The document discusses opportunities for banks to improve their customer experience and operating models in the changing digital landscape. It suggests that banks need to provide consistent services across channels to better engage customers. The existing operating models of most banks are fragmented and decentralized. The document proposes transforming operations by implementing technology to enable straight-through processing, standardizing products and processes, and consolidating operations. It provides examples of how banks can improve offline and online services, such as enabling card issuance and payments at branches, implementing multi-channel payment options, and expanding offline infrastructure and services in developing markets.

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The Changing Playing Field
To enable a superior customer service experience in the multi-channel environment services
and communication must be consistent and identical offers need to be made available to the
same customer via different channels. Banks that can achieve this can expect a higher
customer engagement. To make this happen Banks (Issuers) need to re-look at their
operating models to make it leaner and more meaningful for their customers. Effectively,
the times are a changing and the Banks need to keep up with changing playing field. Today
customers needs and requirement has changed, they are not satisfied with the just “internet
of things”, to most customers the following matters;
 Speed to market and delivery...
 Integrated with end to end ownership and multi channel payment offering...
 ...and Delivered in a risk free environment at minimal or zero cost
Given the intensifying competition, Banks today are keen on leveraging partners who can
provide an integrated managed services model along with technology led solutions that
drive cost advantage as well as reduced time to market. The key differentiator for any
partner is therefore not just domain capability; it is a blend of multiple aspects starting with
a clear understanding of the existing operating capability.
Before developing a solution it is important for a partner or the Bank to review the existing
operating model and understand the business structure and key challenges the Banks face
today:
 Mapping the „As-Is‟ operating model – Understanding the level of fragmentation
 Identifying the multiple product features and underlying policies
 System capability and its ability to integrate with new tools and platforms
It has been observed, in most cases the operating design is largely on the lines illustrated
below;
Understanding the Existing Capability

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Operating Design and Opportunities
Figure 1: Decentralized and fragmented operations
Addressing the Challenges:
In most cases each financial institution requires a unique solution configuration. The key to
the implementation methodology therefore lies in addressing the challenges in phased
manner to ensure risk mitigation and to provide adequate time for technology intervention
to settle down. The first step will be to:
Transform:
The key objective of transformation is four-fold -
 Implement technology solutions to enable straight through processing – Eliminate handoff‟s
and establish issuance to dispatch from a single source
 Enable seamless offline acquisition of customer details (AOF – Account opening forms)
 Standardize process and product offerings leading to system driven policies and procedures
 Consolidate to a shared service center (depending on mass)
Solution

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Figure 2: Decentralized and fragmented operations
Most partners supporting the Banks tend to consolidate first and then over time change the
systems/ platforms, this leads to a prolonged period of stabilization along with multiple risks
across the engagements in different phases and change management challenges due to
repetitive up-skilling, resource optimization and other factors.
The key is to maximize technology intervention in this stage to ensure one time change of
process designs and upfront identification of risks.
 Offline customer acquisition – The first and only tenet is ‘Do not think online when solving
for offline’. Capture of basic customer information through online portals and then outbound
calling only leads to increased cost and the returns are extremely low. It is important for
Banks to start solving for offline customers differently.
For example: Implementing clipboard based digital form to eliminate
manual/hand-written form filling. A low cost plug and play tool that can be used
by sales force at the mall, events and even ATM kiosks or branches. When
plugged back into the Banks network, this will automatically download to system
(data entry), index additional documents that have been scanned or mailed by
customer and match signature to the right AOF
 Credit appraisal delays – In today‟s banking environment, this is the single largest
bottleneck which leads to huge referrals & rejects and thereby increasing the turn-around-
time. Due to lack of system intelligence and prompts over 40% of cases are either rejects or
sent back as referrals.
System based credit appraisal and approval is therefore critical. Over 80%
exceptions (rejects and referral) are inward facing – Rejects due to

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incorrect/incomplete document set, REFERRAL due to lack of approvals, incorrect
appraisal and DSR (Debt Service Ratio) calculation. Systems need to be designed
within-built policies, procedures and historical exception management thereby
down-skilling the role of a credit appraiser into data input. Product based
document requirement identification, DSR calculation and limit setting by systems
can reduce standard processing time by almost 60%-70%.
 Contact point verification – This is a low value activity that can easily be eliminated by
mandating e-mail/letter from organization especially for salaried employees. For self-
employed business TAN and bank details are either ways a part of the supporting
documents.
A Contact point verification takes anywhere between 5 – 10 minutes and has a cut-
off since this cannot be done after business hours, leading to volume pile up in this
queue post 6PM. Eliminating this activity completely can improve same day
issuance by at least 15-20%.
 Disbursement – In the real world, the disbursement resource checks only the documents
and the data entry to verify the input. This is clearly a NVA since they are neither
consolidating the risks nor are they adding any value.
This should ideally be replaced by a checker who can evaluate the risks identified
in systemic credit appraisal, validate and make changes. Exception (referral
approval) and the risk taxonomy validation are activities that should be
carried out in this stage before the card is printed.
And Build Your Product and Service Capability...Online
1. On-spot card issuance and card production:
As the word suggests it is „Instant issuance‟ of card for customers at the branch
 The card application is captured using the „New Card Application‟ Web screen or the bank‟s
own screens.
 Encoding and embossing requests are sent to SSC, and the card data is formatted, checked
and then returned for embossing by the branch system.
 The card can be sent instantly for embossing or clubbed together for a batch process
throughout the day, depending on the bank‟s preferences.
 The cards are typically issued with a „blocked‟ status and without a PIN for security
purposes.
 Once issued, the customer is then asked to use a PIN pad at the bank to enter in their own
PIN. This process can also optionally activate the card.
 The background process updates the Core system at the bank for card renewals along with
primary contact details for further DIY (Do It Yourself) changes.

