One of the biggest time consuming and expensive aspects for any bank is how much of customer traffic flow in to their branch network, i.e. the number of customers visiting the branches. Customer service is a critical aspect of any bank that can impact it negatively or positively. Whereas, the international banks are known for providing better customer service than the local banks, the latter is quickly catching up with the use of ADC (alternative distribution channels) as a method to reduce customer congestion at their branches. The time saved being redirected to providing better customer service levels. Alternative distribution channels such as online banking, Automated Teller Machines and SMS banking provides customers the option of accessing their account and performing their activities anywhere in the world provided they have access to an ATM, the internet, a designated call center or carry internet enabled mobile phones. They can avoid the hassle of having to go to their branch, sit in line and wait for their turn to be served by a staff member. One of the biggest factors in customer experience is how long it takes to be served by a teller at the cash counter. Many banks set turn around times that the customer should be serviced and transaction dealt with. This turn around time has a direct impact on how long the customer’s relationship exists with the bank. As a predominantly service oriented culture and where word of mouth travels fast this is what makes or breaks the success of a bank. Merely, having better products or higher interest rates is no longer enough to survive in the fast paced banking industry. In this paper, we look at alternative distribution channels for customer servicing beginning with an introduction to mobile computing.
Mobile computing began with the advent of portable computing devices such as laptop computers, PDA’s and other hand held devices such as smart phones (internet enabled mobile phones), collectively known as Mobile Devices. This enabled individuals to have computing power at their finger tips. However, connecting through wires was still required in order to gain access to information within a given network. Initially, downloading or uploading information on to mobile devices was done with the help of cables connected to a regular desktop computer, known as synchronization. This enabled employees who traveled outside the organization to keep track of sales, inventory as well as marketing data. With the advance in information technology it was only a matter of time before connecting through wires was replaced with wireless communication. This enabled field officers to connect real time with their organizations network and upload or download real time information, thereby increasing efficiency and improving the service provided to customers.
An e-business application is any internet based application that enables transactions or exchange of information via computer networks. Examples include online shopping sites, auction sites and banking services. Through the advent of wireless mobile computing M-commerce or Mobile commerce was a natural extension of e-business but in a wireless environment. Its application in the financial or banking sector has been vast with regards to providing numerous services such as performing transactions, balance enquiries as well as other services. This paper tries to outline how alternative distribution channels other than those in current use can help Stand Chartered Bank (or ‘SCB) redirect its customer traffic flow away from the branch network.
In terms of competition against international banks SCB’s main competitors are HSBC and CitiBank. The latter, however, will be ignored for comparison as entry in to the consumer (individual and SME) market is limited but reference will be made to the other countries in which they operate. This paper will only concentrate on the consumer aspect of banking, i.e. excluding services provided to large corporations which make up the corporate services aspect of banking. The consumer service side will therefore include individuals as well as Small and Medium Enterprises.
Prior to the merger of Merita Bank, in Sweden, with Swedish Nordbanken forming MeritaNordenBank, the bank has been instrumental in pioneering fund transfers and other services online in the banking industry. With regards to the international banks in Sri Lanka online banking services are offered both by HSBC and SCB, whereas CitiBank Sri Lanka does not provided this service. CitiBank in other countries, however, offer both Online Banking as well as SMS Banking (e.g. in the US). Online services provided by HSBC is a little ahead of SCB in terms of facilities such as stopping cheques and being able to open Time and Savings Deposits online. Common to both organizations online services include fund transfers, account balance enquiries, utility bill payments, cheque book requests and other services. With the advent of mobile computing users can manage their account activity any where in the world through their laptops, PDA’s and other hand held devices such as smart phones. Mobile computing has consequently changed the way we do our banking. Redirecting customers to alternative distribution channels such as this has helped lessen the customer traffic flow to branch networks. Thereby, improving customer service for those that need to visit a branch for personal services. In 2005, there were 1.02 billion people accessing the internet through mobile devices, in 1999 there was roughly half that amount of users. With the exponential growth of users, it is only natural that many companies implement an online service element in to their existing customer offering. As the online services provided by the institutions, including other local banks, are very similar we move on to discussing the use of mobiles to perform the day to day management of an account. In particular the use of SMS Banking will be highlighted.
