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Send  Share  RSS  Twitter  28 May 2010

BANKING: Improving Retail Banking Productivity

 





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South Africa is a unique mix of first and third world, and the banking sector serves to highlight this fact with its blend of first world technology combined with a still extensive number of manual processes that require people to go into a bank to complete, according to Steven Woods, South African Country President of Compass Management Consulting

From one perspective, local banks are well ahead of the international curve, especially in terms of aspects like express transfer and electronic funds transfer. In South Africa we take it for granted that we can instantly transfer money, which is often not the case overseas.

On the other hand we are quite far behind in terms of manual processes. For example, there are a lot of actions that require banking customers to physically go into the bank and stand in queues, and produce identity documents that are then photocopied. These paper based manual processes are time consuming, non-user friendly and inconvenient, and also push the levels of productivity in the individual branches down.

Technology can be leveraged not only to reduce transaction processing costs and improve efficiency, but also to improve customer satisfaction and enhance customer retention, reducing waiting time at counters, meaning that more staff are available for dedicated customer service.

There are three specific areas of potential improvement that can be addressed by retail banks: reducing task times for processing counter transactions; increasing the utilisation of service staff; and increasing self service options for basic transactions such as cash and cheque deposits and bill payments.

However, one of the challenges that exists in South Africa is the availability of infrastructure and access to technology to allow for more Internet and self service banking. The problem lies in the fact that internationally, the trend towards self-service banking has been largely driven and facilitated by Internet banking, while the majority of South Africans still do not have access to the Internet.
While steps such as self service terminals have been installed in many branches, there are still a large number of paper based and manual processes that take up the time of counter staff. Adding functionality to ATMs to allow people to do more transactions at these terminals helps processes, but by far the most prevalent trend locally is the emergence of telephone and mobile banking.

Mobile banking in particular is hugely relevant in the African context, as while people may not have access to Internet most people in South Africa and other African countries have at least one mobile phone. If this functionality can be pushed and enhanced and used to drive more self-service options, it could help to dramatically increase branch counter productivity, as people would not have to go into a physical branch for as many things.

South Africa is poised for this form of banking. According to RocSearch Limited, mobile banking is emerging as a preferred way for South African banking customers to conduct banking operations such as balance enquiries and account payments, to mention a few. This is driven by increasing mobile penetration coupled and creates a huge opportunity for banks due to the million of unbanked people with access to a mobile phone.

However, FICA regulations require that many interactions involve face-to-face contact, for example opening a bank account, collecting a new card or changing details like physical address. For most of these processes tellers are required to make paper copies of identity documents. Not only is this inefficient, it also poses something of a security risk on its own, should the documents fall into the wrong hands. Technology such as barcode scanners could be used to verify identity without the need to make physical copies of documents.

Despite these 'manual' and paper-based requirements, RocSearch Analysis'
findings indicate that South African banks have invested heavily in technological solutions, especially to meet the compliance requirements set forth by the Basel II Capital Accord.

Aside from taking these steps there are many technologies being employed globally that have applications in South Africa to improve branch efficiency. For instance multi-functional Automatic Banking Machines and Automated Deposit Terminals offer intelligent deposit technology which can reduce counter time for depositing cheques and also replace the manual envelope deposit process.

While these technologies would require a large investment, they have the potential to help banks leverage incredible savings, and free up more staff for revenue generating activities rather than performing counter jobs.
Savings can be achieved using technology to reduce teller keying effort, reducing cash administration costs, reducing the volume of bulk cash deliveries and lowering fraud levels associated with envelopes.

The South African banking landscape is fairly sophisticated from several aspects, and yet we still rely heavily on manual paper-based processes that require face-to-face interaction and a lot of time and effort on both sides.
Technology can be used to vastly improve this, which in turn will help to reduce the time taken for counter transactions to be processed, increase the utilisation of staff for customer service and revenue generating activities, and increase options for self-service on basic transactions.

Improved productivity means happier, more loyal customers, extensive cost savings and at the end of the day, a stronger bottom line and a more profitable business.


 
 
 
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