61% of India’s population living in the villages and with only 44% of the population uses smart phones, constituting a big challenge for expanding banking services to all. Two bankers and one tech CEO delve into the challenges and share the various ways to achieve the goal:
Government owned public sector banks remain the backbone of banking spread across India, a large geography. The type of customer base is also distributed across a wide spectrum of technology awareness.
As per data from UN, 62% of the total population of India, viz 0.85 billion people, are from rural background. This population still prefers physical banking services, while people in urban areas prefer the digital mode.
Deepak Sarda, GM – IT at Indian Bank, explains this nicely: “It’s obvious that digital technology can do several chores quicker and better than humans, but it can never replace humans since it lacks emotional intellect, empathy, can’t work outside the box or something creative. This technology will simply assist humans (both service provider and consumer) and this physical-digital blend will always exist irrespective of the type of industry.”
Demonetization and the pandemic enabled large scale technology adoption even in rural areas. Empowered with high internet penetration, the rural masses have access to similar digital banking infrastructure as their urban peers. Although they are familiar with technology, they are cautious, and therefore, reluctant to transact on digital banking platforms, observes Rajesh Ram, GM & CIO at Bank of India.
Harshal Dunakhe, CEO, Business Automation at Kores India, observes that most banks have taken strong steps towards servicing the relatively tech savvy customer base by investing in kiosks, ATMs, UPI, and mobile based banking channels. The experience that a customer who prefers going to the counter gets at the branch needs to be upgraded. Kores a technology solutions provider that helps banks adopt relevant technologies that improve customer experience.
De-Crowding the Branches
Public sector banks have historically faced a surge of crowds, creating difficulties for customers as well as employees. One technology that made a big difference is ATMs. It has evolved from a cash dispensing machine to a self-service kiosk which is available outside the branch 24×7 as an e-banking outlet. For services like withdrawing cash, depositing cash, printing passbooks, depositing cheques, making small money transfers, and inquiries among others, people frequent the ATMs. Aadhar-based payments have also become quicker. Ram adds: “With branch automation, the bunching of customers at the branch during banking hours has spread across the day, relieving both customers and employees. For trade finance customers, we provide the services in the comfort of their office/home. This has also helped disperse the crowd from branches.”
From branches to BCs
Customers were used to a particular form of banking. With digital, banks have removed the strong room for currency. So, while the 24×7 service model is in the front end, the branches continue to function their normal hours for customers who still want to visit and avail the banking services with the help of a digital assistant. This form of banking is presently available through business correspondents. Ram explains: “Business correspondents are going deep into the villages and other parts of the cities where they interact with the customers who are unable to come to a branch. They offer banking services around the clock in a digital mode, but with certain limitations and full precautions like an Aadhar authentication.”
Branch Automation
Digital banking offers services like any other bank branch. Ram explains: “When a customer enters a branch to open an account, he just enters a kiosk to complete the entire process, and he is out of the branch in the shortest possible time. It is like the ATM kiosk, once the customer is familiarized, it will be easy. In future, whether it is electricity, Internet, or phone, all bill payments will be 24×7 in an online mode.”
In general, banks are working towards channel amplification, i.e. developing the right mix of assisted and self-service channels to provide a rich, unified and consistent banking experience to customers resulting in a long-lasting relationship between the bank and the customer.
Improving Process Efficiency
How the transaction happens at the counter, how the person behind the desk behaves, turnaround time of the request – these need to improve for benefiting both the bank and the customers, says Dunakhe. Transactions and document processing in the back office have remained relatively unchanged for many years. It is time to look at these processes, as they add value at multiple layers in the transaction lifecycle.
Customer experiences and branch operations are both vast topics of discussion. “Branch operations can be more efficient if the branch and back office are perfectly balanced during the transaction cycle. Back office and branch efficiency are interconnected. In the same way, customer experience depends on the effectiveness of the branch and back office in providing service,” adds Dunakhe.
