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Consumer is truly king in today's neo-banking

Abhishek Salwan, 28, living in Mumbai, is no longer worried about banks going on an extended holiday of three-and-a-half days. Sachin Kumar reports. An alphabet soup to nourish banking health

india Updated: Apr 09, 2012 01:11 IST
Sachin Kumar
Sachin Kumar
Hindustan Times

Abhishek Salwan, 28, living in Mumbai, is no longer worried about banks going on an extended holiday of three-and-a-half days. On Thursday and Friday when banks were closed for Mahavir Jayanti and Good Friday, Salwan went online to send money to his parents back home in Amritsar.

You could call it neo-banking. Thanks to abbreviations such as CBS, RTGS, ECS and CTS, which may sound Greek, banking these days has become easy and hassle-free.

In fact, the two most dominant customer-centric banking activities that have nearly migrated to a fully electronic system are cheque clearance and cash transfer.

After RTGS, ECS and NEFT, cheque truncation system (CTS) is all set to accelerate the process of money transfer through cheques.

The system, which would lead to the realisation of the proceeds within the same day, is currently being implemented on a pilot basis in some banks in Delhi.

A natural corollary of course is the decline in the number of customers visiting bank branches for routine transactions.

"We have witnessed that household customers are now not going to bank branches for routine transactions," said KVS Manian, president, consumer banking, Kotak Mahindra Bank. "Non-branch transactions, which happen through Internet banking, phone or ATMs, are now around 80% of the total transactions."

ATMs or automatic teller machines, have begun to assume the role of a mini-bank kiosk, making the need for a visit to a bank branch almost negligible.

Seeing the popularity of ATMs, banks have now began to install other devices such as cash-depositing machine (in which you can deposit loose cash), passbook printer, internet kiosk, information kiosk and phone banking device next to ATMs, which ensure that branches see less number of customers. At present, there are around 91,000 ATMs installed in the country, which ensure that banking transactions do not halt even if banks are closed for two or three days.

"Banks now do not witness cases of sudden increase of withdrawal of money from ATM or crowd in bank branches, a day before long holidays because customers know there are alternate channels such as internet, ATM and phone to carry out transactions," said Julius Samson, senior vice-president, Axis Bank. The bank recently installed 200 cash-depositing machines and plans to install 300 more soon.

But perhaps the biggest beneficiaries of this influx of technology in daily banking have been the financial institutions themselves, which have seen a substantial reduction in operating costs. Per transaction costs which range anywhere around R40-60 at a branch level come down to R7-10 when done through the Internet.

First Published: Apr 08, 2012 22:02 IST