Payments are a critical piece – Digital Banking ToolKit

In India, digital and mobile Payments is a really HOT space right now.

  • HDFC Bank introduced PayZapp which intends to be the gateway for all m-commerce transactions, with incremental offers as the initial incentive
  • ICICI bank introduced “Pockets” – a way for even non-ICICI Bank customers to have access to mobile payments
  • Axis bank launched Ping Pay and Lime
  • 11 new Payment Bank Licences have been issued. This not only includes some of the bigger telecom players but also the likes of PayTm.

All this action is triggered by multiple factors including a huge opportunity to move transactions away from cash. In the fact that ecommerce is booming and so is the comfort that consumers have in paying online or through mobile. Mobile, smartphone and 3G penetration is booming etc etc.

But from a bank’s perspective, payments are critical.

Why?

Payments are high-frequency use case

You would probably take 3.5 loans in your life.

Your salary gets credited into the account once a month. If you have a SIP instruction, the investments may also happen once a month.

You withdraw cash probably once a week.

But you make maybe multiple payment transactions everyday. And in most cases, banks do not have an idea of the payments we make.

More transactions allow banks to have more interactions with their consumers and hence move a step closer to being an Everyday Bank (Accenture coined this interesting term to bring banking into consumer’s day-to-day activities).

Payments provide rich-context

During my brief stint in the Life Insurance industry, the key challenge was that post acquisition, there is not much context to go back and start a dialogue with the customer.

The same is true (or will soon be true) for banks that miss out on the payments. Access to payment level data gives so much deeper insights into the consumer.

The bank understands where do you spend (which markets, which segments), when do you spend, your typical ticket size etc. This is really powerful data, which can help generate insights into customer segments and their needs. E.g. a banking customer who pays school fees (for her kids) online has told the bank that she might be a good target to be pitched Children Plans (life insurance).

It can also help the bank design better products that resonate more with the consumers.

Payments will see sticky behavior

In the early days of Digital Banking, it was said that the bank which manages to get Bill Payments on to its account will be a sticky account. If you can get the customer to map his utility payments etc, you were on a path to be the preferred banking account.

Why ?

Because these are important transactions yet not something customer wants to spend a lot of time on. Hence if he gets used to a specific platform/UI – until and unless something changes drastically, the customer would not move. Same reason why I am so loyal to PayTm ever since they made it so easy to pay bills and do set-top box recharges.

The bank or service provider, which onboards customers to a frictionless platform will be tough to unseat.

Marshmallow Test and Insurance Marketing

I spent the last week reading up “The Marshmallow Test by Walter Mischel”. And while the book is a fascinating summary of key findings (and some of its applications) from Walters more than three decades of research, I found some of it is relevant for how we look at Insurance Marketing and Sales.

What is the Marshmallow Test

Walter’s team designed a test for pre-schoolers where the kids were asked to pick their favourite treats from Oreos, marshmallows etc. One of the treats was placed in a tray in front of the kid on a table. The table had a bell, which the kid could ring to bring back the researcher. There was another tray which had two of the same treats, on the same table. The kid was told, that the researcher needs to step out. If the kid wants to bring back the researcher she can just ring the bell, but then he/she gets just one treat. On the other hand, if the kid waits for the researcher to return on her own, she could have two treats.

As one would expect, there were all sorts of experiences that were witnessed in this experiment – from kids who waited easily, to those who found it very painful, to even those who ate the cream from all three Oreos and kept it back as if they had not been touched at all :-).

Walters team ran these tests and tried to understand how the human mind manages self-control, Takes decisions which can postpone instant gratification. What techniques work and which ones fail, consistently. And in all of these interesting findings, I found these as most relevant for Insurance Marketing.

Me Vs Them, Now Vs Future – HOT & COOL Minds

In multiple versions of the tests it was discovered that when asked, whats the logical thing to do for someone who is given the option of 1 treat now vs 2 in the near future. Every kid said that any smart one would wait. And interestingly when the same kids were asked, what would you do – most of them responded by saying “I would take the one treat”. Walter believes that this is due to what he calls the HOT and COOL brain system getting activated. When its a hypothetical situation that involves someone else, the cool mind takes over – it is good at coming up with rational and logical answers and hence every one knows that we should wait. But when the situation involves us and in the present, the hot mind takes over. This is where it becomes tough to manage the temptation.

