Finacle paper on bank customer service analyses important factors that impact the adoption of technology on the banking ecosystem and how the effective balancing of the human factor against technology adoption can contribute to a fuller realization of banks goals.

1. Bank customer service – ‘click or dial’
versus branch
Thought Paper
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2. Bank customer service – ‘click or dial’ versus branch
Thanks to the ever increasing use of technology of banks, especially in a rural-dominated country
by Indian banks, the proverbial human touch in like India. This paper analyzes the factors that
customer service is being increasingly replaced impact the adoption of technology on the
by inanimate touchscreen presses, button clicks banking ecosystem and how the effective
and IVRs. But this strategy seems to cut both balancing of the human factor against technology
ways as technology adoption sans the personal adoption can contribute to a fuller realization of
touch can subtly impact the long-term prospects a bank’s end goals.
Introduction of alternate channels
A foreign bank operating in India started and phone banking, channel-based banking
popularizing alternate channels for banking became the norm. The banks’ premise was that
transactions in a big way, going to the extent the time spent in attending to sundry customer
of charging customers using the branch for queries could be better utilized attending to
transactions and service requests, while offering high net worth customers to create new business
discounted charges to customers using non- and cross selling opportunities. Staff strength
branch channels. could be lowered and the branch could be run
smoothly and the staff can be more organized
The new generation Indian private sector
and efficient with the aid of technology.
banks soon followed suit and with increasing
customer awareness about the Internet, mobile
Click or dial – pros and cons
The advantages that technology offers are international remittances or trade finance
obvious. The simpler transactions like obtaining transactions like purchase of foreign bills.
account balance, viewing/querying completed
Thanks to the Internet, customers are at liberty
transactions, creating a fixed deposit, requesting
to complete simple transactions at leisure, at any
a new cheque book and placing a stop
time of the day and without branch assistance.
payment request can be done through click (by
However, constraints like lack of awareness
accessing the website) or dial (by making calls
and unavailability of the concerned bank
to banks’ customer service numbers). These
representative may adversely impact transaction
routine transactions usually get concluded
numbers. Also, Internet-enabled transactions
within the turnaround time defined by the bank.
provide very limited opportunity to banks to
However, branch visits will be necessary at
cross sell and thus attract new business. Further,
certain times like when an urgent stop payment
reduced number of branch visits by customers
request has to be placed and also for complex
makes introduction of complex products
transactions like availing a home loan, or for
like housing loans difficult, if not impossible.
specific foreign exchange transactions like
02 Thought Paper

3. While relationship managers can work towards Also, the popularity and wide usage of non-
creating product awareness, they mainly service branch channels notwithstanding, many
high net worth customers. The mass customer customers still do not find them fully reliable
segment is mostly ignored. due to various reasons. A recent survey shows
(figure below) that about 17% and 29% of the
To remedy this situation, banks have attempted
customers found Internet and mobile banking
to popularize new schemes or changes in
unreliable, respectively.
interest rates by using non-branch channels,
that is, through messages/marketing calls, but
with limited success. This can be attributed to 100% 17
29
bad call timing or inability of the inexperienced 80%
callers to clarify customer queries satisfactorily.
60%
In addition, while the customer does consider 83 71
40%
factors like interest rates while deciding on a
loan product, a regular branch visitor is far 20%
more likely to approach the same bank for 0%
the loan. The bank also will be in a much better Internet Banking Mobile Banking
position to convince such a customer to do
Very Reliable/Reliable Unreliable
business with it.
Simple versus complex transactions – business
benefits to the bank
While simple, technology-enabled transactions Worse, the customer might even shift loyalties.
– such as placing a request for a cheque book The customer might move his/her savings bank
or a stop payment request – earn income for account to avail of the benefits of a home saver
the bank, the income from the sale of complex loan scheme where the balance in the savings
products is much higher and the bank stands account is linked for interest calculation, and
to lose much more if it misses out on such also carry out other complex transactions like
opportunities. For instance, it will lose out on overdraft and remittances from there. Cross sell/
huge interest as well as allied income like loan upsell of products is essential for increasing
processing charges, if the customer chooses to business which can be mostly achieved through
avail the housing loan from a different bank. the branch outlet rather than through channels.
Customer service SLA
It has been frequently observed that routine CSRs are assigned a minimum number of queries
queries or transactions when routed through in a day to be resolved, and their effectiveness
alternate channels, take a long time because and efficiency is measured on the number of
of the process involved – the customer resolutions. The number of queries attended
raises the service request, which gets routed per CSR per branch is used as a yardstick for
through a Customer Service Representative performance evaluation. However, on analysis,
(CSR) for resolution based on the Service Level it often emerges that many queries were not
Agreement (SLA). resolved to the fullest satisfaction of the
Thought Paper 03

4. customers. The CSRs, who often do not have any operationally. Over a period of time, reduced
banking background, are minimally trained and satisfaction levels will begin to adversely impact
are typically equipped to provide only limited the bank’s customer retention prospects.
answers. As a result, queries are not addressed
Such issues can be handled at a much faster
with a holistic perspective.
pace if the customer visits the branch instead,
The efficiency of CSR is generally measured by and raises the query there. At the branch too,
the number of requests closed without the bank needs to employ efficient and
assessing the criticality and complexity of the experienced staff, who can not only resolve
requests closed. The SLA statistic, which gets problems but are also knowledgeable about the
reported to the bank’s higher management, products on offer, and can engage meaningfully
thus ends up presenting an erroneous picture of with visiting customers, paving the way for a
ground realities, and the bank fails to improve mutually beneficial long-term relationship.
Customer complaints and satisfaction levels
An analysis of the customer complaints logged The following diagram depicts the results as per
during the last decade throws up a surprising a recent survey on customer satisfaction levels,
fact - the number of complaints has increased which revealed that only a small percentage of
in spite of the technology advantage and bank customers are highly satisfied with channel-
convenience afforded by click or dial transactions. based services. Since customer satisfaction is
One reason could be branch proliferation and vital for retention and enhancement of the
the consequent rise in the number of bank business relationship, a more customer-friendly
accounts, as also the variety of complex products approach and direct interaction to understand
on offer, and the heightened awareness of needs and resolve queries are called for.
customers about their rights.
Customer satisfaction level Customer satisfaction level
82% 75%
15% 10%
11% 7%
Internet Low Medium High Mobile Low Medium High
Banking Banking
04 Thought Paper

