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 !

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. 

Dealing with shirking banks taking cover under black coats !

This was posted by me, today, in LinkedIn under the Group 'Banking, and Finance Technologies":

It was shocking to read the treatment meted out to the Squash champion Dipika Pallikal by the Axis Bankhttp://timesofindia.indiatimes.com/city/chennai/Squash-champ-vs-bank-Verdict-on-February-20/articleshow/29677903.cms#write

Though the matter is subjudice , I would like to dwell more on such incidents rather than the specific case. 

Few days back one of my close relative too had this experience of a Nationalised bank rejecting money in ATM (reason "Unauthorised Access"), though she had sufficient balance in the account. The incident was reported and since there was not much help from the HepDesk, it was escalated to the CMD's office and even then the matter was resolved only after three days. 

Ultimately this turned out to be due a process failure within the Computer Dept and the branch, with both blaming each other, in open communications to the customer ! This was for a fairly urgent purpose and since it was a small amount, she could manage without the ATM support. 

There are few things on which I would like to pick the bankers' brains: 

1. What if such a denial happens at a very critical juncture, like one has to pay Hospital for the surgery to proceed on a Saturday night? How will the customer manage & what is banks' responsibility here for having denied payment despite a healthy balance in the account? 

2. The complainant's counsel argument in the above case was "A bank is a custodian of the consumer's money and denying the complainant use of her own money is a clear deficiency in service." He said Bank's argument of Force Majeure (chance occurrence or unavoidable accident) was not sustainable as no unforeseen event, like a power failure or snapping of communication lines, had occurred. The bank's counsel has said ".....it was "a one-off incident" and there was no deficiency on the part of the bank...." 

Having denied the service and putting customer in a soup, the bank's effort to wriggle off as 'one of situation' is really a shocker. 

Understandable that counsels could be engaged to argue in any manner for defence/prosecution and it is their job to make a killer appear like a saint . 

What happened to the moral responsibility of the bank? 

Having said this, the bank also tries to wriggle out by questioning the authority of the honourable court / Forum by saying "...As the incident occurred on foreign soil, the forum did not have the jurisdiction to try the case...", despite the fact an International Debit card was being used !! 

It is highly desirable that such high profiting but mean minded and less customer friendly banks are taught lessons by the court in pulling the highest executive for having the cheek to put those in hot waters, whose only fault was in choosing the bank for parking their investments

Withdrawal of Pre-2005 released Bank notes

The Reserve Bank of India has today advised that after March 31, 2014, it will completely withdraw from circulation all banknotes issued prior to 2005. 

From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication. 

The Reserve Bank further stated that public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have on them the year of printing on the reverse side. (See samples given below)

The Reserve Bank has also clarified that the notes issued before 2005 will continue to be legal tender. This would mean that banks are required to exchange the notes for their customers as well as for non-customers. 

From July 01, 2014, however, to exchange more than 10 pieces of `500 and `1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes.

The Reserve Bank has appealed to the public not to panic. They are requested to actively co-operate in the withdrawal process.

Please also read related links at:

 http://www.hindustantimes.com/business-news/rbi-to-withdraw-all-currency-notes-issued-before-2005/article1-1175658.aspx

http://m.economictimes.com/news/economy/policy/currency-notes-issued-before-2005-to-be-withdrawn-post-march-31-rbi/articleshow/29210580.cms

Banks and Technology

The more banks adopt technology, the farther it seems to be distancing itself. The more facilities it seems to introduce, lower the banks seem to fall short in the expectations. Does that mean that the banks are not serious about what they do to improve customer service, facilities with additional support from the emerging and growing technologies?

Though prima facie the banks' efforts to reach out to people and bringing Indian banking on par with the best in the world may appear to be more of a dressing up exercise and with goals other than customer satisfaction, it cannot be totally swept aside. After all, computerization introduced amidst so much of resistance from major walks of stakeholders way back in the 1980s has indeed brought benefits to the customers around but then it appears to be insufficient. More so, the banks' struggle seems to be in keeping up with the technologies used and extract the maximum benefit out of these efforts, rather than its willingness to serve. In short, the banks seems to be falling short of directions in choosing the right priorities !

But then, what exactly ails the banks' technological aspirations that gives way to more of frustrations from the customers? A recent article I read seems to provide some thoughts and insights (http://ponnarasups.wordpress.com/2013/12/23/engineering-grads-have-bright-future-in-banking/)

Even when computerization was introduced in the later half of 1980s, banks though hurriedly brought in computers also did their best to provide support by stationing technical staff from the software providers but then, this obviously could not have been a permanent solution. Indian public in general are well equipped and knowledgeable to expect and extract the best out of banks and this is where the latter faltered.

The initial hesitation and dilemma of the banks about using third party applications or in-house developments took their own toll and by the time the issue stabilized many precious years have rolled by and so also rose the customer knowledge and expectations.

Those banks which chose to use third party applications had a head start in that the usual strapping and paraphernalia accompanying any application launch  was there but by the time the euphoria started clearing up , the realities began descending in and only then the banks started talking about the Service Level Agreements (SLAs) etc., and the software developers made good use of the time between the initiation and reality. The banks that used such software had to then continuously engage themselves with the developing organizations about the functional gaps and support.

The gaps in functionality was blissfully absent in those handful of banks which chose to develop their own software. But then the people who were involved were mostly bankers who were falling short of the professional intricacies, expectations and were obviously struggling to keep up with the mercurial advancements- both technically and professionally. Bankers being such a serious breed would never accept anything other than perfect and that seem to be directly at loggerheads with the existing practice of  deliver and then started discussing about shortfall in the name of 'production support'.

Long and short of the story is that from both the sections of banks, the customers suffered uniformly. Banks should have neither indulged in complete technical aspects nor given away total control to the developing organizations but must have had a finger in both. In short, they lacked the wisdom, sight and professionalism that typically signifies many US and other customers who provide software business to India. Though, they entrust the work of development of the software they also engage immediate rungs of professionals who effectively monitor, report and scream when things go out of control. And for them, "Customer Satisfaction" is the ultimate and no compromise will be made in this area.

Even now it is not too late for Indian banks and with some non political, non trade unionist attitude and actions they could well come out of the shackles as these are not problems that could be resolved over months. With no dearth of technical talents in the country, banks would do well to form core experts team and technology team, who should work closely as a single unit.

With so much of vendors also available and making the best use of the existing competition , the banks could well extract their pound of flesh which would result in a stable and sturdy software more user friendly to the customers. Instead of trying to impart technology into the aging skulls of bank men, Banks would do well to blood young engineers into their fold and run a focused and specialized banking boot camp to groom a possible pool of techno bankers, a breed that is going to be in great demand in the years to come. The senior bankers could well be allowed to specialize on project managements and control mechanisms, so that the banks don't lose their experience and expertise. When these groups start jelling together, the customers would well start heaving sighs of relief in having struck the right combinations. Until then, the steam let out by dissatisfied customers could add to global warming in no small means, rather justifiably too.