The book talks about another experiment conducted by Hershfield, where in participants (in their mid twenties) were asked to create a digital avatar of themselves. For one set of participants, they were shown their regular avatar and asked how much would they invest in retirement planning. And the other group was shown their own aged avatar (aged mid-sixties) and asked the same question. Surprise surprise, those who saw their future self said they would save 30% more than those who saw their normal self.

marshmallow test insurance marketing
Source: HBR (link below)

Read about this interesting study on how we make better retirement planning decisions here on HBR.

This tells me few things (& I would love to hear what you read into the findings)

  1. Insurance purchase decisions are very similar to the Marshmallow test conditions. You forego immediate spends for deferred benefits.
  2. Walter discovered that the specific tactics that were adopted by each kid who waited (for the better rewards) fell into a generic category – Cool the now, heat the future. Which means, reduce the temptations of the immediate future and build temptations around the choice of waiting. Sounds logical, and there are good insights for Insurance sales and especially renewals. Buying on monthly installments is easier as the psychological barrier is 12 times higher than when buying an annual policy. Auto-renewal (Standing Instructions or Auto Debit) is better for persistency, as the consumer is not subjected to the same choices every year.
  3. Personalization – Creating Insurance ads that showcase a happy retired life may not trigger purchase decisions, because the consumer may or may see himself in the lead actor of the TV ad. If he doesn’t, chances are he understands the theory of why insurance is needed, but when presented by a choice to buy, he would forego. And this infact has been the experience of most life insurance products. We have only moved a step in this direction with calculators and personalized models for generating scenarios. But they are far from effective in building a true connect with the future self of the user. Calculators and models talk to the cool mind, what we need are ways to get the buyer involved actively in the future self. And decide now in favor of the future self or future selves of his/her dependents.
  4. I see a bright future for digital in Insurance marketing – we have been going at it in the wrong way. Cheaper term plans is not the only opportunity here. Disintermediation and cost-saves is just one slice. The Insurance agent was selling successfully not only coz of the trust & proximity he has with customers. Maybe he can narrate stories from closer home, talk to the customer by giving vivid examples and building scenarios where the customer can easily imagine himself and his family.

Like all interesting studies on behavioral economics and psychology, I feel Marshmallow Test is a great set of hypotheses to bring into the marketing themes and design of campaigns.

Showing Contact Addresses in Google Maps

Quick Summary:

Here’s a small product feature recommendation for Google Maps on Android. Currently when I am in Google Maps and typing in the search box, it throws results that match with Google Places directory on the web. If it also throws matches with local contacts in the phone (or Google account) that have an address field added, it will ease usage.

Google Maps & Contacts
Background:

A quick background will help understand the use-case much better. I was travelling to Jaipur and wanted to go to my friend’s place in Bani Park. I had asked him for his address the day before and stored that in the phone’s contact against his name. Now when I was close to Bani park and looking for exact directions to his place, I had to

  • go to the Contacts,
  • search for his name,
  • View and copy the address,
  • Close Contacts and open Google Maps,
  • click on search(in GMaps) and paste the address (without the door number etc),
  • See the matching list of places from Googles Places directory,
  • Choose the right one and get started

Recommended Solution:

It would have been so much easier if

  • I go to G Maps
  • Click on search and type the friend’s name
  • IF there is an address field against it, gets thrown up
  • [CHALLENGE] – Smartly remove the part(s) of address like door or flat number and match it with Google Places
  • Get started

Better still would be if
GMaps and contact addresses
Once I have used the (text based) address for directions inside maps for the first time, it asks me to “pin” the place on the map when i reach my destination,so that an accurate latlon (latitude longitude) can be entered in a hidden field against this address.

If this pinning of a text address is done, it can add more wow – as soon as I open up Google Maps at a particular location, it can show me my pins in the vicinity – no more typing or searching needed – just choose the pin for directions and get started.

What do you think?

Is this something that would make your GMaps experience better? Do let me know in the comments section below – will love to hear your feedback.

#Android #GoogleMaps #GMaps #Google

Thin Mobile App or a Fat one – Digital banking toolkit

Mobile is the new frontier and banks know this well.

Amongst the various choices to make as part of the bank’s overall mobile initiative, is the decision around the structuring of mobile app(s).

Thin App Vs a Fat App.

These might sound strange terms especially in reference to mobile apps and no, we are not talking about the size of the app in MBs.

A Thin Mobile App is a niche solution available for select instances or customers, which allows a small subset of activities to be handled.

