Wire Transfers and ACHs

A recent Mercator Advisory Group look at 3 types of wire transfers and two types of ACH operations.

Banking - Unlocking Efficiency

Low cost deposits and technology are two keys to high performance.

Understanding Digital Banking

By Stanley Epstein - Principal Associate, Citadel Advantage

The term ‘Digital Banking’ is, to my mind, one of the most miss-understood concepts in the financial world today. Ask any group of 21st century bankers and you will get more definitions than there are member of the group. And this confusion of definition is one of the reasons why there a lack of fire and enthusiasm for the whole idea.

Many simply see Digital Banking as mobile banking or on-line banking. They see it as an add-on to existing and traditional banking services. All of these are too narrow focused. They fail to see the big picture.

How do I define “Digital Banking”?

Well, I have agonized over this for a while now, in part because I have been seeking a simple, succinct turn of phrase, ten or twelve words crafted into a killer definition. But even this eludes me.

My best shot at this is;

Digital Banking is the application of technology to ensure seamless end-to-end (STP in the ‘old’ jargon) processing of banking transactions/operations; initiated by the client, ensuring maximum utility; to the client in terms of availability, usefulness and cost; to the bank in terms of reduced operating costs, zero errors and enhanced services. 

Just for a moment I would like to expand on the benefits, to both the bank and the client, just to try to illustrate a larger reality, the way that I see digital banking.  

Benefits to the bank:

Lower operating costs through;

• the elimination of costly back-office processing operations,
• fewer (or ideally no) errors,
• smaller branch footprint (the typical branch can become a kiosk affair, providing technology interfaces for the client to use plus the ability to deal with banking specialists via a video link) – a minimum number of actual staff will be required.
• concentrating banking/business specialists in a single centre, who are then available to clients via a technology link (either on their mobile, pc or via a kiosk branch).

Operating cost savings of between 20% to 40% could be achieved this way, according to industry experts. Cutting costs has the opposite effect on profits – they go up.

Dumping legacy systems;

• Make no mistake - one of the biggest drawbacks to going ‘Digital’ is this irrational clinging to legacy systems (developed in the 1960s and 1970s) that hold progress back. Banks plead the huge cost of making the change. They are wrong. The ultimate costs of not making the change are far greater.

Benefits to the customer

Improved services and product offerings; 

• 24/7 bank services and availability through your mobile, pc or kiosk branch,
• ‘smart banking’ applications that allow ALL transactions to be completed from the device of your choice, from beginning to end (with clear instructions and fail safe mechanisms),
• access to a FULL range of services (savings, investments, insurance, loans, mortgages, foreign currency, etc.),
• new useful client services such as warnings, notifications, budgeting, expenditure analyses, savings programs, calculators (you name it – the range is endless),
• lower charges (and therefore cheaper banking),
• banking that meets the client’s needs (not the banks). 

Of course with all this data available banks should not hesitate to follow up on what their client is doing or looking at – by e-mail, on-line chat, personal phone call. Just like the popular hotel grading system ‘Trip Adviser’ does today. If you’ve been checking out hotels – they follow up in days with a ‘Are you still interested in hotels in ….?’

However, somewhere along the way the concept is just simply getting lost to many bankers. To put it in simple terms, after a promising start, a digital application for a banking product or service comes crashing out of the digital world, spiraling down as just another piece of paper to be handled in just the same way as it has been done in the past. The illusion vanishes; the bubble bursts; the concept is dead. And we remain trapped in the same old inefficient, disjointed and highly expensive manual processing routine of the past.

Some banks are getting it right though and for those still on the shelf it is going to be one hell of an uphill struggle to catch up when the penny (or the pound) finally drops.

To my mind the concept of the ‘Digital Bank’ is vibrant, alive and exciting. It points the way to a future where banks can really add value and where customers can secure huge benefits in terms of bank products and services that are really, really useful.

Dad's Army banker visits the branch of the future: So were things REALLY better in his day?

From Mail Online -

A retired bank manager recently checked out the changes (technological and other) inside an HSBC branch.

Brian Fielder worked there almost fifty years ago when there were no computers - today bank-advisers wonder round the branch armed with iPads.

Brian reminisces on what working in a bank branch was like almost 50 years ago.

Worldwide bank branches are closing as technology takes a hold.

Read more>>

Indian cheque truncation project completed

From Finextra

“NCR Corporation (NYSE: NCR) and National Payments Corporation of India (NPCI) announced today the successful completion of the landmark Cheque Truncation System (CTS) project in India.

Started by the Reserve Bank of India, India’s Central Bank, in December 2007 to ease the process of cheque clearing in the country, this project changes the traditional physical movement of cheques to electronic clearing using NCR’s image-based software that is secure, fast and cost efficient.”

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Technology makes thousands of front- and back-office bank jobs extinct

From Computer Weekly

“Bank employee numbers are falling by the thousand, as modern IT automates previously manual processes.

This week Dutch bank ING announced almost 3,000 job cuts in its IT department, back office and callcentres.

The bank said it is moving to simplified IT systems and automation, at a cost of €200m for two years from 2015. It expects to save €270m per year from 2018. It is cutting 1,700 full-time employees and reducing the number of contractors it employs by 1,075.

The bank said the cuts came as the bank was modernising to meet customer demand. It said customers are banking “the way they want, when they want and in a consistent, reliable, clear and easy way".

read more>>

Where Should Business Continuity Be Located?

Industrialized Crowdsourcing

From Deloitte CIO Journal

“Enterprise adoption of the power of the crowd allows specialized skills to be dynamically sourced from anyone, anywhere, and only as needed. Companies can use the collective knowledge of the masses to help with tasks from data entry and coding to advanced analytics and product development. The potential for disruptive impact on cost alone likely makes early experimentation worthwhile, but there are also broader implications for innovation in the enterprise.”