How Indian Public Sector Banks Can Improve Customer Experience

Source : SlideModel

Improving Customer Experience — A Core Component of Digital Transformation

Since the idea of #DigitalTransformation has been introduced to enterprise domain, a key focus of the paradigm has been “Customer Experience”. Consultants, analysts, vendors and leaders have talked about CX as the critical component to achieve business growth and market share in the digital economy.

In this sequence of articles, we will look at how public sector banks in India have handled customer experience in the past and what steps they have taken to improve their CX under digital initiatives. We will consider some of the innovative banks that have built new initiatives to unshackle themselves from legacy poor “branch experience” metaphors and those who have simply done lift-and-shift of their brick & mortar experience onto digital workflows and how that has impacted their ability to change perceptions of customer friendliness and business growth.

We will also talk about the elements of modern customer experience and how enterprises can take advantage of digital-first and fully-digital workflows to offer new-gen customer experiences to their customers.

Customer Experience/Perception of Indian Public Sector Banks (Before digital/mobile)

Flashback Year 2000.

The world was looking at some phenomenal changes to happen with the turn of the millenia. The Private sector banks were slowly getting into the mainstream. Internal banks a fad and Public Sector banks were where the bulk of the investments were sitting at. The Public Sector banks were sitting pretty. With Private sector jobs gaining focus, the most lucrative were the neo professionals.

Now, imagine you needed to open a new banking account in 2000. In India, most middle-income professionals would have preferred to open their account with an Indian private bank, some of the higher income folks may have chosen international banks and only a very few may have selected a pubic-sector bank (given a choice and zero minimum balance requirements etc, nearly no one would choose public sector banks).

The neo professionals wanted experience.

One reason for this behavior pattern is the strong perception of “poor customer experience” and service from the state-owned banks. Arrogant behavior by officers, tellers and even guards; detailed paperwork required for simple transactions and long lines of customers jostling to get their transaction done are embedded like an image in the consumer mind.

The public sector bank experience of opening an account was a great (mis)adventure tale for an ordinary consumer. If you told the bank officer you wanted to open an account, she would look down at you as if you were planning the biggest crime next. After satisfying herself that the only crime you intended to commit was give them business, she would hand out forms (with no instructions on filing it but clearly marked caution that any errors or overwriting may make the form invalid) and demand that you produce two “introducers” who could certify to your character (earliest KYC) and sanity (though the latter was already in question by now).

On the other hand the private bank experience was a stark contrast. You walked into a plush bank branch, took a number for your meeting the officers, parked yourself on the sofa, met the officer and she politely helped fill the forms, take your deposit check and complete the formalities in 30 min or so. (Over time, if you were not able to travel, they would send an agent home too.)

Customer Experience/Perception of Indian Public Sector Banks with Digitialisation

Cut to year 2022.

Over two years of the COVID pandemic and national shutdowns, the bank branch, which had been losing importance as a banking destination to online banking, completely collapsed except for public sector banks which continued to see crowds as folks with no internet access jostled to get their simple banking transactions completed. If you had to open a new bank account in 2022 what would be your preference be?

Unfortunately for the public-sector banks, the consumer perception of poor customer experience hasn’t changed much, even though the consumer’s behavior of visiting bank branches has changed. Poorly designed user-interfaces, buggy software, poor and unstable mobile experiences, unacceptable wait times and replication of physical processes to digital portals (as opposed to re-engineered automation) has kept public-sector banks at the bottom of the consumer preference even though reduced human engagement should have removed “bad service attitude” element completely from the equation.

The Private sector banks have invested into the relationships of Neo professionals, who are no top shot executives and grown with them.

The private sector banks have won again by building better UX, better workflows, better integration, better responsiveness. From at home account opening to online video KYC, the leaders in private banking have re-defined customer experience using an integrated digital transformation strategy.

The business outcome/impact is for all to see (figures may have improved even further in favor on private banks in last two years).

Innovations in some public sector banks

While the perceptions drag down consumer preference for the public-sector banks as a cohort, there are some very innovative initiatives attempted by some public banks which deserve to be mentioned and which have demonstrated high consumer response.

SBI NEO, launched as a digital-only offering, has quickly become a leader in its category and is recognised as one the best Digital banks. The “ONE Card” from Federal Bank offers one of the best on-boarding experiences for consumers in the credit card segment.

In our next article, we will talk about the continued challenges faced by the Public Sector Banks and how they can work towards improving this perception….

(This article was jointly written with Ritesh Varma. A variation of this was published by CxOToday at



Innovator. Entrepreneur. Mentor. Investor. Learner. Love technology, sports, arts and literature. Strive to be fair.

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Arvind Jha

Innovator. Entrepreneur. Mentor. Investor. Learner. Love technology, sports, arts and literature. Strive to be fair.