On the contrary, a Fat app is one where all the possible features and functionalities are available in the single app.

Banks have chosen to tread either of the paths. E.g. ICICI Bank has multiple apps in the playstore and HDFC Bank has just one main app.

Bank Mobile App - Fat or Thin

As one would expect, there are pros and cons of both, and I am listing a few here that come to my mind.

Attribute Thin App Fat App
 Clean UI  Easy to deliver  Needs design assistance
 User Engagement  Higher – as less distractions  Lower as many features irrelevant
 App Marketing  App adoption slows as marketing dollars split across multiple apps  Overall downloads look better as one single app
 App Development  Becomes complicated with multiple apps in market  Easier since tracking just one app
 Channel Migration  Depends on how the bank approaches it   Depends on how the bank approaches it

I personally feel, more than the final choice, it is the reasons that drive the choice which are important e.g.

  • It makes more sense to have a separate thin mobile app, if there is a unique customer segment that seems to have very different transaction or enquiry profile as compared to the others. E.g. Retail bank customers vs SME business owners
  • Building Traction. Many banks want to keep their mobile banking app for transactions only and do not see value in building any pre-login use-case. This makes the mobile adoption target so much tougher as there has to be a very precise value that the customer foresees in using the mobile platform for transacting. Plus its a two stage goal, get downloads and then get usage. It might be useful to break it down into easier goals, get downloads by providing a use-case even if its a pre-login e.g. offers on debit and credit cards. And then get the customer who already has your app to start using it for transactions.

What do you think?

SMS is reborn as an acqui channel in the Smartphone age

In the early days of Deal4Loans, we used to get a lot of traffic and leads through SMS campaigns. Especially for products like Personal Loans (Simple pitch and high-urgency in a need based product)

SMS reborn in smartphone ageDuring those days, NDNC (National DO NOT CALL) list was not introduced and there were very few players who were sending bulk SMS for lead generation. Response rates were high.

Market quickly figured out that this was a cost effective and easy channel to scale up. A tsunami of SMS campaigns started to happen and finally the National government had to intervene with its NDNC initiative.

And while SMS acquisition campaigns have largely died out, it seems to be back again.  And with even more potential.

In a recent campaign we closely observed, a bank reached out to a select base of consumers through SMS and emails. The resulting traffic on the portal was significantly higher in case of SMS.

Why?

Apart from all the other factors (higher delivery rates, targeting time of intervention), now most recipients have a 3G or Wifi enabled smartphone, where CTAs are simple. This campaign had a short URL taking to the Landing Page after a crisp text talking about the offer.

Lesson learnt:

If you can withhold the temptation to abuse your mobile registered users, SMS can deliver amazing results even in marketing campaigns.

3 tips for New To Bank Acquisitions – Digital Banking Toolkit

Why Online Acquisitions

Acquiring New To Bank (NTB) customers is a key agenda for most Digital Heads at Banks.

Its only logical that online acquisition budgets are getting bigger, given the following:

  • Consumers are spending more and more time online. Digital is the best channel to start a dialogue
  • Digital channels are tracked exhaustively. You can measure the return on each dollar spent.
  • Digital channels allow data to flow at higher speeds. This could translate into better context, targeted products, straight-through-processing, upfront checking of applications etc etc.
  • Tablets have provided the ideal form-factor to do an assisted digital sourcing, as has been proven by the success of ICICI Bank
  • Regulatory changes are also making it easier to acquire online – Aadhar database, eKYC, wet signatures to go away in some instances etc.

Here are 3 seemingly simple tips for anyone who is doing NTB acquisitions today at a banking set-up.

Choose the right on-boarding product

choose-productWhich product will you focus on to get more customers into the bank?

Many would say, we do not have a choice as each business line would be relying on the support of digital channels. Be as it may, it might be prudent to take a step back and understand the advantages of choosing a particular product for consumer on-boarding vs another.

  • Do we reject a lot of applicants for this product. Typically in case of credit cards and most loan products, the rejection rates are high and hence we need to sieve upfront to reduce the cost per lead or cost per account. Are there other products in the portfolio which have lower rejection rates e.g. most liability products may fall in this category
  • Does the product start giving me more data and insights about the customer? Can I build strong contexts to pitch the next product. Any payment product would be a good bet as it starts building a lot of relevant data points about the customer.
  • Is this being sold or the customer has a well articulated need? Loans should see a higher conversion as against credit cards because the customer has a need. But the scenario may change if the card is free and loaded with offers.
  • Is the process straight-through? If not, how many steps are there? The higher the number of steps, lower would be the conversion rates.
  • Competition – given that you are not the only bank trying to talk to the customer, the kind of marketing money it takes to interrupt a customer would increase for the segment with higher competition. Back in 2007 the bid rates for Personal Loan keywords moved almost 100% in less than 6 months. Every bank in India was focusing on acquiring Personal Loan customers.

