Alternative Banking Channels
By Adi Kohali and Adi Sheleg
Weighing up the options
Recent economic turmoil and increasing market complexity has placed unprecedented pressure on financial institutions. The demand for a digital lifestyle and the technological revolution it brings to homes and the workplace, coupled with a significant demographic shift and a new regulatory framework, are subjecting the finance sector to a host of new challenges in a time of severe market uncertainty. However, it is in times such as these that opportunities arise for companies to step outside their comfort zones, fueling innovation on the financial services landscape. In an attempt to optimize services and minimize costs, banks are frequently migrating towards a 24-7 service and customers are enjoying the greater sense of freedom that this creates. Availability is the name of the game as we demand instant access to loans, deposits and our account status. So what is the next step? In a bid to drive even greater differentiation from the competition, financial services institutes are now exploring alternative banking channels, including the internet, telebanking, self-service halls, cell-phone and fax banking.
28 Tefen Tribune | Spring Issue, 2011
Despite this trend, the call for branch services still remains significant although, as we will see, the type of service demanded there has changed considerably.
The world banking sector has been revolutionized over the past 30 to 40 years by an onslaught of new technologies and a widespread change in the regulations governing the use of this technology. As a result, many banks have started adapting their distribution channels and shifting from frontal personal service to direct sales and marketing via phone, email or electronic transactions. The general understanding is that this creates value both for the organization and its clients. Development of main channels: ATM: During the 1990s, the number of active units in Europe rose by a staggering 50%. Originally only used to withdraw cash, the ATM has evolved to support a wide variety of services, including deposits and account details. To counteract the impersonal impression of the so-called “hole in the wall”, the Spanish bank BBVA has developed its “future ATM”, an innovative touch screen interface with customized shortcuts to reflect individual user requirements. Telebanking: the first call center was launched in 1983 in the U.S. by MCI. This marked a shift by many organizations towards centralized customer service centers, often with an automatic reply service (IVR) incorporating voice recognition systems. However, despite these efforts away from personal interaction, the majority of call center activities still involve human representatives, particularly when dealing with transactions. Online banking: another channel to emerge in the 1990s but one which still showed low penetration by the end of the decade. Initially used to present an institute’s marketing platform, the
websites are now enjoying a new lease of life as a door to the world of 24-hour online transactions. Some countries even prefer the instant access to online account information and transactions to that offered by traditional banking, as confirmed in a survey conducted at the end of 2009 by the American Bankers Association (ABA).
Mobile banking: this channel is relatively new but is already showing steady growth. Used in its early stages as a push/pull tool for information text messages, cell phone banking now supports personal account access and is forecasted to become the new mobile payment method or “digital wallet” of the future.
Tefen Tribune | Spring Issue, 2011
Social media: recent years have seen social media creeping up alongside cell phone banking. Banks feel the need to counteract the impersonality of our digital age by offering customers greater contact on a perceived one-to-one level....
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