BFSI VISION | Alternate Channels


Mohammed Ansari

Head – Transaction Banking Practice,
Aurionpro Solutions Limited

Alternate Channels – Trends and how to enhance usage

Technology has transformed the way people do their banking today. More and more people around the world have now begun using Alternate Channels rather than standing in a queue in a branch. With the help of information and communication technology, banks in India have introduced several new modern alternate delivery channels which offer 24 X 7 services to their customers:

  • ATMs
  • Internet banking
  • Phone banking
  • Mobile banking
  • Multifunctional kiosk
  • Call Centers
  • Point of sale etc.

Basic banking to exotic products are now available on these channels. Facilities ranging from accessing ones account balances to statements, cash deposit to cash withdrawal, initiating domestic payments to international ones, opening a fixed deposit to prematurely closing it, ordering a cheque book to putting a stop payment, bill and tax payments to various online payments and many such services are now available through one or more of these channels.

Alternate Channels have greatly reduced the transaction processing costs for banks when compared to transactions done at their branch. However, banks can realize the full benefit from these channels only if there is a significant increase in its usage by customers. Ongoing customer education plays an important role to induce usage e.g. highlighting convenience of usage, faster TAT, tips on securing user id and passwords, security measures undertaken by the bank etc. Banks should extensively train their staff also on these new channels and make them fully conversant so that they can in-turn train and convince their customers on its usage.

The channel strategy can be brokendown into three stages: segmentation, channelling and service matrix. The challenge is to find out which customer segments the bank wishes to address and through which channels and services. When considering Alternate Channels, customers generally fall into four main groups: those who prefer human interaction; those who are open to new channels; those who are unsure and therefore undecided and those who have differing preferences, depending on the individual services in question. It is important that the bank addresses each group of customers differently and then actively sell the relevant channel to those customers. Apart from education, incentivising the customers on usage of the Alternate Channel will also help facilitate the shift. This process will be easier if the bank already has a good reputation for handling its various channels and is well trusted by its customers. The technology employed should be perceived as reliableand simple to use. The channels should be backed by excellent service rules, product features and a grievance redressal mechanism. Technologies supporting Alternate Channel products should also be under continuous review and up-gradation to avoid any adverse situations that could affect customer satisfaction.