The use of mobiles for your banking services has emerged through the use of Short Message Services (SMS) as a basis for performing such activities. Many organizations use this method to relay information to their customers, without their specific request, such as market information on shares and foreign exchange. Where messages are sent to customers on no accord of their own it is known as a push message. An example of which is the market information relayed to customers by the earlier mentioned MeritaNordenBank. CitiBank in the US has been responsible for pioneering the SMS banking concept, offering facilities such as account balance alerts, cheques presented for payment, credit card payment due dates as well as other facilities. Locally, one of the first banks to introduce SMS banking was Seylan Bank (Pvt) Ltd. Pull messages refer to requests sent by the customer to the bank, the information is then relayed immediately. Seylan Bank offers information such as balance enquiry, mini statements, the last five credit and debit transactions, clearing cheques for the day, returned cheque totals and other facilities as pull messages. Push messages as described earlier refers to information sent by the bank voluntarily through no request by the customer. This is also used for marketing purposes such as when a new product is about to launched or alerts regarding foreign exchange rates etc. Another local bank, Hatton National Bank, has pushed the boundary a little further by incorporating fund transfer requests through SMS banking, inclusive of credit card payments. Although limited to your own personal accounts or designated third party account(s) within the same bank, the concept of being able to manage your money without having to visit a branch has revolutionized the banking industry. Although the use of smart phones or internet enabled phones is relatively new in the market, HNB has been proactively promoting the use of mobiles that are GPRS/3G enabled to manage accounts through the use of their online service site in addition to their SMS banking facility.
One of the biggest local banks with a network of over 150 branches islandwide, Commercial Bank of Ceylon, has also implemented SMS banking along with their online banking services site. Like HNB, ‘fund transfers’ is another facility offered under SMS banking. None of the international banks, although capitalizing on online banking services, has yet to implement any sort of SMS based services. With customer service being the core differentiator this is one aspect that the international banks including SCB can not ignore. With more and more new to bank customers opening accounts more has to be done in terms of redirecting customers to alternative distribution channels. Maintaining a good customer relationship and generating new leads / sales is a core functionality of the banks sales workforce or relationship managers. With the account portfolios ever increasing, the time needed to service the customers of each portfolio also increases for the responsible relationship manger. Time spent on the phone servicing customers in relation to mediocre enquiries which do not enhance or reinforce the customer relationship, such as account balance enquiries, is time spent away from providing services that does maintain / enhance the relationship or generating new sales. Some banks such as HSBC only entertain calls of this nature being made only to their call center unit and only more important customers or premier customers with deposits over a certain threshold are allowed to maintain personal contact with their relationship managers. Depending on the cost to benefit analysis, SMS banking takes away the mundane tasks that do not need to be performed by an experienced sales agent.
Other methods of alternative distributions channels include Automated Teller Machines, which customers frequent to withdraw cash, make deposits, enquire balances as well other services, such as statement requests. Currently, all the major players in the banking industry have a wide ATM distribution. SCB currently has fifteen ATM machines, with 5 machines located off-site (not at branch premises). The VISA and MasterCard network enables any person to access funds from their account from any ATM worldwide. However, using an ATM card at an ATM other than which belongs to the bank you have an account with attracts additional charges a majority of the time from the acquiring bank. In principle, however, use of an ATM to access your funds (but not account information) has meant that customers do not have to frequent their bank for the same purposes. Interactive Voice Response is another method of servicing customers without requiring the intervention of a human being. This is used for phone banking purposes to which customers call, enters an access code, and relay their instructions through steps of pressing numbers on their phone keypads and / or voice commands in order to perform the required function.