He also gives an example: A simple request for an address change may be processed on the spot, however, it will mean a long counter/branch wait time, which means other customers in queue get delayed, or it may be sent to the back office to process, which means counter/branch time is less, but if the back office takes a long time, say 3 days, to process – the customer’s perception of services gets adversely impacted.
“The best balance would be a quick acceptance and verification of request documents at the branch and equally quick processing at the back office so that the changes are made and an SMS sent to the customer by the time he/she reaches the parking lot of the branch. Perfect design of processes and the adaptation of the right technologies like workflow, document handling software, AI, and RPA can help banks achieve this balance,” explains Dunakhe.
Efficiency through RPA
Sarda believes that RPA can reduce time to perform tasks by up to 90% and lower costs by up to 80%. RPA is Robotic Process Automation, a relatively newer technology that automates multiple time-consuming & repetitive processes. It handles workload automation and leverages job scheduling softwares to automate IT and business processes throughout applications, data, and infrastructure. At present the average EOD operation time take is around 5 hours, and is ripe for RPA.
Cheque & Currency Automation
Cash and cheque handling is the core of the branch’s connection with its customers and also with its back offices. Tying up the CTS service locations, BPOs, and the cash part through currency processing centers, and currency chests is extremely important to provide the best service to the customer. Also, it is important to look at the tasks that the branch should do and not do to make the most of the available time window.
Dunakhe emphasizes that a comprehensive solution in this area should eliminate manual data entry and manual tracking, counting, etc, through scanning of cheques at the branch or scanning center. A solution that allows flexibility to follow the path of least delay should be adapted. In the case of cash, reconciliation is the key, and tracking the flow from and to the currency chest is critical. The exchange, capture, and analysis of cash data can solve many operational challenges both at the branch and currency chest. A combination of various modules, and solutions that are interconnected will be the best way to transform branch banking operations, opines Dunakhe.
Newer Automation Avenues
The banks are integrating most of the services with their digital platforms like mobile application, phone/internet banking/POS machines. Since the type of customer footfall varies with various factors such as geographical region, size of branches, etc, proper data analysis can lead to desired results.
Dedicated relationships managers assigned to HNI customers, robotic kiosks, ATM and BNA can be used for day-to-day operational services. More services can be integrated to mobile app and customers can be encouraged to use the app by giving some cashback/rewards, etc.
More physical counters should be arranged during the peak hours for branches where majority of the customers seeking physical service instead of digital. A major toil in branch banking is passbook printing, for which customers can be taught of using passbook printing kiosk, assisted by a bank employee for customers who are not familiar.
An Essential Activity
Presently Bank of India has brought all the services available to serve its customers digitally to the mobile phones. Urban/metro customers and rural customers can avail all banking services from the comfort of their houses. The challenge is in adoption by the customers. The customers need to be trained to use the digital platform and must be comfortable in using the services. For that, Bank of India has designated young officers as digital banking companions at its branches.
Explains Ram: “When a customer walks in, the digital banking companion takes the responsibility of hand-holding the customer by teaching him/her how to use digital banking products. The first step to that is installing the mobile app. Once the mobile app is installed half of the challenge is addressed. Digital banking companions are helping customers learn digital banking in a big way.”
CRM
For a bank branch most valuable source of contextual data is the customer base. Customer relationship management (CRM) technology can be used to collect information on just about anything and everything customer-related, including geographic location, purchasing preferences, spending habits, customer service history, etc. Sarda says that CRM in the banking allows banking organizations to build a customer-focused business framework to understand the customer’s needs and demands and, more importantly, meet them with banking and financial services.
Data Integration
Indian banks use more than 500 applications to run their systems and processes. Sarda says: “This calls for a structured, streamlined and if possible, a unified window for overseeing the stack. Most important is speed. The speed with which bank gets this information and the speed of processing this information is make or break factor for delivering a transformative customer experience (CX). By investing in data structures that integrate AI & ML into enterprise business programs to produce interactive data visualisation and real-time insights, they will develop a single, holistic view of the customer to offer better service.”
