BFSI VISION | Alternate Channels | NEWS

Mobile is no longer an alternative channel for banks
Source- Cbinsight

With the GSMA predicting that the world will have over 1.75 billion smartphones by the end of the year, mobility has become the hub of computing and connectivity. As smartphone adoption rates grow year after year, and broadband penetration becomes a norm in daily life, banking, commerce and payment sectors are also transitioning through the mobile channel. If the banks don’t realize this tectonic shift, they risk remaining behind in the wake of mobile innovators serving consumers anywhere, anytime.

Today, banking apps enable us to log-in without a password, withdraw money from ATMs, send money, and pay anyone anywhere, all without a bank card. A measure of how investment in customer service is moving to digital, SNL Financial reported that U.S. banks closed 1,487 branches last year, the highest number of net closures since it began tracking the statistic in 2002. Across our own business, we see customers click on their mobile banking apps an average 30 times a month. The success of mobile banking in particular means that consumers are even rejecting traditional online banking in favor of mobile, and banks are seeing massive waves of adoption.

Smartphones are poised to take over the user experience of paying and buying. For example, more than half of Amazon customers used mobile devices to make purchases during last year’s holiday season. Banks must follow this trend to satisfy their consumer base, track their customers and understand their spending behaviors by delivering innovative services to their customers that deliver real dividends: attracting new users, increasing relevant offers and loyalty programs and driving customer retention.

Impact of Alternative Delivery Channels on the Branch
Source- FMSI

As alternative delivery channels continue to evolve, the impact that these options have on your account holders and branch traffic increases, as well. Most financial institutions have been offering debit cards for decades and online banking for years. To keep up with technology available in the market-place, in more recent times, organizations have taken the next logical step into mobile banking. Let’s face it, more account holders are discovering mobile banking every day, and realizing it is the best option.

Mobile banking certainly changes how account holders interact with their financial institution, because the mobile device they are carrying is now their branch. While mobile devices may be a relatively new method for mobile banking services, e-commerce on the internet certainly is not. As the chart below indicates consumers are indicating an increasing preference in both mobile and internet banking. These numbers will likely continue to grow year-over-year.

While many of today’s account holders still value visiting their local branch, recent trends show a sizable decrease in transactions traditionally conducted in branches. According to the most recent FMSI Teller Line Study, industry transaction volume trends show that since 2005, branch transaction volumes have decreased 32.7%. How much of this decrease in transaction volumes is directly related to mobile banking?

The FMSI Study also revealed a 13.4% increase in teller Salary & Benefit Hourly Pay Rate, from $13.79 to $15.64, and a significant increase of 38.9% in Labor Cost per Transaction (from $0.72 to $1.00). How much of an increase in teller cost per transaction have you experienced since 2005? The future generations of the 21st century will undoubtedly utilize mobile banking as the preferred method of conducting their banking, because of ease and convenience, seeing significantly less value in visiting a branch in person. What is your financial institution doing to prepare for the impact of mobility on your account holders?

Smart phones and tablets are taking traditional transactions out of the financial institution branch networks just like email and texting have taken traditional mail out of the United States Postal Service offices. The Postmaster General, Patrick Donahoe, recently announced a plan to cut Saturday mail delivery as a means to save the financially burdened agency $2 billion a year. This is the first significant reduction in USPS delivery service since it discontinued Sunday delivery in 1912

Source: American Bankers Association (2010, 2012)

BoB bets on alternative delivery channels
Source- The Hindu

Bank of Baroda has said that it is currently focussed on boosting the capacity of alternative delivery channels (ADCs) and has chalked out a budget of Rs.500 crore for the same. It is also in the process of adding 7,000 new jobs for officer and clerical levels during the current year.

With more and more customers embracing modern technology to save time and costs, banks are also transforming to serve customers better by providing alternative delivery channels such as ATM, Internet or online and mobile.

The transactions through these electronic or ADC modes have been on the rise, and going forward a significant portion of traction is to happen through these modes.

“We are enhancing the capacity of ADCs in a bid to meet the diverse needs of different customers. First, we are ramping up our ATM network, and by the end of this fiscal, we intend to increase the number of ATMs to about 6,000 from 2,600. The number has already crossed 4,600,” S. S. Mundhra, Chairman and Managing Director, said.

The bank has also opened self-service 24x7 35 e-lobbies (equipped with cash dispensers, cash acceptors, cheque deposit machines, Internet banking kiosks, self-service passbook printing kiosks, and hotlines to the bank’s call centres) have been opened across the country and 15 more are to be opened before this year-end.

Other initiatives include self-service passbook printing kiosks in 1,500 branches and cash acceptors in smaller centres, among others.

At present, ADCs account for about 53-55 per cent of transactions, and it is expected to increase to 60-65 per cent soon.