Want your customers to adopt alternate channels? Read on..

Inspite of ATM, Internet and Mobile channels being available for last 10 years in India, total number of transactions on alternate channels is very low compared to bank’s total transaction base.

According to a BCG survey, active Internet banking accounts in metro branches are 20% and active mobile banking accounts are below 5%. Averaging these numbers with non-metro branches makes them even worse. If we compare all channels pan-India, adoption is around 10-15%. This is a cause of concern for the banks since fixed costs are high to maintain these channels.

There has been a lot of talk about challenges in adoption of these channels. The penetration numbers have not changed much in last few years. According to a BCG study, two main reasons for slow adoption are:

  1. Lack of awareness
  2. Lack of education

Adopting a new channel to bank is like adopting a new technology, changing the way customers have been working so far. Let us look at the technology adoption curve by Geoffrey Moore. Any technology adoption goes through the following cycle. When iPad came, their use was limited to Innovators and Early adopters before every other person started using them.

alternate channel adoption chasm

Technology adoption curve

  • Innovators: Enthusiasts who love new technology, even when it doesn’t yet have a purpose.
  • Early Adopters: Visionaries who see how a technology can be used to solve a problem.
  • Early Majority: Pragmatists who want social proof that a technology has value before adopting it.
  • Late Majority: Conservatives who prefer old technology until its clear a new technology dominates.
  • Laggards: Skeptics who avoid adopting new technologies at all costs.

Before the majority adopts a technology, there is a chasm that needs to be crossed. Alternate banking channels seem to have stuck in the chasm. To cross this chasm, and to have majority adopt the channels requires a thought after strategy by banks. For businesses like banks, dealing with volume customers, Moore suggested a Four-gear model to enhance adoption.

The Volume Operations Model

The four gears driving the growth of the business are:

  • Acquisition 
is the process of acquiring new customers. Since the objective is to make current customers adopt alternate channels, this step has already been taken care of.
  • Engagement 
means getting customers to like your product, to make them use it. Banks need to find non-users of alternate channels to try those channels. It is only when people experience convenience and value, they are inclined to change.

    Alternate channel adoption

    Four gears model

  • Monetization involves generating money from the use of your product. One the customers have tried a channel; idea is to make them use it regularly leading to optimization of channels and cost reduction for banks.
  • Enlistment 
is having customers get others to use your product. Banks need to use customers who have recently switched to alternate channels to advocate the use of channel to other customers.  Imagine when a 50 years old customer talks about online banking to another customer with same demographics, impact is going to be multifold.

Steps for banks to expedite alternate channel adoption-

  1. Channel selection – Pick the channel that would give highest return for the effort – the channel with highest fixed costs and low adoption rates.
  2. Segment selection – Pick a segment of customers who are relatively easier to convert. It is important to segment customers and choose an easy win segment.
  3. Proof of concept – Start the initiative with a few key branches. This would give the time to understand the effect of the approach and use learning in other branches.
  4. Education and Engagement – Educate the customers; make them try the new channel so that they can see the value and experience convenience.
  5. Regular use – Motivate customers to use the channel again and again using motivational techniques and rewards.
  6. Enlistment – Use the new adopters to advocate the use to other customers in their segment, and to educate them on the use. This can be done through advertisements, one-to-one interactions in branch, reward programs etc.
  7. Scale up – Scale it up to other channels, segments and branches.

While banks take all these steps, uptime and availability of these channels has to be ensured. Without this, all steps would be futile.

Adoption of alternate channels needs an active effort and strategy from banks. Hoping that customers would convert one day by themselves would not reap much result.


About artigupta

A mother of two adorable girls, I pride myself in being able to successfully balance my personal and professional life. I love my work, and believe in working on things that give me joy. My passion lies in adding value to people, be it through training, coaching or working with organisations to deliver better customer service. Life is too short and uncertain, live and let people live; be happy and spread as much happiness as you can.
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