The banking sector often revels in its digital progress, customer focus and streamlined processes. Let's assume, for a moment, that these claims are true. By that logic, we'd expect a flawless consumer experience.
However, the reality is far from this. Does the sector and importantly, the sectoral regulator assume that just because consumers rarely fight, quarrel, or lodge complaints — particularly the kind that are agonising to pursue — that there are no consumer issues?
While regulatory grievance mechanisms are well-intentioned, they tend to focus only on the visible tip of the iceberg. These systems often measure success by the ratio of complaints resolved to those received, but anecdotal evidence across industries suggests that unreported issues could vastly outnumber formal complaints. Consumer behaviour consistently shows that for every complaint filed, there are likely four to 10 that go unregistered, driven by factors like a lack of trust in the system and the time-consuming nature of the process.
However, the reality is far from this. Does the sector and importantly, the sectoral regulator assume that just because consumers rarely fight, quarrel, or lodge complaints — particularly the kind that are agonising to pursue — that there are no consumer issues?
While regulatory grievance mechanisms are well-intentioned, they tend to focus only on the visible tip of the iceberg. These systems often measure success by the ratio of complaints resolved to those received, but anecdotal evidence across industries suggests that unreported issues could vastly outnumber formal complaints. Consumer behaviour consistently shows that for every complaint filed, there are likely four to 10 that go unregistered, driven by factors like a lack of trust in the system and the time-consuming nature of the process.
A recent personal tryst, involving interactions with three large Indian private banks and one public sector bank, paints a confusing picture of the state of banking in India.
Take, for example, my simple request for a written or emailed confirmation from the bank. Over the past 20 years, I've been a customer with three major private banks, yet despite their claims of high-net-worth individuals and wealth banking benefits, along with relationship managers and promises of expedited service, the experience fell short. To their credit, I've never used my RM's services for favours or non-core products like insurance, wealth management, or mutual funds — having learned from past mistakes I attribute to my own financial illiteracy.
The first private bank handled my request via email after my RM directed me to a specific address. After several days of emails, the task was completed. However, receiving the final confirmation by courier, rather than through the same email thread, caused unnecessary delays. The bank failed to proactively keep me informed, and I had to chase them daily for updates.
The second private bank's response has been equally frustrating. Three weeks later, my request remains unresolved despite multiple follow-ups via calls and emails. None of the contacts I reached out to, including senior branch officials, bothered to update the status. My only remaining option is to escalate the issue to the chief executive officer.
But how many consumers have the time, patience, or resources to pursue such a simple matter to this level? This should be a wake-up call for this 'highly valued' bank's leadership about the bureaucratic, indifferent culture within their teams. More importantly, how does branch staff treat consumers? A stellar market cap or global reputation can't mask such systemic inefficiencies or poor customer service attitudes.
The cultural shift required in banks goes beyond technology and regulatory compliance, it demands a fundamental change in how customers are viewed. Too often, customer service is treated as secondary, overshadowed by operational efficiency and compliance.
Banking should be about building relationships—not just opening accounts or soliciting business. After all, customers are not transactions — they are partners in the business of trust, the very core of banking.
The third bank's series of missteps would be almost comical if they were not so frustrating. On a Sunday, I received an email from the bank's automated system, introducing me to my new RM. Coincidentally, that was the same day their online banking and mobile app failed to complete my re-KYC process, forcing me to visit the branch.
On Monday, I called the listed RM, only to discover she had left the bank two months earlier. This raises serious questions about the bank's internal coordination and digital maturity. Forced to visit the branch, I resolved the know-your-customer issue in minutes — credit to the branch staff for their efficiency. Though the entire concept of re-KYC needs a major overhaul.
I was then told my actual RM was someone else, who happened to be unavailable that day. When I asked for his contact details, I was connected to yet another person four days later by email. At this point, I was thoroughly confused. Who is my RM? When I asked why the bank’s online system couldn't handle the KYC process, branch staff hinted at internal turf wars between the digital and operational teams. Meanwhile, I, the customer, bore the brunt of their inefficiencies. Maybe their new managing director can fix this bureaucratic mess.
The public sector bank added its own twist to this "customer-is-king" saga. Despite closing my account months ago, I still receive emails containing bank statements meant for another customer, complete with their personal details. Despite repeated complaints, the issue remains unresolved.
Somewhere out there, another customer is likely missing crucial financial information, while I, a non-customer, have access to their private data. This is a glaring breach of privacy, exposing the fragility of their digital systems. Despite being slapped with a regulatory fine for similar digital failings months ago, this bank seems to have learned nothing.
The banking sector's push for digital transformation is undermined by technological limitations, such as fragmented data and incomplete fintech integration. These gaps prevent banks from offering personalised services, as customer data remains siloed across disparate systems.
The examples shared above are not isolated incidents, they represent the daily operational nightmares faced by countless Indian banking consumers. For each of these consumer incident, for the consumer, it is the updated centre of their perception about banking, while for the bankers, it might count as yet another operational irritation or challenge. Left unaddressed, these systemic inefficiencies could accelerate the erosion of consumer trust—a downward spiral no bank can afford to ignore.
If these banking frustrations could be crowdsourced through regulatory outreach, the RBI might be flooded with complaints, making my own experiences seem trivial in comparison. Circulars would be issued, mandates would multiply, and the gap between policy and practice would once again be laid bare. For now, though, the banking sector seems content with its head buried in the sand, blissfully unaware that the ground beneath it is starting to shift.
The Reserve Bank of India must take note. While the sector celebrates its digital triumphs, the operational flaws and cultural fragility lurking beneath the surface threaten to undermine consumer confidence. Addressing these issues is crucial to preserve that trust. A banking system that relies on consumer resilience as its safety net risks waking up to a trust deficit — one that no amount of innovation can fix.
If banks spent as much effort improving customer service as they do updating their digital apps and glossy marketing materials, we'd be living in a world of truly seamless transactions — beyond just our finances!
Srinath Sridharan is a corporate adviser & independent director on corporate boards. He tweets as @ssmumbai.
Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.
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