Technology has touched every aspect of our lives in the recent years and banking has been no exception. Huge strides made by information technology have allowed banks to provide much better levels of service to their customers at drastically lower costs. The deployment of technology has also changed the channels via which customers interact with their banks. In this article, we will trace these changing channels of banking service delivery.
Traditional Delivery Format: bank Branches
Bank branches form the traditional channel for delivery of banking services. Almost every bank in the world has branches although of late banks have reduced the reliance on these branches and are attempting to replace expensive branches with inexpensive technologies.
However, for the moment, branches still remain one of the most popular methods of delivering banking services because they enable banks to offer all services from the same location. Also, the size of the bank branches, in terms of real estate, has reduced considerably in the past few years. This is because of the technological innovation that has made it possible to have better storage and processing without utilizing any space. Technology has affected every area of banking and this includes traditional models like bank branches.
Modern Delivery Formats
The modern service delivery formats vary significantly from the branch based model. First of all the focus is on efficiency. This means that the banks aim to provide more and more services at the least cost possible. Secondly the focus is on educating the customers and making them accustomed to banking via these new channels.
Here is a list of some channels for providing banking services that have been developed recently.
- Automated Systems:
Automated systems have become extremely popular in the past few years. This is because they generally cost less than humans performing the same service. For instance the maintenance cost of an Automated Teller Machine (ATM) is far less than that of a human teller. Also, the machine can provide service 24 by 7 which a human cannot possible do. Therefore, along with ATM’s a wide variety of other automated systems have also been deployed in bank branches. Some of the other automated system include cash deposit machine, machines which update pass books or provide bank statements or machines to recharge debit cards with predetermined values. Automates systems are now predominant in developed countries like United States and Europe where labor costs are high. These systems have also started reaching developing countries in the third world.
- Telephone Banking:
Telephone banking is the provision of banking services over a telephone line. Therefore, telephone banking is also equipped with providing almost all the services that a traditional brick and mortar bank can. However, phone banking faces an additional challenge. Phone bankers also need to identify whether they are speaking to the correct person or else they may end up divulging sensitive information to the wrong person. Mechanisms have been created in order to ensure this. Such mechanisms include phone banking passwords and confirmation of personal information that can only be provided by the account holder.
Phone banking provides customers with extreme convenience as they can avail the service 24 by 7 and from any geographical location. Also, phone banking allows banks to reduce costs as they can outsource their call centers to lower cost countries like India where the work can be done at a fraction of the cost. Hence, a win-win situation is created.
Internet banking is the provisioning of banking services over the web. Like phone banking, internet banking can be used to replicate all the services that are offered in brick and mortar branches. Also, like phone banking, identification of customers is a problem. Internet banking faces its unique sets of risks like phishing attacks and hacking of customer accounts. However, the development in technology has allowed the banks to build secure systems which can defend against such attacks.
The main reason behind the massive thrust on internet banking is that the processing capability gets transferred from bank staff to users. Hence, if a user needs a bank statement, they can obtain it themselves. The requirement of bank staff is completely eliminated and this helps the bank save massive costs. It is for this reason that banks insist on educating customers about internet banking and prefer to deal with customers in that manner. Some banks charge customers additional money if the avail a service in a brick and mortar bank branch that can also be availed online.
Developments in information technology have made it possible for people to conduct banking transactions while on the go. The cell phones of people are connected with high speed internet. Also, mobile applications have been developed which enable customers to obtain all the services that they would be able to avail at a branch. Once again the threats of security attacks and hacking are present. However, these are risks that are being mitigated.
The banking industry believes that mobile banking of m-banking is the future of the industry wherein people will be able to avail any service they require at the click of a few buttons. Technology is therefore enabling banks to provide customers with unprecedented service levels while simultaneously providing their shareholders with unprecedented return on equity,
Technological developments in computing are certain to find more applications in the baking world. Therefore, the forerunners in the banking industry understand that their business has become intertwined with technology and the next industry leader will be someone who is able to utilize technology to the maximum.