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Technological Environment

This chapter explores the significant evolution of banking and technology in India, focusing on the transition from simple products and low volumes to complex, multi-channel offerings. It discusses the necessity of reducing transaction costs, automating routine processes, and the ongoing migration to technology-led service delivery channels. Key initiatives such as automated cheque processing, online trading accounts, and multi-channel delivery models are highlighted, emphasizing the importance of efficiency, speed, and customer satisfaction. This overview provides insight into how banks are leveraging technology for improved service and competitive advantage.

vernon-wiggins
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Technological Environment

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  1. Chapter Eleven Technological Environment

  2. Future • Continued retail focus • Need to push down per transaction costs Present • Retail push • Complex products • Multiple channels • Challenge of increasing volumes Business complexity Past • Simple products • Low volumes • Focus on high value corporate business Time The Evolution of Banking in India Changing business needs have constantly posed challenges for the technology…

  3. The Deployment of Technology…. • Automate the routine / transactions THEN • Move on to new ways of service delivery THEN • Move on to new ways of doing business

  4. The Key Areas of Application of Technology • Transaction processing • Make the routine BUT NECESSARY work • Easier • Faster • Accurate • Cheaper • Product bundling / creation • Combine products in ways otherwise not possible • Cost cutting • Normal transaction channel migration • Technology led delivery of products

  5. TRANSACTION PROCESSING 1. Transaction Processing • Rapid increase in customer base led to proportionate growth in number of transactions, creating a need to use technology to improve productivity and efficiency of the processes • Focused factory concept for processes like account opening, cheque clearing etc. • Economies of scale • Control and consistency in processes • Reduced load on branches • Improved turn around times

  6. TRANSACTION PROCESSING Contd…. Technology Initiatives • Automated cheque processing • Imaging and document management • Automated deal matching system • Centralization of operations like clearing Advantages Centralization • Allows economies of scale • Reduction in costs of running each branch

  7. Operations Branch Network Channels ATMs Internet Banking Push Pull Call Centers Cheque Shops m-Banking Agents CPC DELIVERY CHANNELS

  8. 2. Product Creation and Bunding Online Trading Account The online trading account integrates banking, broking and demat accounts. Key Features • Low minimum balance with plain vanilla SB features • Facilitate investment in a basket of products – MF, IPOs, etc. • No paperwork • Complete information • Shares can be bought/sold immediately

  9. Key Benefits • Convenience - Trading without the hassle of chasing the brokers • Independence - No need to transfer money to broker’s pool • Speed - Transaction reduces few clicks • Control - A comprehensive account for all the investment needs • Rich Content - The trading site offers a rich content and helps to take an informed decision • Settlements - They are no longer a problem

  10. Technology led delivery Call centers Internet Banking m-Banking ATMs Loans - Home, car etc. Deposits Private banking Credit / debit cards Young Stars / Student Banking Services Investments - Mutual funds, GoI bonds Savings account 3. Technology Led Delivery of Products … with a strong focus on web-enabling all services

  11. Channel Migration as a tool for cost cutting • Migrating the customers to alternate channels improves the quality and lowers the cost of service delivery • The banks are getting consumers to use the right channels for the right transactions and interactions • The alternate delivery channels are the biggest growth drivers for the banks

  12. Multi-channel delivery model Phone Banking m-Banking Internet banking Branch Banking ATM Extended Reach by Multi-channel Offerings … with focus on migrating customers to technology enabled delivery channels

  13. Channels Internet Banking Services • Electronic bill presentment and payment • Online bill payment for shopping travel and donation transactions • Funds transfers 24X7 facility • Money to India for NRI customers • All routine transactions regarding Banking, Cards, Loans and Investment services Automatic Teller Machine • Routine Banking transactions like balance enquiry, cash withdrawal, funds transfer, cheque book requests etc. • Features like airtime recharge for pre-paid mobile phones, donations to temples/trusts • ATMs for visually challenged customers

  14. Channels • SMS alerts for salary credit, account getting credited/debited, cheque bounce • SMS alerts for credit card due date reminders, approaching credit limit reminders Mobile Banking Call Centre • Customer contact through Voice, e-mail, correspondence, video conferencing • Wide range of solution offerings to customer right from balance enquiry to execution of banking transactions like funds transfer, bill payment over phone

  15. Channel migration – sustained emphasis…

  16. Functions of Channels • Functions that channels must perform • Sales • Transaction • What are the various activities under • Sales? • Transactions?

  17. The Activities Under Sales…. • Pre – sale • Lead generation • Lead follow up • Account opening • Post – sale • Cross sell • Relationship deepening

  18. The Activities Under Transactions…. • Cash payment/withdrawal • Request for Demand Draft /Pay Order • Account opening/closure/transfer • Investment Consultancy • Balance Enquiry/last few transactions • Statement of Account • Cheque Book Request • Cheque Status Enquiry • Demat Queries • Standing Instructions • Fixed deposit renewal/closure/opening • Address Change • Stop Payment • Cheque Deposit • Funds Transfer • Balance/Interest Certificates • Others………...

  19. Types of Channels • Where do these belong? • Branch • Mobile banking • Home service • Internet banking • ATMs • Call centre Predominantly Human Predominantly Technology

  20. Let us do a SWOT of each channel….

  21. Strengths Weaknesses • Personal touch • Personalized information • Facilitates complex banking activities • Customer retention • Deepening of relationships • Brand visibility • Inculcates customer loyalty • Perceived as a trusted advisor • Requires high manpower • High infrastructure cost • Restricted timings • Limited accessibility • Time consuming Opportunities Threats • Financial advisor • Facilitates channel migration • Effective cross selling • Increasing cost of transactions in the branch The Branch Channel….

  22. Strengths Weaknesses • Cost effective • Better reach • Brand visibility • Round the clock availability • Quicker transactions • Networked to centralized database enabling online updating • Adds a fillip to Bank’s customer base • Cost of set up • Limited cash dispensing ability • Lack of human interface • Waiting time is not eliminated completely Opportunities Threats • Platform for cross selling • Value added services like donations, mobile phone prepaid recharging • Shared ATMs to reduce cost and to maximize reach • Mobile ATMs to reach remotely located customers • Security concerns • Lower brand loyalty The ATM Channel….

  23. Strengths Weaknesses • Lowest cost per transaction • Reach • Minimum physical infrastructure • Round the clock availability • Convenience banking • Account integration for single relationship view • Waiting time eliminated • Information gateway • All transactions not possible • Slow adopters to internet banking • Lack of human interface • Poor penetration of internet in India Opportunities Threats • Platform for cross selling • Value added services like ticket reservations • Virtual banking • Security concerns • Lack of strong trust environment • Perceived notion that internet is not a safe place to conduct financial transactions • Not accessible to masses The Internet Channel….

  24. Strengths Weaknesses • Cost effective and accessible • Most of the banks offer 24*7*365 days service • Convenience banking • Economies of scale • Self banking through IVR • Single point of contact for multiple products • Supports complaint resolution • Cost of set up • Limited transactions • Communication barrier • High AHT (Actual Handling Time) Opportunities Threats • Campaign & cross selling opportunities • Accessibility across locations • Deepening of relationships • Acquisition of new customers • Communication gap • Customer perception of incurring cost while transacting The Phone Channel….

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