Why Legacy BFSI Brands Dominate Inspite Of Tech Disruption

The financial services sector is undergoing a rapid transformation driven by technological advancements and changing customer expectations. Where traditional banking methods once dominated, the landscape has now shifted towards mobile and online platforms, making financial transactions more accessible and user-friendly.

One of the primary drivers of this change is technological advancement. The introduction of ATMs, smartphones and mobile banking apps has revolutionised the way financial transactions are conducted. The implementation of the Unified Payments Interface (UPI) and other cashless payment methods has further streamlined these processes, allowing users to manage their finances with unprecedented ease.

In addition to these technological shifts, the emergence of user-friendly investment platforms has significantly impacted retail investing. Platforms such as Zerodha, Groww, and Upstox have become particularly popular among younger investors. Their intuitive interfaces and ease of use have shifted investment patterns from traditional savings to market-linked instruments like mutual funds, real estate investment trusts (REITs), digital gold, and direct equity investments.

Despite these technological advancements, legacy brands like SBI and HDFC Bank continue to maintain their leadership positions due to the high level of trust they command. For instance, SBI's deposits grew by 11.13%, and HDFC's by 12.08% for FY 2023-24. Public Sector Banks (PSBs) still hold 59.7% of the deposit market share in India. 

This dominance is largely due to the trust factor, especially in a country with low per capita income where customers prioritise security over innovation. However, as incomes rise and financial literacy spreads, private sector banks are gaining ground. From 2010 to 2024, the market share of Public Sector Banks in deposits fell from 74.2% to 59.7%, while private sector banks saw their share increase from 17.7% to 31.4%.

To thrive in this dynamic environment, financial product sellers must focus on two key pillars: trust and service standards. Building and maintaining trust through transparent communication, community engagement and reliable performance is crucial for capturing and retaining customers. High-quality service, welcoming branches and well-trained staff have become essential for competing in today's market. Additionally, providing seamless digital experiences is vital. Mobile apps and online platforms must offer intuitive, user-friendly interfaces that meet modern customer expectations.

(The author is the Founder & CEO of Two99)