BFSI VISION | Alternate Channels


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How to adopt Alternate Channels?

Banks- On encouraging users to adopt Alternate Channels
  • By providing an omni-channel experience. Customers should be in a position to navigate across channels and have uniform experience.
  • By offering incentives like waiving fees on transactions done through alternate channels, incentivising customers for transactions through Alternate Channels like cash back, reward points, etc.
  • By disincentives: Charging for transactions at branches after a certain threshold, paper statements, etc.
  • Set Alternate Channels as positive defaults- Position Alternate Channels as standards and advising the customers to select an Alternate Channel and exit from other channels.
  • Charge the customer according to the channel adopted; waive the fees if cost effective channels are used.
  • Increase awareness among staff; make the staff use Alternate Channels.
  • Customer education- Provide interactive education either by setting up self-learning kiosks at branches and / or through online.
  • Increase awareness about IT laws and customer protection; increase awareness about safety of operations.
  • Need to visit branches should be reduced to the maximum extent possible, taking into account security considerations.

Justification for ATM usage fee
  • The charges are applicable only for those accounts where the balance is below a certain level.
  • With no minimum balance being stipulated for SB accounts, the costs overrun due to unremunerative accounts force the banks to restrict the free usage of ATM service beyond a certain number of transactions. There is no option left to the banks except to recover the costs from the accounts which are un-remunerative.
  • The costs of maintenance including currency management at ATMS, upkeep, security etc have considerably gone up over the years.
  • The ecosystem needs to move towards cashless environment. The levying of usage fee will result in restriction of cash withdrawals and will enthuse customers to move to cashless transactions using Debit Cards, Online and Mobile Payments.

Acceptance of Alternate Channels
  • The trust factor - security of transactions, safety of data, theft of mobile handset (in case of mobile banking), threat of phishing etc.
  • Lack of awareness about cyber laws, regulations, guidelines and policies to protect customer interests.
  • Unavailability of Internet connectivity, cost of connectivity, etc.
  • Absence of incentives to customers using alternate channels

Acceptance level of Alternate Channels by rural customers
The digital divide plays a major role in adoption of Alternate Channels. Usage of internet channels for banking is popular in metro and urban areas.

Even though internet connectivity may not be available in rural and semi urban areas the availability of mobile infrastructure, coupled with ever growing usage of mobiles and improved mobile technology has spiraled the use of mobiles for banking services

Sensing this, many of the banks have launched Mobile Banking service as an effort to include rural customers also for Alternate Channels. Mobile is going to be the future and is being considered as Direct Channel and not as Alternate Channel, in terms of its reach.

This has been a boon to rural customers. The usage of the alternate channels has been steadily increasing.