Manage the Drop-out funnel

With all the tools available for tracking, doing A/B testing it is so much easier than before to manage the drop-outs in the acquisition channel. Over the years, industry has also learnt and created a best-practices library. Use it. E.g.

  • Acquiring through partners who have data on customers is more efficient and reliable. This is why most banks are exploring SME financing through ecommerce platforms.
  • Allow applicants to save applications and continue later. Across channels.
  • Build for a true OmniChannel experience. As the customer journey will definitely toggle devices
  • Provide for assisted filling of forms. What might sound simple & easy to you may be confusing to others
  • Authenticate the communication fields upfront (email, mobile). This allows you to follow-up on leads more proactively.
  • There are no permanent rejections – a customer who is not eligible today may be eligible tomm. Except may be those who are already over age :-).

Build data-led acquisition platforms

Data - Led AcqisitionsWhat has changed significantly in the last decade is the amount of data prospects and customers are generating across various channels and touch-points. The future (if its not already upon us) of digital acquisitions is data-led.

E.g. acquiring SMEs for working capital financing can happen in multiple ways:

  • Bidding on search engines for loan keywords
  • Putting up banners on B2B portals
  • Showing banners to specific SMEs on a B2B portal basis some cuts
  • Deep integration with portals to get fresh data about SME’s transaction, reputation, growth trajectory etc.
  • And so on.

Its easy to see that as the richness of data improves and also its freshness, the credit decisioning becomes better.

But this is not easy to do. It requires bringing together credit , product and digital teams into a room and understanding clearly the opportunities ahead of us.

Some banks are already working hard to evaluate the new data-points available and calculate their influence on the traditional credit models. Its a matter of time before this becomes the new normal.

 

Easier to be Krishna than to be Arjun

The other day, my mom shared a powerful and thought-provoking quote, that she has just read.

It’s easier to be Krishna, than to be Arjun !!

And she went on to explain, that being Krishna requires one to look inside and discover the highest qualities that each of us are bestowed with.

But to be an Arjun, one needs to be full of faith.

Infact have so much faith and trust, that you see a Guru in your friend, who then becomes the Krishna in your life.

Krishna ArjunaIts a very powerful thought.

To be able to trust someone or something so much, must infact be very liberating.

Coz then you surrender all your worries, doubts and fears.

I guess that’s why our ancient traditions laid so much importance on the role of a Guru.

And its definitely true in our corporate lives too.

We all need mentors. And for mentors to be effective, one has to let go of all fears, doubts and insecurities and share what we truly feel.

Uber and Free Market Economics

Uber has changed the way we travel within cities. On a recent trip to Jaipur, the first thing I did on reaching the city, was to top-up my PayTm wallet to get going on Uber. (yeah no card-on-file yet 🙂 )

Uber Free Market Economics
Uber Jaipur

And over the next 3 days I took more than 12 rides across the Pink city. Here are some of the interesting observations I had:

