Wow, what a wild ride 2023 turned out to be for India, right? We got a spanking new Parliament, nailed space missions, successfully organized the G20 Summit, and even saved people stuck in a tunnel! Then elections buzz and a near miss at winning the ODI World Cup got us all worked up in Q4.
Now, here at Forrester India, we have wrapped up our year with a bang — a successful three-city India Predictions tour, where we unveiled our meticulously researched predictions. And let me tell you, our predictions were a real smash hit. The credit goes to everyone involved at Forrester, along with our awesome clients and everyone who graced our events. The post-event one-on-ones were buzzing with appreciation, especially for the powerhouse women who took the stage. It was so awesome that I could talk about it all day! But let’s calm down a bit, take a deep breath, and get into the good stuff; if you missed it, I can’t wait to spill the details, so here we go!
Prediction 1: Fintechs and traditional FIs that neglect to design niche journeys will lose market share.
In India, online adults exhibit a high level of trust in their primary banks, yet only 33% perceive their main bank as distinct from others, which raises a red flag. Fintechs and neobanks are changing the game by shifting from building products to targeting persona-specific needs. By focusing on highly specific segments, they can craft hyper personalized and efficient user journeys tailored to diverse group needs. We believe this transformative trend is not just a passing phase; it is here to stay. In 2024, we expect a surge in innovative fintechs offering fresh and game-changing solutions. We also anticipate a few traditional FIs will acknowledge the value of serving specific groups with unique needs and habits and will then creatively address them. The majority may miss this wave, however, risking a loss in market share.
Prediction 2: Two banks will significantly outperform their peers and increase the digital maturity gap.
Customers are seeking more than just transactional capabilities; they want their banking apps to contribute to their financial well-being, provide personalized services, and offer live support. Unfortunately, most Indian banks fall short of meeting these expectations. While adept at moving money, they have significant room for improvement in other areas. The key lies in going beyond simply being a processor of financial transactions. They must prioritize offering holistic financial requirements to help their customers’ financial well-being. Most bankers understand this shift, but only a couple of them have started acting on it. How do we know? We work with quite a lot of them, and this is often a focus area of our engagement. On the contrary, the ones neglecting to invest in financial well-being programs will struggle and risk losing customers to providers better equipped to offer overall financial care.
Prediction 3: Open finance will pick up speed, but 90% of financial service firms will struggle to monetize it.
Thanks to the Account Aggregator framework introduced by the Reserve Bank of India two years ago, open finance has started gaining traction in India. It is garnering participation from major public and private sector banks, asset management companies, stock depositories, insurers, and others. Despite an impressive 82% commitment from banks to open finance initiatives, they have not been able to drum up customer enthusiasm due to data privacy and security concerns. We expect customers to demand even more clarity on the usage of their data and protection measures. Financial services providers will fail to convince customers and won’t monetize open finance opportunities, unless they have a compelling value proposition, which unfortunately looks unlikely given their focus on cross-selling and upselling more, rather than using the data for delivering value back to customers.
In 2024, the spotlight will be on financial inclusion. Financial services firms will search for growth in underserved segments and promote digital literacy. To navigate this competitive and changing market, our guidance for financial entities will be to:
- Assess digital maturity and take steps to create an omnichannel experience.
- Use data smartly to build strong connections with customers.
- Keep customers at the heart of product and solution design.
As a Forrester client, you can read our Predictions 2024: Banking and Predictions 2024: Payments reports. Not a Forrester client? Download our complimentary Predictions guide, which covers our top predictions for 2024. Want to talk to us? Please reach out.