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Banks are typically seen as resistant to any change - be it technology or otherwise. Part of the reason is Cultural banks are supposed to be risk-averse and conservative. The other is driven by the fact that banks have a strong line of defence from incumbents - they have a strong distribution channel, a large set of captive customers (and their money and a complex regulatory framework among other things.
However, it is also true that the threat of technology disruption today is at its highest since the dotcom era. In the context of banking, the evolution of smartphones, social media, the rising value of customer experience, service expectation and lower switching costs for customers are changing the way banks function.
The disruption comes not just from smartphones (and easier customised access) but also from the accessibility/availability of data that wasn't possible earlier. Moreover, the regulatory moats are getting diluted -- the RBI recently allowed 11 entities to open payment banks in India. Public cloud had also helped banks cut down infrastructure cost substantially.
Banks that embrace this new digital world will have a better chance to survive and emerge stronger and more profitable. Many banks think that incentivising their customers to use internet banking and mobile banking is good enough. For others, being on social media completes their digital journey. The more 'advanced banks' are trying to build their own mobile wallets to supplement their mobile apps. Sadly, all this isn't enough. Banks that go beyond these obvious actions stand better chance to acquire the best (most profitable) customers and retain the lucrative parts of their business.
So what should the banks start doing?
Banks have to redesign their processes keeping the customer at the centre. Incremental improvements are not enough. Digitising an existing process is not enough. How can you reduce a 7-page account opening form into a single mobile scree? How can the customer get approval on a loan within 30 minutes using a smartphone instead of going through a tedious documentation process and waiting period of 7-15 days? These changes will lead to a truly differentiated service offering and an immersive experience. Indian millenials are digital natives growing up with Uber and Amazon as benchmarks. The role of brick-and-mortar bank branches will undergo a drastic transformation to provide new and more relevant experiences. Unlike today, where branches handle a majority of financial transactions, these centres will work like showrooms to display signature products and Services.