Having identified that the one main area that the international banks have not ventured in to is SMS banking and that SCB would be the first within the international banks if implemented we go on to look at the benefits and disadvantages of offering SMS banking. In addition to the benefits of utilizing SMS banking mentioned earlier, the other advantages include the fact that customers will no longer have to be put on hold to enquire about balance enquiries if the method of enquiry was by telephone call. Obtaining information regarding your account balance is only an SMS away from your mobile. The immediate drawback of such a system is when an unauthorized party gains access to your mobile. Sensitive information can be obtained through this method in the form of undeleted SMS messages stored on your mobile. Another advantage of utilizing SMS banking over online banking services, even through your mobile, is the fact that 3G and 3.5G coverage is fairly new to the Sri Lankan market, especially in terms of the locality covered within this network. On top of this, the percentage of 3G enabled phones in circulation will be low compared to those that do not have this facility. This, however, does not preclude the use of SMS banking as only SMS capability is required which most phones nowadays have as a standard phone feature. The costs in relation to accessing your account details through the internet will also be considerably higher than a simple SMS enquiry or transaction request. Bearing in mind that the individuals with access to the internet is relatively much lower than those with mobile phones it is only natural that Additionally, the security of information transferred does pose an issue as hackers develop other ways to hack in to networks, especially where wireless connectivity is involved. Albeit the risks, SMS banking should be looked at as viable option for reducing the customer traffic. Nokia, one of the biggest brands in mobile manufacturing, predicts the mobile market to grow to 1.2 billion units in 2008. The numbers alone show how much penetration can be achieved providing services through ones mobile. This, however, does not mean that the online services is of less importance to SMS banking. This in itself is a very value adding service provided to the customer. Coupled with wireless connectivity on mobile devices, internet banking is a useful tool that should not be overlooked, especially as more and more new users access the internet.
In the future Sri Lanka will probably see the introduction of Cash Deposit Machines, which are similar in appearance to ATMs but does the complete opposite. That is, accepting cash deposits. HSBC has in operation a machine called the ‘Easy Pay Machine’ which accepts cash deposited in envelopes but does no physical verification of the amount input at the time of the deposit. Other countries have already implemented the use of CDMs in order to give the customer the option of depositing cash at any time of the day (although account realization may occur only the next day if late the preceding night etc). This could be another way forward for redirecting branch customer traffic away from manned desks.
The implementation of SMS banking for SCB will have to be analyzed in terms of the cost to benefit ratio. The benefits of enhancing the technology infrastructure of any firm is always difficult to quantify, as most of the benefits would be intangible. Finding an accurate figure for the cost saves, in terms of time saved by redirecting calling by phone customers to this channel for the mediocre service, is also difficult to estimate accurately. In the distant future, however, SMS banking has found its mark as a convenient tool for both customers and their banks. With the latter the use of push messages to market new products and services would be an added low cost benefit. SCB should look at this option as an alternative channel to which they can redirect the mediocre tasks that do not contribute to maintaining or enhancing the relationship with the customer. The costs saved will translate to requiring fewer personnel to providing the same level of customer service while utilizing that man power for sales generation. One important note, however, is not to overlook the importance of having that human touch at the front end of any business.
We have seen the application of e-business solutions in the form of online services offered by banks and the evolution of mobile commerce and its application in the form of direct access to online services as well as SMS banking. With the service provided being the most important differentiator we have seen how implementation of SMS banking could benefit SCB, reducing its branch traffic flow. This, however, depends on the cost to benefit analysis. Mobile commerce is here to stay revolutionizing the way we do our banking. Only with time will logging on to the internet through your mobile will it become the norm for the majority of mobile users in Sri Lanka. For the time being m-commerce in the form of SMS banking can help reduce the influx of customers to SCB’s branch network.
Contributed by: Inoshe A.