  • Jaipur is really a small city – Only one ride was over Rs 100/-. All others barely crossed the Rs 75/- mark. Given the distances are not too much, the per ride fare is expected to be low. This is a critical point because the supply-demand balance can be easily titlted in a small-population. Also the per ride metrics are sensitive to even the slightest changes.
  • Free market economies tend to be cyclical – Almost all the drivers I spoke to talked about the good old times they have had, driving around as Uber cabs upto almost 6 months back. It seems back then Uber was super aggressive in signing up cabbies and were paying as high as Rs 1800/- per day. Guaranteed. This came down to 1600, 1400 and now is at 1200/-. And its all because of the immensely huge supply. Most cabbies now complained of getting too few rides on a daily basis. Add to that the low average per ride fare and it is clear that this city needs volume of rides to be high. Or to quickly reach an optimal sweet-spot of supply and demand match. As the word of tough times (for the cabbies) is spreading,  fewer are joining and many who had joined Uber are reportedly quitting it. Some can’t even pay their loan EMIs.
  • There is no consistency of vehicle experience – I got from a Nano to an Innova under UberGo. Firstly, UberGo is where most customers go, hence even cabbies are registering themselves as UberGo. So you are better off choosing an UberGo. The Innova guy said that he wasnt getting any rides so he switched from UberX to Uber Go. Also it seems you make the same per ride across both categories. Hence UberGo seemed a logical preference. The Nano guy was proud of his decision, he claimed that he would recover his investment much faster. And thats true. I think this is a classic example of how the market evolves when its close to a free market.
  • Drivers understand and give importance to rider feedback – I have never seen so much sensitivity from an Uber Driver towards the feedback/rating. To have been able to crack this is really commendable on Uber’s part. The drivers have strong appreciation for this feedback being utilized for giving them ride bookings. Again, there might not be a completely transparent system but the fact that information and feedback is flowing across the supply and demand side, is strong enough motivator to influence decisions.
  • Locals are avoiding taking own vehicles – Lot of areas constantly face bad traffic due to construction activities. Parking is a challenge. Most of my local friends have either started using an Ola or Uber over self-drive or are seriously considering to do so. Atleast till the fares are this low !

Update:

And back in Delhi.

  • There was a surge charge of 1.9X due to high demand and unmatched supply I guess. This allowed UberX  guys to also pick up UberGo customers without formally registering into the UberGo. Complete reverse of what’s happening in Jaipur. I guess Delhi customers prefer the more spacious UberX and there is sufficient demand therein.
  • The first cabbie who picked my request, called me and asked me where I need to go (instead of asking me where to pick me up from), and hearing my destination – declined. Just put the phone down and on my Uber screen I was back at fresh request. No way to even go and give feedback on this bloke ! So I guess Delhi cabbies have a hack to the feedback-driving-behaviour loop also. Land of Jugaad !!

Embrace APIs – Digital Banking Toolkit

Digital is the latest buzzword in banking. Not only are the bank boardrooms echoing with digital keywords, its what seems to be driving the pitches at most IT and Management Consulting firms.

And rightly so !

When the data tells us that 9% of the population already uses Mobile Banking, we know that Digital Banking Revolution is already upon us.

India Internet Statistics
Source: We are Social

In the last article, I mentioned, how the Digital Banking Journey will be different for each bank and why it might be a good idea for the banks to play to their strengths.

Equally important is to acknowledge and understand, that partnerships will be essential in this journey.

And what enables partnerships to work (apart from a culture and mindset) is a technology architecture that is geared towards APIs.

APIs are like Legos – you own some, some you borrow – but put together you make something exciting.

While the consumer technology companies understand this, banks have traditionally been slow to embrace deep connects into their systems. The risk is too high ! After all banks have been trusted with the consumers money and data.

But to stay viable, banks will need to embrace partnerships, learn to publish and consume APIs, while still not compromising the customer promise.

 

Digital India – its already here

Today’s the launch of the Digital India initiative and quite a coincidence that I had an experience which makes me believe that Digital India is already here.

Digital India

Here’s what happened.

I was in Mumbai and called for an Uber. I started talking to the cabbie to understand the target market for a specific use case for mTuzo . We are pitching to banks that with mTuzo we can help move their debit card customer from an ATM only to ATM + POS relationship.

So I asked him which bank account he gets his Uber payments in – it was a SBI account and it was his choice. Uber gives him complete freedom to choose the banking partner.

Next I asked him if he had a debit card for that account . Turned out he did.

I asked him if he’s been using that card at ATM or for shopping also. As expected he had been using it only for cash withdrawals.

Probing further I asked him what if he got 15-20% discount if he shopped using his debit card, would he consider switching from cash to card. And his response just stumped me.

He said he’s already used his card for online purchases at SnapDeal. He did his first purchase using COD (cash on delivery) but once he was sure that they delivered just fine, his next transaction was through his debit card,

Let me repeat that – a 30 something male who has been driving a cab in Mumbai for last 10 years, is only schooled till class 10th, who uses his debit card only for cash withdrawal, has used it online at SnapDeal.

And what really really shocked me was his first purchase on SnapDeal. I can bet you will never be able to guess it.

 

 

Take a few guesses…..

 

 

 

…….

He bought a selfie stick for Rs 300 (after a 66% discount). A selfie stick !!!!

I rest my case, Digital India is here.

Maybe we need a Digital Bharat initiative.