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By delivering the convenience of instantly issued debit, credit and prepaid cards in branch
locations upon account opening, financial institutions can further improve profitability with
increased card sales, activation and cross-selling opportunities. Competitive advantage is
also maintained, with issuers able to differentiate their product and service offerings with an
enhanced customer experience that can attract new card sales and build cardholder loyalty.
2. Multi-channel payment offering:
Emerging technology and changes in consumer behavior are changing the payment
landscape. While this is true in certain geographies such as Europe where contact-less
volumes are seeing sustained hyper – growth rate: exceeding over 200%, however it is
also important for Banks and their partners to understand the winds of change. Follow the
herd mentality of embracing is most often counterproductive leading to increased costs and
sub-optimal revenue realization.
For example; in UK -mass adoption of ‘Near Field Communication’ (NFC) in public
transport industry is a key enabler for mobile payments. Coupled with Host Card
Emulation (HCE) as an alternative to SIM –based hosting of card credentials on
mobile phones, this will reduce banks dependency of working with mobile
operators and free them up to innovate , launch independent contact-
less payments and reduce the need to revenue share.
Now imagine, a bank in Asia implementing the same technology. Needless to say
given the economics of the region this will not exactly be a roaring success!
3. Rise of e-commerce and m-commerce: The growth in both these units and its convergence
with in-store payments means acquiring is no more about card acceptance through siloed
channels. It means providing a consistent multi – channel experience to both consumers
and merchants.
Imagine this; you go to Jack and Jones to buy a pair of leather boots. You pick a
pair you like and you take it to the checkout. At the checkout a BLE (Blue tooth low
energy) beacon immediately activates your mobile wallet and also displays a one-
time QR (Quick response code) a tokenized version of your card to make the
payment immediately. Voila! You are all set......
well not entirely, you take the pair of boots back home and your partner suggests
that they look ridiculous with the umpteen pairs jeans hanging in your
closet....You trudge back to Jack and Jones and again the BLE beacon lights up to
take your electronic receipt from the mobile wallet and with a simple tap on your
phone the credit card has received the refund.
Here‟s another example of how the banks can really help their customers; you are an
independent home designer and a prospective customer calls you to design her
parlor. She goes through your portfolio and likes one of the designs she sees on

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your tablet. You request for a deposit to fulfill the order and the customer
suggests using a mobile wallet to make the payment. In the past you have
accepted Master, Visa or cash but now your payment service provider (PSP -
hopefully your Bank) accepts so many different payment brands that you cannot
remember them all. Using a NFC reader, the customer taps her phone onto your
tablet. Your PSP accepts the payment and also highlights the merchant service fee
(preferably a small pay per transaction model fee...otherwise Banks can forget
about you as a customer) along with recommendation of a revised figure if you
want to pass on the service fee to the customer. You take it or leave it depending
on your business model or need, and the transaction is done.
And last but not the least...the best one yet; you are going through a financial crisis of
sorts, but you got to eat...at least once in a while. You go to a grocery store to
make some purchase. As usual at the checkout counter the BLE lights up when you
open the mobile wallet. The wallet suggests you use your reward points to make
the payment and also shows your account balance and quickly calculates the best
fit financials till the end of the month. It also plans out your regular payments and
gives you a view into next month financial situation based on your wages/salary
and shows you where you can cut costs.
It is time, Banks start thinking differently. Customer experience is not just about
seamless service; it is also about improving the financial capability of customer’s
money....the reason why Banks were established in the first place!
As Well As Offline
While all of these make sense for geographies like North America where one in three
household is wireless, these innovations don‟t play out well in emerging markets and
regions such as Asia. It will be prudent to remember that over one-third of the population in
Asia is below the poverty line and over 68% population lives in rural areas. Given the shift
in economics, the region requires more offline payment based infrastructure on the
following lines to capture the offline market such as;
 Tap n Go debit cards for instant identification and card to card payment transfer
 Large scale NFC monitor based kiosk setups (not ATMs just monitors) with optionfor direct
payment transfers based on lists and
 Conversion of existing ATM kiosks to enable the same functionality
 Tokenized check books to activate passive NFC‟s
Here‟s an example of how this can work; Imagine a farmer in the state of Haryana in
India, all he has is an ATM debit card and a bank account. He sells his grain to a
business man who pays him by cash. The nearest bank where the farmer can
deposit the cash is 50 kilometers away. With a monitor based kiosk next door the
business man can do card to card transfer, just by tapping the cards on the

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monitor...similar to an online transaction where we have to put in our account
number to make a payment. Only in this case the monitor using its NFC captures the
card to be debited and the card to be credited. The same can be used for a tokenized
check as well; however the customer will need to add the details of remittance or
the creditor will need to tap his card. Simple, easy and seamless transfer of funds.
Citing an example from the UAE region; 85%-90% of the population is people from
other countries making a living. Today, most of the people have a PayPal or such
other account to ensure low transaction fee. Imagine the same solution being made
available by a bank coupled with an extremely low pay per transaction fee. The
amount of remittance traffic of that Bank will increase by hundredfold and all
straight through processing requiring zero manual intervention....The potential is
massive; all it requires is the right technology solution!!!
Signing off; While offline market is far harder to crack, however enabling technologies which
are currently in use in malls and storefronts can very well provide seamless solutions. Plastic
cards are slowly but surely getting dematerialized and it is up to the Banks to choose the way
forward...by transitioning to a bank of the future; trusted, indispensable and integral to
customers or remain a transaction provider.