Monday, December 22, 2014

How 'small' is Expendable?

Few days back, my friend living in New York, got a call from his bank saying that a transaction of USD 4 using his credit card was pending approval as they wanted to check the same being used in a small town in Africa. They wanted to make sure that the transaction was indeed made by my friend since the location was different. When he responded in the negative, the bank assured they will block his card immediately and send him a new card.

After disconnecting the call, when he tried to check his card history via net banking, the card had already been blocked from the account! The bank acted so fast and did the blocking instantly that it thwarted this and prevented any further attempts.

 It is suspected that the data attack on the popular retail store whose database was compromised was the reason behind this potential misuse, as my friend has made many purchases with the retail outlet.

Things to be noted here are U.S banks do not have the Indian practice of One Time Password (OTP) and instant SMS for every transaction, while only a notification will be sent on the App.

But, they follow an appreciable practice to check with the customer on any suspicious transaction- in this case he was contacted as the transaction was made from a place much farther from the declared place of residence. Imagine even for that 'small' amount of $4 !! With this they were able to avert a potential fraud as it is very likely that in the event of this transaction for a small amount going through, the fraudster would have made an attempt for a much larger amount with the data in his possession.

In this context, it is to be noted that today it was reported in a social networking site that RBI is contemplating to remove the practice of sending OTP for 'smaller' transactions and would soon come out with details. With the increasing incidents of cyber frauds, this appears to be a retrograde step towards protection of customer interest. While it is fervently believed that RBI will reconsider this ill-advised move, in the absence of such robust 'live' cross checking practices followed in U.S, the central bank could also enlighten as to how a 'small' amount could be identified, in this land , where the poverty line is fixed at Rs 27 in rural area and Rs 33 in Urban area !

Wednesday, December 3, 2014

Bold initiatives for better banking experience

When I went to the Citi Union Bank to deposit a small amount into an account at their Kumbakonam branch, I was surprised that the same could be done without using any credit challan. A handheld machine, similar to the card swiping machine is offered and the remitter is required to key in the account number and after verifying the name the amount is accepted by the attending staff. The receipt given is similar to the charge slip emanating from the card machine. Amazing that the whole transaction took only few minutes by what is known as 'Xpress Desk' banking.

No doubt a laudable thought process, cutting down the traditional process of filling up the challan including the denomination and stand before the queue at the cashier, who counts it atleast twice , brands a stamp and above a certain amount the credit paid in challan will also be countersigned by another official. I was informed that upto 49000 could be remitted in such a way !

But the bank will also do well to cover some of the potential risks:

1. Remitter's details are neither sought nor recorded anywhere and if required, the remitter cannot be traced. This could create problems for people in sensitive posts by making mischievous credits into their account.

2. No denomination is entered anywhere. In case of differences, counterfeit notes etc., tracing will be next to impossible, putting the bank staff to greater risk.

3. The charge slip like acknowledgement on the thermal paper may fade away soon. In the growing disregard of passbook practice, this could be risky for customers.

4. Newer avenues of corruption and black money conversion could be derived in course of time making use of the dropped security veil.

While the bank's efforts at innovative ways to cut down the waiting time at the banking hall is noteworthy, the bank would also do well to plug such potential trouble spots. Despite these apparent shortcomings , the bank must be applauded for taking some bold and innovative steps while the traditional pioneers in banking , under the protective National cover are still dragging their feet, even for minor steps that could facilitate better service to customers.