5. The rural urban divide
Banks should also keep in mind that the that the banked population of India consists of
transactional and servicing needs of rural and more rural than the urban.
urban customers are quite different. While the
Banks operating in the rural sector focus primarily
majority of banking offices is still based in rural
on credit and low cost deposit products apart
areas (RBI data, as at 31/03/2011), the volume
from traditional savings and recurring deposit
of business is far less than that of urban offices.
offerings. Also, the bulk of the rural population
is not technology savvy and still visits the
Population group-wise distribution of number of
branch for routine transactions, despite the
offices of commercial banks - as on 31-03-2011
availability of technology-enabled services. As
a result, customer services through click or dial
are more or less restricted to the urban and
metropolitan banking population.
33602
23048
19156 17274
Moreover, complex banking products like
structured deposits and foreign exchange
products like options, futures and derivatives
Rural Semi Urban Urban Metropolitan
have not had the desired impact amongst the
rural population. This has meant that on the
Statistics reveal that only about 48% of the
one side, the rural Indian has not benefited
entire Indian population has bank accounts.
from the technology available, and on the other,
Further, studies reveal that out of the rural
banks find it unviable to expand their rural
population of India which constitutes 70%, only
reach or offer channel products and other
40% have bank accounts, and of the remaining
complex offerings.
30% urban population of India, 60% are having
bank accounts. What this essentially means is
The age factor
Age is an important factor that determines attuned to Internet and telephone banking,
banking product demand and channel usage, and prefer to transact through click or dial. In
and therefore the kind of customer service to contrast, customers belonging to the 40+
be provided. It has been observed that the segment find it challenging to bank through
savings potential of individuals above the age technology-enabled channels, perceiving them
of 40, and their capacity to create assets in the as unfriendly, and prefer to visit the branch. For
form of residential apartments, long term fixed them, using channels for transactions is not a
deposits and retirement savings, is slightly natural choice, but one that is forced upon by
higher compared to those who have either just the bank. Even when the Automated Teller
entered into professional life or have less than Machine (ATM) was introduced by the new
10 years of work experience, and are frequently generation private sector banks in the early
job hopping. The decision on long term 1990s, the usage was restricted to the youth
investments like housing loans or pension/ for a while, before it caught up with 40+
retirement products are taken mostly at the customer segment .
age of 40 or over.
Having been technology savvy from a young
age, customers below the age of 40 are more
Thought Paper 05

6. Conclusion
Banks need to attract all types of customers benefits by way of more business which can
– young and old, urban and rural, technology further translate into a lasting relationship
savvy and otherwise – to increase business. beneficial to both the customer as well as
There is a customer segment that enjoys visiting the Bank.
the bank and is also likely to provide references
On the other hand, the suggestions/feedback
that will help the bank get new business. The
requests requested by the Bank through click
bank staff has to consciously set aside time to
or dial are mostly ignored by the customer
service such customers and also use this
or feedbacks provided by the customer are
opportunity to cross sell.
not evaluated properly because of the
When it comes to the rural customer, it is incompleteness of the feedback. The inability of
imperative to build trust, assist in improving the customer to communicate in a meaningful
personal savings/deposits and provide guidance manner may be due to a variety of reasons which
in loan selection. Since the rural customer has includes a structured format designed by the
limited access to current trends and technology, Bank to capture the just desired information or
the quality and timeliness of advice are the usability. The feedbacks thus received by
important for providing enhanced customer click or dial will not help the Bank to make
experience and building a great relationship. judgment/decisions on customer servicing or
Then again, a well presented and user-friendly to make any relevant changes to the processes.
website, and an alert, knowledgeable and
It is the need of the hour for the Banks to
proactive CSR will play a significant role in
employ front office staff who are experienced,
retaining the urban customer.
aware of the products that the Bank is offering,
Since the demands of customers from various conversant with the recent regulations which
segments are not identical, there has to be a have come into effect and its nuances on
judicious mix of technology and the human economy so that the Bank staff can engage
element in customer service and banks should with the customer in a meaningful discussion.
ensure that the service levels and efficiency is Over time, more such quality help rendered
improved in all the facets of banking. builds trust and confidence with the bank staff,
and the customer wouldn’t mind visiting the
If the customer visits the branch, the Bank staff
Bank multiple times for an advice or business
can analyze the banking needs of the customer
decision rather than raising a query by click or
and more cross sell/up sell business opportunity
dial even though it is a simple transaction.
can be explored. Once the opportunity conversion
into a banking account happens, the bank
References
1. www.livemint.com 3. www.saycocorporativo.com
2. www.rbi.org.in
Reghunathan Sukumara Pillai
Industry Principal, Finacle, Infosys
Santhy Sreedhar
Lead Consultant, Finacle, Infosys
06 Thought Paper

7. About Finacle
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and customer experience, arming them with ‘accelerated innovation’
that is key to building tomorrow’s bank.
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