More than 134 banks (inclusive of private, public and also international) exist in India. In 2016, there were 1,38,850 commercial bank branches, signaling a commercial bank branch is serving almost 1000 people round the year.

This leads to an important inference that citizens are flooded with many banking opportunities. Even NBFCs (Non-Banking Financial Companies e.g. Bajaj finserv, Aditya Birla Capital, etc.) aren’t behind the race, the financial solution provided by these people are also eating the market share of the bankers.

Hence, it’s high time for bankers to innovate, retain and continuously add their clientele base. Gone are the days when Public Sector Banks or established Private Banks were the only solution for any banking related work.

The supply (the number of banks) is increasing and each and every one provides a well-differentiated product.

The banking market is now transformed to market similar to an FMCG kind of market.

Leveraging Technology

Going Digital is the new mantra which has been adopted by many banks. Digital solution by banks and NBFCs, with a wide range of underlying technology like artificial intelligence, the blockchain, machine learning, neural network etc. have enabled savings in resources of banks.

There is a direct saving in the transaction cost, which was one of the major cost components. Also, time consumption for the transactions and other bank operations have drastically reduced by going digital.

As per the customer point of view, these banks and NBFCs have provided OTG (on the go) banking facilities. Access to funds have become much easier, you can now take a loan within few minutes which earlier used to take 3-4 days.

Initiatives by Indian government like NPCI’s BHIM, UPI have allowed faster payment. There is a huge rise in wallet culture by various service providers and this has enhanced payment and money transfer.

Next Steps

Hence, a large market gap of fast money transfer has been filled with all such digital solution for transferring.

But, aren’t every bank in India floating its reach through the digital medium. One of the gap in banking in India was in the area of accessibility and now banks are doing well in that.

So the need of the hour is a customized differential financial product which can act as a competitive edge.

Revenues of banking sector companies are directly linked with the selling of these financial credit product. Many banks and other NBFCs have now started exploring the rural India spectrum, a segment where a plethora of opportunity exists.

For instance, many financial products have become pocket size so that people with low income could also benefit. Financial products like loans which were earlier designed as per urban audience had a loan amount of a larger ticket size and accordingly the credit terms were stringent.

Pocket size products break this stigma, here the loan is not of that big size but most of the credit terms and requirement are much simpler when compared to their urban version.

Innovation streams

There are basically two types of innovation streams-

1.Cost Innovation

These are the innovation which reduces the fixed charges or variables charges in the bank operations. For instance, HSBC recently used block-chain for trade finance for Reliance Industries Limited.

Using technology and centralized repository for data, a lot of work has transformed from hard papers to cloud. This has enabled the saving of resources both in terms of time and organized data.

Even artificial intelligence has crept in for designing products according to the needs and also searching products which best matches the need of the customers.

2.Revenue Innovation


These are the innovative financial products and services that a bank or NBFCs offer to the customer.

Structured financial products, suitable credit terms, better return and tenure of the financial products are the major four legs of financial product differentiation. Innovations in any of these products have resulted in people buying up the financial product.

Small Finance and Payment Banks have helped in last mile delivery of financial solutions that a normal bank could not have delivered.

Banks have started linking various customer data and passing on the benefits to the customers. The financial credit/debit solution is no more a hard-wired product, everything has got customized. A customer shows a special proclivity towards customized products over a generic version.

Not only products but customer services also play a huge role in turning audience in. Gone are those days where people used to stand in long queues of Public Sector Banks (PSBs) and get their work done.

Now, banks connect with the customer and hence, customer centricity has become one of the goals in the mission statements of many banks.

3. Banking Services and Customer Connect, Still Some Miles Away

The non-traditional firms as per their survey provide better value for money because they focus on customer engagement and hence, they are able to snatch customers from the PSB base.

Private Banks and India have caught up this trend whereas PSBs are slowly catching up. Brand endorsement is an area where banks need to look into in an innovative way. The extra delight under the umbrella of services is what attracts the customer.

Recent Trends on Customization Products


Customer data is an elixir to the banking industry.

They need to leverage the information and customize products. For e.g. one of the banks gets data from health wearables like Fitbit, etc. and re-design loan covenants..

Also, intelligent products like loans for master degree can bring students from reputed college. The ticket size of the loan is not very big, but credibility norms and collaterals are relaxed as these people are almost sure that they will earn well, once they complete their education.

Artificial intelligence, the blockchain, etc. are being used for making transactions more secure. Also, Fintech companies are providing phenomenal solutions, which a bank could use.

There is a thrust of development from banks towards Microfinance, MSME (Micro, Small and Medium Enterprise) sector as the opportunity is unexplored in this arena. Customized solutions and better services are finding a huge customer base.

Mortgaging various farm assets, syndicating loan, loan against crop yield are some of the target products for the farmers

Only Developing Product or Services is Not Important, Marketing them is Also Important


The banking market is no more a traditional push strategy oriented arena, it has now become like the FMCG market, where one needs to pull customers.

Hence, marketing strategies play an important role and also acts as an innovative step to pull customers. Showcasing customers differential benefits and brand equity or brand connect is now the only way to bring them on board.

Banks need to establish a trust factor in the audience, this is more challenging in the rural areas as people see PSBs proxy for a government entity.

Rural people find it hard to connect with private banks or NBFCs as they have a notion of these entities defaulting and their money will be lost in the game.

Social marketing ways need to be adopted by banks for physiological mind shift, for rural people.

Customer centricity is not only to be observed but also should be conveyed by the customers, certain customer engagements activities need to be targeted so that there has to be a brand recall.


Banking Industry is like an old reliable transport bus, which does the job of transferring people from one place to another (job: transactions of money).

The innovation we need to bring to the table is better experiencing like comfort, route connectivity, passenger engagement, and travel assists. Similarly, for banks, customer experience, customized and personalized products, and customer assists acts as differentiators.

Technology is just an enabler and not the solution, using technology to create innovative products and services will help in gaining larger market access and response.

Hence, there is an inherent race amongst banks and NBFCs to provide financial solutions. The first mover in any stream of financial service will be awarded directly in the revenue stream.