CXO Accent

Banking on the move

P J Jacob Panjikaran

Mobile banking has made life easier for both customers and their banks

In the 1980s, account holders had to make a weekly visit to their banks for routine activities—updating the pass book, withdrawing cash for weekly expenses, verifying weekly credits or debits, or simply to get a new cheque book. These routine matters took plenty of time as every bank used to be crowded, especially on a weekday. This had two implications—the customer wasted precious time, and the bank clerk precious working hours.

By the mid-nineties, the effect of globalisation and advances in technology started trickling down to the banking sector. The entry of foreign banks and the opening of next-generation banks accelerated the process of technology upgradation in the sector. Till then, banks were only talking about customer satisfaction. Increased competition saw banking players go beyond just satisfying the customer. Indian banks started looking at options wherein they could help the customer while at the same time reduce their service costs. They started looking seriously at alternative delivery channels such as ATMs, Internet banking and tele-banking. The latest of these other channels is mobile phone banking. Apart from these new channels being very convenient for depositors, banks found that transaction costs, manpower and the rush at counters could be reduced by deploying them. They freed up the staff, who could, in turn, be deployed for more productive activities and thus contribute to increasing the overall efficiency of the bank.

SMSing account holders

In recent years, mobile phones have gained acceptance as the preferred means of communication. It is therefore natural that banks started thinking about putting this technology to good use for interacting with and acquiring customers. They started looking at SMS as a tool for sending and receiving business messages. If a message can be generated by the system based on certain preset conditions, it can be transmitted via the Internet or converted into an SMS and transmitted to a mobile number. The option of receiving an alert rests with the customer.

For example, a customer can specify rules or conditions under which he wants to be informed whenever his account balance goes below a certain amount. He can also receive an alert whenever a credit or debit happens in his account, or whenever a credit or debit for a fixed amount—like monthly rental or insurance—is debited. The system automatically sends these alerts to his mobile phone.

To enable this, the bank’s service provider has an SMS gateway to other mobile service providers. The message can be delivered to any mobile phone in any part of the world. In the same manner, a customer can make structured queries through his mobile phone regarding account balance, last few transactions, cheque-clearing status, etc—all through a simple SMS.

Banking at your fingertips

When an enquiry is made for, say, an account balance, the system fetches data from a primary server and delivers it to the account holder’s phone inbox as a short message. A request for a cheque book gets processed in the back-office with a receipt number that is sent to the customer, again as an SMS. For depositors, this is a value-added service. Banking is at his fingertips.

For the bank, there is considerable reduction in the number of telephone calls received. Customers need not worry about bank timings since the database of any bank that has deployed a core banking solution is up and running on a 24x7 basis. No human intervention is required for generating alerts or for replying to queries. Requests for cheque books can be consolidated into a report that the bank’s staff act upon the following day. Even the timing of messages can be scheduled. The bank can also send promotional messages, birthday greetings, festival greetings or any other messages through this medium. The alerts help prevent frauds as alerts can be set for any withdrawal above a specified amount. If you suspect that something is wrong, you can stop payment.

Innovation is the mantra and banks have to be one step ahead. Technology-based products can definitely help win customer confidence and enhance service levels. In the case of South Indian Bank, we came out with this product in May 2004. We are presently offering 16 different types of services through mobile banking. The product is an instant hit with our customers, especially with our NRI clients. As an introductory offer we are giving this service free. We also have ATMs and Internet banking, but for mobile banking the attraction is that an account holder does not need to go to an ATM kiosk or to the nearest Internet café—he only has to press a few buttons on his mobile phone to access his account.

The future of mobile banking looks bright. In future, the customer will be able to book railway tickets and air tickets, and order various utilities using his mobile phone, for which the bank will debit his account online.

I would like to close with a word of caution. Banking is a service industry, so if technology overtakes relationships, we will start looking at the customer as a pin number and not as a human being. And when the customer realises that he is only a pin number, he will look for a bank that is more humane, and then no technology will be able to retain him. That is why our motto should be ‘Blend Tradition With Technology.’

Jacob Panjikaran is assistant general manager at The South Indian Bank