Technological Environment

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….