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Novelty to Necessity: The Power of Personalization in Banking The banking sector – a bulwark against the breakdown of other industries is left to nibble from the remnants in the wake of the virus-induced global economic slowdown!

By Sonam Chandwani

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The banking sector – a bulwark against the breakdown of other industries is left to nibble from the remnants in the wake of the virus-induced global economic slowdown!

Banks wrote off over ₹80,000 crore of loans in the first half of FY2020. The number exceeded ₹2 trillion in the past two years. But major Indian banks have demonstrated resilience through uninterrupted services, offering EMI moratoriums or fee waivers to borrowers. Unfortunately, historic trends alludes a grim scenario where Indian financial institutions were resigned to overlook defaults thereby leading to grave profitability concerns and credit risks associated with it in the wake of the COVID-19 pandemic.

Given the current slow-balisation, financial institutions cannot press for repayments from individuals and are expected to sit on bad assets for a longer period in light of RBI's moratorium effective until 31st August 2020. As the sector is left scrambling for money, more financial institutions are embracing technology to achieve their objective of survival, growth, expansion or otherwise.

Online Banking

At the outset, banks and financial institutions adopted technology as a means to stay connected to customers, deliver services and perhaps make money. Essentially, online or web banking offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments through desktop, laptop or mobile phones. At the core, online banking permits users to avail services in just a few clicks!

There are several advantages of online banking such as 24/7 access to their bank accounts from world-over, fast and easy fund transfer, coupled with highly safe and secure transactions of low to high value. The latest trend in Internet banking is to integrate third parties into the electronic business. Typically, customers use banks to interact with a third party, for example to pay their bills. In this case, the Internet channel can also be used to do the complete transaction electronically, resulting in impressive cost and time saving, not only for the bank and its customer, but also for the other involved parties. In addition, the electronic business aspect of Internet banking is creating completely new types of services – services that do not exist in other banking channels – that can be offered to new customer segments and used to create new revenue.

Personalized Banking

Tech Giants like Amazon, Facebook, and Google have spurred a desire for more customized interactions and fostered a willingness to trade data for a better experience. As a result, the concept of "personalized banking" becomes important now more than ever before! Targeting customer micro-segments and tailoring offers for them will enable banks to differentiate themselves, build customer engagement, and gain competitive advantage.

The first step would be to identify what personalization is and what it is not. Thereafter, banks and financial institutions can leverage on the large repository of customer data, customer touch-points and digital platforms to deliver meaningful and powerful personalized experiences. To be sure, personalization in banking is not primarily about selling. It's about providing service, information, and advice, often on a daily basis or even several times a day. Such interactions, as opposed to infrequent sales communications, form the crux of the customer's banking experience. Yet many banks still tend to focus their personalization efforts on the sales arena.

Today, machine learning and data analytics can be harnessed to deliver an omni-channel digital experience to your customers. For banks and finance companies with a wealth of data available, hyper-personalization represents a window of opportunity to stay ahead of the curve with a value proposition that makes customers feel understood. It also promises significant gains, with Boston Consulting Group estimating that successful personalization at scale could represent an increase of 10% in a bank's annual revenue.

The biggest takeaway for a bank is staying ahead of the curve as you get to know your customer better and leverage on those insights and trends to create tailored digital experiences that boost revenues. On the other hand, as customers expect a basic level of customization, hyper-personalized experiences in personal finance can lead to amplified satisfaction and engagement, fraud-prevention, better decision-making coupled with a sense of humanized understanding from their bank.

This humanized understanding by banks can be demonstrated in many ways, including:

  1. Behavioral Personalization: This personalization attempts to determine the visitors interest based on their actions, which includes visit count, search phrase, content viewed, functions performed, and referrers websites.

  2. IP Based Personalization: This personalization can gain information about the anonymous visitor from the IP address and DNS record. This tytpe of personalization makes use of Geo location tracking, company attributes to customize the experience.

  3. Online Banking, CRM, and Loan or Deposit applications: These effective types of personalization use data from other banking platforms to drive personalization. While this type of personalization may seem complex, the implementation is often easier than first perceived.

However, customization leads us to a larger question of – whether technological advancement and privacy can be allies?

Presently, the Information Technology Act, 2000 and Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011 govern India's data protection regime. However, these legislations fail to protect an individual interests in today's time. Geo-location tracking, biometric data and facial recognition apps could invariably violate the right to privacy, but there is no legal framework that regulates or enables the use such technologies without violating the Fundamental Right to Privacy granted under Article 21 of the Constitution.

Even the Personal Data Protection Bill, 2019 which is likely to be approved by the Parliament in the Monsoon session of 2020 fails to take into account all stakeholders involved in data breaches. For instance, the Bill imposes heavy fines upto Rs 15 crores or 4% of the annual turnover for violations, but exempts the "consent' requirement in certain circumstances where – data is required by the State, for legal proceedings, or to respond to a medical emergency. These regulatory changes, though onerous to many, are almost a natural and necessary trajectory considering India's growing digital footprint in the world!


Personalization is without a doubt a promising area that might be able to answer some of the burning questions that Internet banking must deal with today and even more in the days to come. The possibilities of personalization are not yet fully utilized, nor is there sufficient hands-on experience or research-based knowledge about the most advanced ideas of how to personalize Internet banking services. The importance of hitting the right target in both selecting the things to be personalized and the way of presenting them visually are delicate matters. If not done right, they might compromise the most important customer values: speed, efficiency and trust.

Thus as the impact of COVID-19 flare-up relies upon the gravity, degree, and dissemination of the cataclysm, which remains uncertain even today, the banking sector must leverage on personalized online banking to boost revenues in a cash-strapped economy and possibly help the banking sector rise from ashes!

Sonam Chandwani

Managing Partner at KS Legal and Associates

Sonam Chandwani founded KS Legal & Associates in 2013 with the vision of having a client-driven firm which offers proactive and feasible legal solutions.  

She had an experience of working with a leading engineering and trading company, wherein she oversaw high-value disputes, advised company management and led the company's legal functions. Sonam has focused on complex litigation and advisory for over seven years, with extensive experience in the areas of Arbitration, Insolvency and Bankruptcy, Banking and Finance, Real Estate Disputes and Corporate Litigation, to name a few. Her combination of substantial litigation experience and in-house responsibility positions her to understand needs and earn the trust of clients, both in contentious disputes and proactive risk avoidance.

She is especially noted for her exacting attention to efficiency in litigation, both in controlling costs and in being selective about avenues to pursue in litigation.

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