Banking, today, is literally at your fingertips thanks to the Net and mobile phone. Taking convenience a step forward, the industry is now focusing on instant gratification— single-screen view of all your financial accounts, instant cash deposit, fund transfers via SMS, etc. While the thrust of banking innovations was on technology and back-end overhauls about a decade ago, today it is mainly about customer satisfaction—making banking more accessible and secure, less tedious and time-consuming. At the same time, these changes have ushered in an era of greater accountability, be it through the cheque truncation solution (CTS) at the ATMs or by the Reserve Bank of India’s (RBI) moves to ensure adequate compensation for consumer grievances. Here is a look at the significant steps in recent times that have enabled this userfriendly approach.
Account Aggregation Service
A typical yuppie owns three credit cards, a couple of bank accounts, a diverse investment portfolio and is servicing at least one loan. Think about the number of passwords he has to remember, never mind the actual money management and timely bill payments. No wonder chartered accountants are in high demand. What if you could view all your financial accounts across institutions through a single user interface? This isn’t a pipe dream. At least one private sector bank, YES Bank, is offering this service, launched late last year, and others are bound to follow suit soon.
The main advantage of account aggregation is that it provides easyto-use budgeting tools and helps you monitor progress using net worth statements and cash flow reports. Apart from providing a holistic picture, these services categorise your transactions so that you can track how you are spending your money. In addition, there are timely alerts via e-mail and SMS to avoid late payment penalty, fraud, etc.
YES Bank’s Money Monitor service is the only one of its kind in the country so far. It uses patented technology by Yodlee, a US-based online service provider, to consolidate and present personal finance data from virtually any online account.
The biggest innovation in this sphere has been the cheque truncation solution. After its successful implementation in the National Capital Region last year, the RBI is planning to take it to six-seven other centres, starting with Chennai. This is good news for customers since it has brought down the time taken to process a cheque from an average of 10 days to less than 24 hours. Under CTS, the physical cheque is no longer dispatched from the branch, where it was deposited, to the clearing house and on to the beneficiary branch. Instead, a scanned image is processed, which cuts down the floating time drastically. Here’s how it works. Assume you have an account at SBI’s Colaba branch in Mumbai and your friend gives you a cheque issued from ICICI Bank, Dwarka, Delhi. Instead of placing the cheque in a drop-box, you get it scanned within seconds at the branch and then SBI sends the digital image to the RBI. In turn, the central bank collects the specified amount from ICICI Bank and, as long as there are no problems like insufficient funds, credits the amount to your bank account instantly. Your bank retains the physical cheque, but you can ask for a copy of the image in addition to the acknowledgement receipt as proof of deposit.
Apart from speeding up the collection and processing stages, CTS reduces the scope for clearingrelated frauds, minimises the cost of collection of paper instruments, cuts down reconciliation problems and is more eco-friendly.
When the RBI ruled that a customer can’t be charged for using another bank’s ATM, anytime money became a lot more convenient. Despite this, how often have you had to settle for a panini instead of, say, a pasta primavera all because you were not carrying your credit card? While debit cards can be used to make a purchase, few people flash them because of the risk factor— it’s linked to a bank account and the liability cover comes into play only after you report a loss. The RBI has tried to take care of this problem by allowing you to withdraw cash from designated merchant establishments without having to buy anything from them. A commission of about 2% will be charged. However, given that you can withdraw only Rs 1,000 a day, it’s a small price to pay for the convenience. To put the accessibility factor into perspective, as of May 2009, there were 10 point-of-sale terminals for every ATM.
While online banking has been around for a while, most Indians balk at monetary transactions on the Internet, logging in only to seek information or issue requests, say, for chequebooks. This is due to security concerns, the worry that disclosing credit card details on a Website can lead to fraud. To allay such fears, the RBI has introduced a secondary safety net. Launched in August 2009, it is called Verified by Visa and MasterCard SecureCode. These 3D secure services allow customers to PIN-protect their card usage on the Internet. Unless you register your card and choose a PIN, you will not be able to complete an online transaction. Your card number, its expiry date and the CVV number can be easily stolen at petrol pumps, restaurants, shops and the like where the swiping machine is not in plain sight. Hence, a smartly picked secondary password becomes a big deterrent.
As an added precaution, consider the use of backspace and clear keys. For instance, if your password is munma211, you can trick hackers by keying in, say, 24[clear]mun1[backspace]ma21. It’s highly unlikely that any malicious spyware can be programmed to keep track of all the changes, so the password extracted will be 24mun1ma21.
Automated Teller Machines (ATMs)
Did you know the RBI has recently asked the banks to reimburse any erroneous debits arising from failed ATM transactions within 12 days of receiving the complaint? In fact, the banks will have to pay Rs 100 per day to aggrieved customers as compensation for any further delay. This compensation has to be directly credited to the customer’s account without any harassment.
Over and above regulatory changes, the ATM machine itself has undergone a makeover, evolving from a cash dispenser to a multi-utility centre. Take cash deposits. Earlier, one had to put the money in an envelope, feed it into the machine and the amount would be credited in a couple of days, depending on the clearance schedule. Now, many banks have installed machines where you put in the cash, key in the appropriate amount and the account number that you want to transfer the funds to, wait for the machine to verify the amount and collect your transaction receipt. Before you reach home you will receive an SMS alert confirming that the deposited amount has been credited. Banks are now working towards introducing the CTS facility at ATMs.
The next few years will also ensure greater ATM accessibility for the differently abled. Apart from introducing ramps to facilitate wheelchair access, the central bank has advised banks to adjust the height of the machines. The most important recommendation is that at least one-third of the new ATMs installed by a bank should be audioenabled with Braille keypads. These ATMs are expected to be placed strategically in consultation with other commercial banks to ensure that at least one is available in each locality.
With the next wave of financial liberalisation coming up, the banking sector is poised for a shake-up, not just mergers and acquisitions, but increased competition. In such a scenario, rapid innovation is bound to become a survival strategy. This bodes well for the customer.
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