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The Future of Retail Banking Lies Within its Channels

The Future of Retail Banking Lies Within its Channels



http://www.infosys.com/finacle ...


Times continue to be tough for banking
institutions as they grapple with low consumer
confidence, intense competition and regulatory
restrictions in a market that is yet to recover
from the crisis. On top, customers are flexing
their muscles by demanding better service and
experience from their bank and leaving them
for another when they don’t measure up to
expectations. In a highly commoditized market,
it is these aspects – and not product and price –
that differentiate one bank from the other. And
the onus of delivery rests almost entirely with
the banking channel.



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    The Future of Retail Banking Lies Within its Channels The Future of Retail Banking Lies Within its Channels Document Transcript

    • The Future of Retail Banking Lies Within its ChannelsUniversal Banking Solution System Integration Consulting Business Process Outsourcing
    • In a market chock full of similar products, moment a client walks in, enabling him to quicklydelivering a strong customer value proposition is attend to the visitor.one of the most important ways in which a bank Other in-branch experience improvingcan create a space for itself. Post-crisis, the technologies include enhanced ATMs/Kiosksbalance of power has shifted clearly towards that automate a number of functions includingthe banking consumer, who is demanding greater cash deposition and also make transacting moreconvenience, functionality, value, transparency, secure by way of biometric authentication.and above all high quality service and experiencefrom his bank, and is willing to switch his service In future, more branches may use monitoringprovider for these, if need be. technologies to see what’s going on in real-time. These will also be useful to gather informationThe banking consumer has also started to about branch traffic and congestion, average waitbehave differently, and nowhere is this more time, peak business hours etc.apparent than in channel usage. A studyconducted in April this year found that being Natural user interfaces – which respond toable to use self-service channels was the human gestures – could become a commonbiggest priority for 2 out of 3 banking customers. sight within next-generation branches, as banksA similar proportion interacted with their bank install very large interactive walls or windowsover multiple channels, mostly a combination that several visitors can browse throughof the branch, Internet and mobile. And more simultaneously for information, or as in the casethan half – regardless of age or channel of the Microsoft Surface, find, simulate andpreference – felt that technology-led channel manipulate financial data on a “tabletop” sansinnovation was important. pen and paper.How are retail banks reacting to this news?An examination of the current and emerging Much More than an ATMtrends in banking gives a preview of how banks In the survey mentioned earlier, multi-functionalare reinventing themselves – and their channels ATMs ranked at the top of customers’ wish listin particular – to strengthen their proposition for branch innovation. For some time now,to customers. banks have been trying to equip their ATMsThrough Channel Innovation with higher capability. Spanish bank BBVA’s redesigned sleek new ATM, which has made theThe Makeover of Branch Banking user experience simpler and more intuitive, is perhaps the best indicator of what all ATMs willAfter some years of depressed spending, be like in future.investment in branch technology is on anuptrend. An analyst firm estimates that banks’ Some of the ATM services that banks areglobal technology expenditure will cross US$ either testing or rolling out include: scanning of130 billion by 2015, of which investment in branch checks so that the machines can accept themtechnology will be a significant component. That’s minus the envelope; payment of direct taxes;understandable considering that approximately acceptance of donations to charitable causes;80% of sales still originate at the branch. railway ticketing; audio/voice enablement to assist visually challenged users; and audiovisualHowever, given the pressure to show a return conferencing with “3D” advisors. Here, it is worthon every investment, banks are being choosy quoting the example of Gambia’s GT Bank,about how they deploy their money. They will no which has innovated on its ATMs in such a waydoubt put some into branch maintenance, but that customers can make cash deposits withoutthe focus is on technologies that can improve using a debit card. Users need only click a button,in-branch customer experience. confirm their account details and feed in theOne of these is the use of an RFID chip – cash. The machine sorts out the variousembedded into a contactless card or other denominations, totals the cash and credits thedevice – that alerts an advisor in the branch the account immediately. The Future of Retail Banking Lies Within its Channels