Time is Money
The face time that a customer grants in the branch is the biggest opportunity for a branch to increase its revenue through cross selling and up selling of its product. At most times, this opportunity is lost because the branch staff is occupied with transaction processing. Making the most of this opportunity to sell will have a direct impact on profitability, avers Dunakhe.
While that being said, it is easier said than done, and there is always the classic save costs to improve profitability mantra at work. If the transformation/automation can aim at reducing front-end time wastage or back-end cost wastages like people doing manual data entry, time and money are lost in couriering documents. An end-to-end view of the operational processes is a must when we think of achieving profitability improvement.
Face Time
Branch transformation has become synonymous with installing customer facing kiosks, machines, and screens. Self-service infrastructure is not ‘branch transformation’, it is more like shifting branch customers to digital channels of service delivery. The biggest drawback of that is that the branch loses captive opportunity to have face time, ear time, and brain time with its customer while he/she is in the branch. “Wouldn’t a business development person at the bank be happy to have the above three with minimum time spent on actual transaction processing?” asks Dunakhe.
So, branch transformation should be focused on how to make branch transaction processing so efficient that the branch can focus on increasing business rather than processing transactions. Dunakhe says that to achieve this touch point with the customer, the most important desk in the branch, viz the teller/cash counter, has to be automated while still having a person in it to connect with the customer. Primarily, the customer comes to the branch for cash, cheque, account servicing requests. Even today, these are the areas where branches struggle. If one handles these three interactions at the best turn-around-time with 99.9% accuracy, the overall transformation of the branch will happen as focus shifts from services to business, he opines.
Future Technologies
Sarda believes that Artificial Intelligence, Machine learning, Natural Language Processing and Deep Learning are some solutions which are widely used by branch banking specialists nowadays to analyse the spending behavior of the customers, categorize them accordingly, build their portfolio and provide customized solutions rapidly based on that portfolio. These will propel customer interaction to a new level.
Future Plans
Ram shares the future plan of Bank of India: “We have been automating all the services which are available today. At a typical branch, we also digitized all products – be it liability or asset. Services to the business community like finance, LCs, and BGs have been automated; but we are also offering specialized services at the backend.”
At Bank of India, the branch of the future will look like this: As soon as a customer walks in, his entire portfolio will appear as a wealth management portal dashboard. The system should use analytics machine learning and AI to provide him his financial planning and provide suggestions for investments, how he should spend, and how he should save. And all these solutions should be in the self-service mode. In future, we may have robots help the customer with all intelligence of analytics and artificial intelligence.
Branch of the Future
Sarda highlights the technologies and solutions that will be prominent in taking branches to the next level in the future:
- Personal Teller Machines (PTMs)
- Self-service coin counting machines
- VR based multifunctional kiosk to provide personalised UX to customers.
- Paperless banking transactions by using more of digital signature feature.
- Fully digital micro branches at shopping malls, airports, etc, for increasing customer presence points.
Reducing Operational Costs
According to Deepak Sarda, PSU banks are promoting use of following products to reduce the production/ operational cost at the branch level:
- RuPay to reduce the dominance of VISA and MasterCard from the market. In the case of RuPay, all transactions happen within the country which reduces the processing fee and makes transactions cheaper by 23% as compared to MasterCard and VISA.
- UPI (for transactions up to `1 lakh) in place of NEFT/RTGS/IMPS which incur minimal cost compared to other mode of transactions.
- Digital or paperless passbooks and statements
- Virtual debit/credit cards
- Passbook kiosks
- ATM/BNA
- Voicebot/Chatbot for enquiry services
Strategic Transformation
Today’s customers have a lot of choices and banks need to understand that. To service customers efficiently, banks must aim for a right mix of both traditional and new age customer touch points. While the importance of banking through traditional channels such as branches, ATMs, kiosks and service drop boxes are far from over, banks need to transform their digital channel strategy with the idea that a customer’s approach to channels is additive and not substitutive, affirms Rajesh Ram.
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