Technology readiness

As part of an earlier blog entitled "Solid Foundation", we had covered the criticality of technology in any retail banks success. Here we will dwell a little more in detail about the different aspects of technology that needs to be addressed. This is not an in depth paper on technology but is more of a general writeup on the importance, scope and benefits of technology in retail banking.

Retail business is a detail business. The volume of customers and transactions, the complexities of the calculations and the variety of products cannot be managed unless a bank has a solid technology platform having the following aspects:

1. Should preferably be a "tried and tested" software in the retail banking space
2. Should be comprehensive in terms of coverage of products, features, variants etc.
3. Should be flexible to incorporate innovations - one way to do this is to keep everything parametrised and not hard coded.
4. Should transfer data seamlessly without the need for human intervention / duplication of effort across channels, branches etc.
5. Should be secure
6. Should have capability to handle scale up in terms of increase in transactions as well as customers
7. Should be Internet enabled and as far as possible updated on near real time basis
8. Should enable customer to access, transact etc. comfortably while protecting her security.
9. Should be able to offer "one view" of all accounts / relationships of the customer with the bank
10. Should be able to provide all calculations (interest, penalties etc.)transparently to the customer.
11. Should be able to keep audit trails
12. Should have a maker / checker concept
13. Should capture / process everything from "cradle to grave" (from the time of inception till final closure)
14. Should be able to store not just data but also images

The list given above is by no means exhaustive and is only indicative of key capabilities. When it comes to use of IT, one should look at maximising the coverage in order to reap benefits of speed, error free processing etc.

Use of applications like Microsoft office programs (Word, Excel, PowerPoint etc.), although useful, should not be confused with the IT needed. I have seen lots of organisations where they take pride in storing and processing data in rudimentary programs like Excel without realising the risks involved like data security.

It would be useful to restrict the core system to cover only the critical functionalities. For example, one need not have a single system covering all IT needs of a bank. One can break up the systems as follows:

1. Core system to track customer financial transactions for various products (liabilities and assets)
2. Support systems which talk to the core system on a needs basis as follows:
(a) For resolving servicing needs, call center
(b) For managing documentation
(c) For sales process
(d) For underwriting
(e) For analytics
(f) For marketing campaigns, media spends management
(g) For vendor payments
(h) For payroll management
(i) For statement printing, tracking outbound and inbound mails
(j) For collection and repayment management
(k) For accounting and drawing up financial statements

When there is an extensive use of IT in a bank, there is a need to make sure that the personnel is well trained on all aspects of use with special emphasis on safety and security. Taking periodical back ups, having a strong disaster recovery process, having multiple sites with data, strong password processes etc. all need to be built in place. Discipline is to be inculcated as a core value in the handling of data and all processing must be done based on preset procedures / time plans.

Banks should be vigilant and take periodic stock to ensure that non-secure methods are not used to process data. The IT system, its output etc. need to be periodically audited to confirm that quality is not compromised. Review of controls and data security should be done regularly.

When a bank is thus comprehensively ready with technology solutions to meets its data processing needs, customers will experience error free and high quality service. This will result in attracting more customers to the bank as well as help the bank increase the share of wallet of the customer.

I would love to hear your views on this blog. Please feel free to leave a comment on the blog or send me a mail at vish.sesh@gmail.com and I will quickly respond.

Service Orientation

Today, one can find banks catering to retail products and businesses virtually everywhere. With so many public sector and private sector banks in business, there is no lack of players. Most of the banks have identical products and even pricing - give or take a few basis points differences. As soon as any bank introduces an innovation in their product, the competitors start introducing similar products or variants.

This leads some to believe that there is virtually nothing to differentiate banks. I had once heard a senior banker comment "Banking has become a commodity business". He felt that price is the only way to compete and grab market share. What he did not state / realise is that customers look for two things - price and value for money.

There is one category of customers who are very price sensitive and will always go for the lowest price. However, most customers also deeply look for quality of service. Over a period of time, if customers realise that they are getting poor quality of service, they will start gravitating towards the bank that offers better value for money and may even be willing to offer a premium pricing for service.

So, what are the things that give value to the customer? I list below a few key service factors - the list is not a comprehensive list as they customer expectations and aspirations keep going up. The key service elements include:

(a) Transparency of dealing
(b) Speed of response
(c) Recognition of customer
(d) Convenience
(e) Courtesy
(f) Integrity & Fair play
(g) Security
(h) Care for customer's interests
(i) Comprehensive coverage of needs
(j) Reliability
(k) Record keeping & documentation
(l) Reasonable cost

Banking in essentially a service business. Banks which are able to offer a wide range of products and at the same time are able to offer high quality of services at reasonable cost are the ones who will attract loyalty and market share.

Customers do not get carried away by advertisements and brand building measures which do not get reflected in the bank's day-to-day behaviour. They also do not get attracted by smart or popular brand ambassadors lavishing praise on the bank. Customers do reflect on their individual experiences and moments of truth and pass it on to others by word of mouth or by sharing it in blogs / Internet sites.

Any investment in understanding customer needs, finding out gaps in the bank's service offering, putting systems / processes / technology in place to address gaps etc. will have huge paybacks in form of customer delight and retention. Banks also need to work towards creating a culture of service within their organisation in order to remain competitive in the long run. Training, rewards and recognition for service orientation, exemplary action against non-conformers etc. are all useful methods to achieve this.

Often, the difference between the leading bank and the others is this service orientation.

I would love to hear your views on this blog. Please feel free to leave a comment on the blog or send me a mail at vish.sesh@gmail.com and I will quickly respond.