CAIIB RB Unit 11 - Delivery Channels in Retail Banking

Customer satisfaction has to happen through different channels and choices are to be offered to customers to experience the optimum channel mix for maximum satisfaction.

Direct channels may be the best fit for a conservative customer whereas young and tech savvy customers may opt for remote channels.

The channels through which retail banking services are offered are illustrated below:

Branch

The transactions carried out in the branch premises infuse a sense of confidence in the minds of the customers that they are not only physically involved in the transactions but also feel the service experience at the branch.

Though customers have accepted the electronic channels of delivery in retail banking with both hands, they still want to transact personally at the branch for their banking requirements. To put it short, they want a human intervention for their services than simply go through on-line or mechanical interventions like ATMs and Internet and Mobile Banking.

Branch layout may be broadly defined as the system of locating the various service facilities within the Branch in order to deliver the most convenient service to the customers.

"Personal Banking Branches" enhance the delivery effectiveness of services by prescribing TAT (Turn Around Time) for different retail loans. Only the formalities for opening the accounts are completed at the branch level and opening of accounts, issue of Pass Book/Cheque.

Book, Debit Card, PIN etc are carried out through a centralised back-office mechanism.

The areas of operations of Extension Counters were restricted to a closed group like Courts, Educational Institutions like Schools and Colleges or a specific company in their premises.

ELECTRONIC/REMOTE DELIVERY CHANNELS

Automated Teller Machines (ATMs)

There are basically two types of ATMs to deliver services to retail customers.
1. On Site ATMs and
2. Off Site ATMs.

On Site ATMs are intended to offer the facility of Cash Withdrawals, Cash Remittances, Balance Enquiry etc., at the branch premises itself.

Off Site ATMs are designed to be situated away from the branches at convenient and busy locations to enable the customers to access it for their different needs but not necessarily from the branch.

"National Financial Switch" was initiated for ATM operations.

ATMS are always complaint prone because of the break downs and cash out situations.

These two faults would result in reputation risk for the bank and may result in customer switching also.

Point Of Sale Terminal (POS)

Point of Sale terminals are the enablers of payment of credit and debit cards in merchant establishments. Whenever a customer makes a purchase in a merchant establishment.

Reserve Bank of India (RBI) allowed cash to be withdrawn from any merchant establishment with a POS terminal. The RBI has, however, put a ceiling of Rs 1,000 a day on withdrawal of cash at merchant outlets using debit cards.

Mobile Banking

Globally, mobile banking initiatives were stared by Wachovia in 2005 and the full fledged mobile browser in 2007. Banking can be done at your finger tips and right in the place where you are. It is convenient, simple and readily accessible.

Internet Banking

Internet banking would have great implications on

(1)  Internet commerce
(2)  new types of electronic retail payments
(3)  electronic retail banking
(4) the movement more generally of retail financial services to electronic delivery, including insurance, discount brokerages, and mutual funds

Internet Banking as a service and channel was initiated by foreign banks and new generation private sector banks in the past decade.  The level of acceptance of Internet Banking, generally, from the public sector bank customers was initially lukewarm though some banks were able to push it hard.