization, particularly among those new to
a delivery platform.

Originality/value
This study provides evidence demonstrating that personalization increases customer
perceptions of performance expectancy and decreases effort expectancy, and that the effect
is most profound for customers with limited level of perceived compatibility with past
experience with e-banking. This paper extended the UTAUT model and research on ICT
service innovation by providing more insights on the impacts of e-banking service
personalization and the contingency impact of user’s background in e-banking context.
5. How banks are using customer data for personalized
experiences
Suman Bhattacharyya | JULY 2017

 Banks are increasingly mining data to inform customer outreach.

 The challenge with data mining is ensuring the outcomes offer value to the consumer.

If you’re a Capital One customer, an alert from the bank no longer just means there could be
fraud on your account. It could actually mean the bank is trying to tell you that your cable
company has increased the charges — and your bill has gone up.

It’s all part of a trend towards personalizing the customer experience. Joseph Whitchurch,
Capital One’s head of customer experience and innovation for small business cards, said the
idea to offer customers insights on their money habits grew out of fraud detection capabilities
that the bank used to track transactions.

“We thought ‘what if we took that system and used it to solve problems for customers, like
getting overcharged?’” he said, speaking at an industry conference in Boston on Tuesday.

It’s this thinking that led to the launch of Capital One’s Second Look program, a service the
bank offers to monitor customer spending habits. It can give detailed insights into expense
patterns of customers, beamed through push notifications. Some examples of alerts include
being charged twice for the same expense, if a recurring charge increased, or if the customer
has been extra generous with restaurant tips. The system is dependent on machine-learning
algorithms, but customers have a say on the kinds of alerts they want to receive.

As data analytics technologies advance, banks and personal finance startups are using customer
behavior data to tailor product recommendations or offer insights into
customers’ money habits. Thanks to machine-learning technology, they are able to crawl
through transaction data to detect spending patterns. They’re also looking at how customers
engage with the content that’s presented — for example, how long they spend reading a blog
post — to figure out how to improve the customer experience.
Other banks are trying to do something similar. JPMorgan Chase, Wells Fargo and Citi
are reportedly mining customer insights to compete with startups that use customer data to offer
product recommendations and advice.

Personal finance platform MoneyLion displays electronic “tips and tricks” cards and blog posts
for its customers, but the content that shows up depends on customers’ activities, including
their money habits and how they interact with the app.

“We have bank transaction data, credit behavior and location data; we want to be able to match
that with a set of advice and recommendations,” said Tim Hong, chief marketing officer at
MoneyLion, which connects to customers’ banks accounts through an API. Hong said
algorithms are able to figure out when customers get paid, what they spend their money on,
and recurring expenses like subscriptions. Based on these patterns, it makes product
recommendations.

“It can range from ‘this is your cable bill and it’s 200 dollars, so you can cut the cord, and if
you did, what are some of the options?’” he said. “We try to make these [recommendations] as
actionable as possible basing them on the spending patterns and how you might compare to the
population at large.”

Elevate Credit, an online lender that focuses on non-prime borrowers, also monitors customer
behavior data. If users make payments on time, it offers them lower interest rates or credit limit
increases. Eric Van Dohlen, Elevate’s chief analytics officer, said customer data mining is an
area where startups have gained an early lead.

“[For fin-tech companies,] it may seem easier because a lot of that is how these businesses
were set up; there are a lot of fin-tech companies out there that offer a better value proposition
[relative to banks],” he said. “The banks have always had an interest in it, but their business
models haven’t always supported looking deeply into the data to distinguish one kind of credit
compared to another — they’ve always focused on a minimum credit quality.”

But despite advances in machine learning and data analytics, it’s still possible to give analysis
and recommendations that actually can turn off the customer. As a result, companies have to
be careful to balance positive and negative information about a customer’s spending habits, to
ensure that the customer stays motivated to make better finance decisions.
Colin Kennedy, chief revenue officer at personal finance app Clarity Money, said it’s important
to gradually give a customer recommendations and insights, in order for them to build
confidence in their ability to save.

“Nearly all of us get paralyzed, scared and overwhelmed when we look at anything financial
and it’s important to give the customer a chance to breathe,” he said. “As opposed to throwing
12 or 13 products, over time we give recommendations for products that can save users money.
In this context, we are able to dig into the details more.”