Ac­cel­er­at­ing change in Co­op­er­a­tive Banks: A tech­nol­ogy per­spec­tive

“The world of pay­ments is chang­ing! Wal­lets will take over Banks! Trans­form or be left out!!”

Banking Frontiers - - Banking Transformation - Mangesh Sawant, Gen­eral Man­ager, Co­op­er­a­tive Bank­ing and Cards, FIS

We keep hear­ing about in­sti­tu­tional changes in ev­ery fo­rum and ev­ery thought lead­er­ship ses­sions where bankers and fin­tech ex­perts meet. Even be­fore we could spell “De­mon­e­ti­za­tion”, Bank­ing and Fi­nan­cial in­sti­tu­tions were be­ing bom­barded with a va­ri­ety of tech­nol­ogy op­tions.

But the main ques­tion that needs to be asked is- Is big trans­for­ma­tion re­ally hap­pen­ing with other banks? If yes, is it ben­e­fit­ing the cus­tomers? What is the end con­sumer re­ally think­ing? To seek an­swers to these ques­tions, FIS did a sur­vey that gath­ered a keen un­der­stand­ing into peo­ple’s ex­pec­ta­tion from bank­ing and their be­hav­iour to­wards the same. The Per­for­mance Against Cus­tomer Ex­pec­ta­tions (PACE) re­port pro­vides a snap­shot of a unique time when the bank­ing in­dus­try was un­der in­tense stress. Some of the very in­ter­est­ing in­sights that came out of the re­port are as fol­lows: More than 60% of the re­spon­dents used

u mobile de­vices to check their bal­ances, view re­cent trans­ac­tions, pay one or more bills, trans­fer funds be­tween ac­counts or re­ceive bank no­ti­fi­ca­tions. This fig­ure is al­most dou­ble than the 35% num­ber that was re­ported on the same pa­ram­e­ter a cou­ple of years back. More than 30% of com­mon pay­ments

u are done with mobile apps com­pared to cash, cheque or credit/debit cards

As we com­monly see, the Gen Y (18-36 years) has adopted tech­nol­ogy very rapidly and in­puts pro­vided by them are re­mark­able: They want to bet­ter con­nect with their

u banks at their con­ve­nience, at any time and from any­where.

The big­gest chal­lenge, ac­cord­ing to

u banked Gen Y Con­sumer, is get­ting time to phys­i­cally visit a branch.

Gen Y are far less sat­is­fied with their

u cur­rent bank­ing providers and are will­ing to change their Bank­ing part­ner.

The writ­ing is on the wall! Cus­tomers are not think­ing about phys­i­cal branches any­more! Just like we are en­ter­ing the age of home de­liv­ery for gro­cery and gad­gets, bank­ing needs to be home de­liv­ered as well. As more and more peo­ple are get­ting used to mobile apps from the ecom­merce sites, same ex­pec­ta­tion in in­creas­ing from banks as well.

We no longer need to queue up to pay util­ity bills, nor do we visit our dear ones to stay in touch. Thanks to mobile phone pen­e­tra­tion strate­gies of the tele­com com­pa­nies and the gov­ern­ment’s push to­wards Digital In­dia, online mobile ac­cess is reach­ing ev­ery cor­ner of In­dia. With ev­ery pass­ing year, this con­nec­tiv­ity will get bet­ter, faster and more sta­ble.

The gen­er­a­tion of adults get­ting cat­e­gorised next year will all be born in the cur­rent mil­len­nium. This is a mile­stone shift over all adults today who are all born in the last mil­len­nium. Their be­hav­iour will be sig­nif­i­cantly dif­fer­ent than the older gen­er­a­tion. They will be cat­e­gorised as na­tive Digital Ci­ti­zens – ir­re­spec­tive of where they are born - in big towns or small vil­lages

How can we pre­pare Co­op­er­a­tive Banks to cope with this change and that too at a rapid pace? Be­low are a few rec­om­men­da­tions:

1. Get a ro­bust core bank­ing soft­ware:

A state of the art CBS is manda­tory for ac­cel­er­at­ing change in the co­op­er­a­tive banks. Core does not change much it needs to be ro­bust enough to add ad­di­tional chan­nels. Un­for­tu­nately, the cores that have evolved in the last few decades have fo­cussed around branch bank­ing rather than online bank­ing. Though online bank­ing has been en­abled in these older CBS, its ini­tial ar­chi­tec­ture was never meant to sup­port online chan­nels. One should al­ways look at a CBS ar­chi­tec­ture and if it is de­signed to sup­port the next gen­er­a­tion chan­nels and their abil­ity to add them as and when re­quired. 2. Mi­gra­tion from old CBS to new:

For any mi­gra­tion to be suc­cess­ful, it needs to be as pain-less as pos­si­ble for the end­con­sumer. “Bank­ing is liv­ing”; and life can­not go down for a mi­cro-sec­ond. The mi­gra­tion needs to be rapid and it can­not go on for­ever. Change man­age­ment needs to re­ally smooth for the con­sumer as well as the bank staff. 3. En­abling chan­nels on the CBS:

Chan­nels are the home de­liv­ery sys­tem of Bank­ing. New tech­nolo­gies such as UPI, IMPS and mobile bank­ing need to be en­abled and avail­able for peo­ple to bank with. A ro­bust EFT Switch is also needed for rout­ing trans­ac­tions. With cur­rent CBS, many smaller banks are find­ing it dif­fi­cult to in­te­grate new and evolv­ing tech­nolo­gies.

With bound­aries be­tween con­sumer bank­ing and tech­nol­ogy get­ting dis­solved, it is im­por­tant for Bank to build a strong tech­nol­ogy mind­set. A strong and sta­ble tech­nol­ogy part­ner will play an im­por­tant role in ev­ery step of the tech­nol­ogy jour­ney with the Bank. With lo­cal cus­tomer un­der­stand­ing from the Bank, com­bined with deep tech­ni­cal knowl­edge and skills from a tech­nol­ogy part­ner, even the small­est banks can chart their course steadily through the waves of tech­nol­ogy.

Mangesh Sawant

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