    • Innovation in Other Channels hitherto untapped segments. Globally, it is estimated that about 2.5 billion people still lackAn interesting example of innovation in mobile access to formal financial services. While there’sbanking – which is witnessing more action than enormous potential in excluded markets, tappingany other channel – is that of the Smartphone it is neither easy nor viable with a traditionalcheck deposit, which allows users to deposit branch banking model.checks from anywhere by transmitting theirimages to the bank, using an Smartphone. Banks, especially those in South Asia have circumvented the absence of a physical networkOther promising mobile banking applications by employing microfinance institutions, NGOsinclude those that facilitate trading, auto accident and individuals with strong local connections asclaim filing, and loan calculations, to name a agents or business correspondents, devolvingfew. The future is headed towards M-banking the entire responsibility of acquiring, on boardingwith the phone doubling up as wallet, credit card and serving customers upon them. They haveand bank branch. set up fixed or mobile kiosks in the vicinity of customers, which act as mini branches. Now,Through IT Enablement the emergence of low cost, ubiquitous mobileBanking on the Cloud technology is giving a further boost to the financial inclusion agenda of banks not just in Asia, butCloud computing enables banks acquire and the world over.reuse IT resources more efficiently, withminimal upfront capital investment. With cloud However, it is also enabling non-banking players,computing, banks incur lower ongoing technology namely mobile operators, to enter the financialcosts, need only pay for resources that they domain. In most markets, these companies haveuse, can scale capacity up or down at will, and leveraged their enormous reach into financiallyroll out new applications faster. excluded markets to successfully deliver basic mobile banking/money transfer services andThat being said, cost saving is not the only some are now experimenting with innovations,benefit of cloud computing, which also gives such as mobile wallets. This is creating somebanks an opportunity to break apart their own pretty interesting dynamics in the area of mobilevalue chain and re-configure the business in financial services and opening up the possibilityreal-time through dynamic sourcing from several of new business models. As a result, the futureservice providers as well as provide customers may see many instances of banking institutionseasier access to services and a more engaging collaborating with network operators toexperience. Already, many institutions, such as extend mobile banking services in financiallyWells Fargo, Bank of America and Citibank are excluded regions.enriching customer experience by incorporatingsocial media into their customer interactions, a Through Social Mediasubject we will return to later in this paper. Othernon-banking players, like peer-to-peer lending Social networking is arguably the biggest agentplatform Zopa, are showing how the cloud can be of change in consumer banking behavior. Evenused to fulfill traditional banking transactions. cursory observation shows how much it is aAlthough issues of data security, privacy and part of daily life. Today, social communities exertregulatory compliance have reined in the growth enormous influence over brand reputation, publicof cloud computing so far, it is still one of the opinion and purchasing decisions. Althoughtechnologies to watch out for. banks, for the most part, are yet to leverage the potential of social media, they might not be ableThrough Financial Inclusion to resist its pull for long. Going forward, we can expect a wider participation by banks in popularBanking the Unbanked social media. In future, social networks could beWith prime urban markets becoming saturated, seamlessly connected to banking channels, andbanks are looking at generating business from perhaps even evolve into one. The Future of Retail Banking Lies Within its Channels
    • Conclusion 3. w w w. b a n k i n g 4 t o m o r r o w. c o m / 2 0 1 0 / 0 6 / sme-banking-in-the-cloud/Daniel BentonTimes continue to be tough for banking :Banking on the Cloudinstitutions as they grapple with low consumerconfidence, intense competition and regulatory 4. www.indg.in/financial-literacy/financial_quiz/restrictions in a market that is yet to recover sbi-faqs-kiosk-bankingfrom the crisis. On top, customers are flexingtheir muscles by demanding better service and 5. www.thefutureofbanking.orgexperience from their bank and leaving themfor another when they don’t measure up to 6. allafrica.com/stories/201107261347.htmlexpectations. In a highly commoditized market, 7. www.atmmarketplace.com/article/182758it is these aspects – and not product and price –that differentiate one bank from the other. And 8 www.networksasia.net/content/retail-banks-the onus of delivery rests almost entirely with spend-customer-analytics-mobile-banking-the banking channel. technologiesWhich is why, channel innovation will continue 9. Accenture banking customer technology studyto play a crucial role in the future of banking. It “Enhancing banking customer value propositioncould take many forms – a high-tech branch, a with technology-led innovation”, April 2011more intelligent ATM, a social media channel,on the cloud banking and a mobile phone thatreplaces both cards and currency, to name afew. Some of these may succeed more thanothers, but collectively they will reinvent thebusiness of retail banking. AuthorReferences: Rajesh Patta Senior Associate Consultant - Finacle1. www.finextra.com/news/fullstory.aspx? Infosys Limited newsitemid=20359 Ashit Gandotra2. www.vrl-financial-news.com/retail-banking/ Associate Consultant - Finacle retail-banker-intl/issues/rbi-2011/rbi-647/ Infosys Limited us-bank-rolls-out-iphone-remot.aspx The Future of Retail Banking Lies Within its Channels