Finacle Blog

Being a self-confessed mobile addict, I was curious about how that little device had insinuated itself into my life, almost without my realising it. What was driving the massive adoption of mobile technology, for banking in particular, by millions of users? Had the trend peaked or was there more to come?

My search revealed what a long distance the mobile had traversed as a channel of financial transaction, from a mere SMS alert mechanism to a versatile channel enabling most types of banking activity. Having grown faster than any other channel, it's on its way to literally replacing the wallet - Near Field Communication technology has transformed the handset into a physical transaction mechanism - so it won't be long before I'm tapping my phone rather than swiping my card to pay for things.

While the need for ubiquitous easy access and lower transaction costs (for both banks and their customers) set the stage for a channel that could pick up the ball from where the ATM and Internet had dropped it, it was technology that got things going. Security was the bugbear of SMS-based banking; while the arrival of WAP and the browser improved protection, it excluded all but the most sophisticated devices, until mobile applications became downloadable to make a host of services, including banking, usable on all handsets. Now, my bank's mobile offering protects my account through an enhanced communication security layer based on the use of encryption algorithms.

Mobile apps also transformed the banking experience into one that was richer, context-based and more responsive.

But that was then.

If the think-tanks are to be believed, by 2012 money transfer will be the most popular consumer mobile application,  and four years from now, more than half the planet will use their phone to make purchases. The arrival of contact-less payments, P2P lending and prepaid cards issued by telecom firms (mobile money) are all harbingers of the same trend. The future of mobile banking will be determined by considerations such as interoperability across all types of devices, browsers and communication technologies; security of stored and transmitted data as well as user identity; extreme personalisation and 'over the air' application distribution.

In the meantime, I have to pay my utility bills and buy weekend movie tickets...where did I put my mobile phone! 

(I have described the journey of mobile banking in detail in my paper: Evolution of Mobile Banking. You can read the same here)

Posted by Kiran KSR at 4:16 AM | Permalink | Comments (1) | TrackBacks (0)

The recent economic downturn has brought about quantum changes to the Wealth Management industry. It has triggered many debates on the role of wealth managers and private bankers in the crisis and the need for greater accountability on their part. The industry has perhaps not witnessed the kind of scrutiny it faces now. Investors are demanding greater transparency in the wealth management services and the industry is also seeing increasing regulatory and political pressures. In order to build trusting and sustainable relationships with the customers and achieve profitability targets wealth managers are looking at investing in a more client-centric wealth management model.

Building Trust - The aftermath of the global financial crisis was erosion of clients trust in their wealth managers. Bankers now need to demonstrate that their customers' best interest is above their own profit intentions.  In order to build healthy sustainable relationships, wealth managers must communicate effectively with the client, bringing in greater transparency. After all, it is essential to keep the client informed when the market movements impact the client's portfolio.

Client Engagement - In order to enable clients to take more educated decisions on their finances wealth managers must invest in passing structured information to their clients on factors impacting their investment portfolios. Banks can look at the following ways to manage information flow to their clients:
• Arrange experts to address clients on factors impacting the financial world and the impact on investor portfolios
• Share financial reports specific to individual investor's interests
• Share webcasts on clients' Internet banking account specific to their interests

Internal Compliance Framework - Besides complying with the restrictions imposed by regulators, wealth management firms need to introduce self regulating measures to safeguard the interests of investors.  Wealth management firms need to maintain strict compliance and audit policies applicable to relationship managers and ensure that the advisors are compliant with sales techniques and communications plans. Wealth advisory firms can have regular audit checks on the accounts managed by their wealth managers to ensure that the accounts are managed in the clients' best interest. Rate of portfolio turnover would be an important metric in judging an advisor's performance. However, advisors' performance should be judged on long term performance measures rather than the gains earned on the investors portfolio in the short run. The quality of advice given to the clients can also be gauged by direct client feedback.

Training and Competency - In order to offer clients personalized advice on finances, risk analysis and in depth analysis of factors impacting their investment portfolios, it is essential for banks to train their relationship managers on different facets of managing wealth.

In the end, it is up to regulators and wealth management firms to ensure that their advisors have the required technical competence standards to practice in this industry. One step could be internal certifications and trainings to improve the competency standards of their advisors.

Posted by Priyanka Diwan at 5:19 AM | Permalink | Comments (0) | TrackBacks (0)

The problem with Small and Medium Businesses (SMBs) seems to be that they fall between two stools - their small size and higher risk rating don't make them corporate enough while their transaction levels are too high to dub them retail customers.  Unfortunately, owing to the sheer SMB numbers, many banks bracket them with mass market retail clientele. This needs to change because SMBs transact in separate fashion and have very different needs from corporate or individual users. And understandably, they expect these to be acknowledged by their banks through personalised, relevant and timely products and services.

Since this is so obvious, why have banks not acted already, especially when they know how crucial SMBs are to revenue and profitability? Quite simply, it's a matter of balancing the cost of service with the need to maintain margins.  Dedicating individual Relationship Managers to SMB customers, educating staff about various businesses and replacing legacy CRM systems all cost money. But an effective CRM strategy can help banks tide over many resourcing obstacles and deliver a better experience to their SMB clients. Here are some practices to improve the servicing, satisfaction and retention of these customers:

Capture profile data in full - when a customer profile goes beyond KYC compliance to reflect the business' objectives, financial position, and banking preferences, it becomes a goldmine of insight for the bank and a platform for right-selling.

Add value to products and services - banks must set up in-house expert teams to analyse market trends and direct the creation of customised products and services tailored to serve the specific requirements of SMBs.

Improve sales and marketing focus - ideally, a specialist team of sales, relationship and marketing personnel must be assigned to manage SMB customers. Their efforts must be supported by a robust CRM system which delivers the right product knowledge over the right channel and targeted marketing activities such as customer education events, referral programs and viral marketing campaigns on social networks.

Offer one-stop service - popular service requests must be made available on self-service channels to improve customer convenience as well as reduce bank employees' burden of servicing routine transactions.  The CRM system must share data across all channels so that users can move seamlessly between them, without having to provide the same information all over again. It should act 'intelligently' to route an SMB customer to the same servicing group every time, as far as possible, and enable the latter to access peers, superiors or databases for help during the course of a customer interaction.
 
I have authored an indepth paper which is available here. I look forward to your thoughts and comments.

Posted by Shriram Parthasarathy at 8:02 AM | Permalink | Comments (0) | TrackBacks (0)