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Role of Alternate Channels in Banking

and Wealth Management

Universal Banking Solution System Integration Consulting Business Process Outsourcing

“People want eyeball-to-eyeball, to build a level Online / Electronic (E) Banking
of trust, and then they will do business on
the internet.”
The arrival of the World Wide Web and other
- Ambrose Mc Ginn.
technologies has radically changed banking, and
wealth management sector is not behind in
Recent studies show that eighty percent of using this technology. Financial institutions now
customers are not interested in purchasing offer online securities trading and investment to
investment products over electronic channels or make these products accessible even to small
phone; they would rather meet a financial investors, which were not earlier accessible
expert or analyst in person before coming to a to small investors. The Internet has not only
decision. It is also true that even now, sales provided an efficient mode of transaction,
are high from branch banking in wealth accessible anytime and anywhere, but also
management, but alternate channels provide allowed investors to use self-help features to
convenience for the regular transactions and take informed decisions. It also provides
provide banks with higher profits with lower transparency in terms of prices for online
operational expenses and transaction cost. broking and consistency for customers
irrespective of their time and place. Financial
“Channelize through channels” is the new mantra institutions have been able to improve cross
for present day banks, which in earlier times sales by placing relevant advertisements on
relied solely on the branch network to fulfill online banking portals. Online tools are very
transactions, sell products and acquire customers. useful for financial planning / decision making
In those days, expanding the business meant and goal tracking. In fact, many banks provide
adding more branches at high real estate and dynamic product selectors to assist customers
licensing costs. choose financial products based on their needs
and expectations of return.
That problem has been largely addressed by
the invention of new low cost channels. What’s Online banking enables customers to interact
more, channels like the ATM, Kiosk and with a relationship manager using the chat
Internet Banking have enabled banks to reach a facility, to give them a branch-like experience
wide consumer base across geographies with without the costs. Last but not least, it makes
little effort. The Internet and mobile channels transactions paperless.
have also provided customers of wealth
management products a convenient mechanism On their part, banks must pay attention to the
to update their portfolios and receive information – following issues pertaining to the online channel:
for example the price of a security or portfolio alert. • Customers’ reluctance to use electronic
interactions for wealth management decisions.
There is a growing demand for channel (and
supporting) technology. Banks are integrating • Cyber-attacks on portals.
channels in order to ensure accuracy and • Server maintenance in order to support
integrity of transaction data. Channels are not high traffic.
only a means of customer service, but also sales • Unauthorized access and fraudulent
and customer acquisition. With wealth banking transactions.
customers becoming more technology savvy in
recent years, their usage of alternate channels of Technology Point of View
banking is increasing. Banks are investing in
mobile banking applications to enable their wealth The technology for online channels - which is
banking customers transact over smartphones. secure, fast and reliable even under severe
load - comprises of the larger pie of technology
Apart from the branch, the following could be the investment. A strong back end, which can
preferred channels by wealth banking customers. interface with the front end of online banking is

Role of Alternate Channels in Banking

and Wealth Management
imperative in order to process requests without ATM, the call center also provides investors with
delay. An online banking solution that works a mechanism to make enquiries and issue
on request mode will not succeed in the wealth service requests. This channel has helped banks
management business where timing and speed cut branch and employee costs. While most
of execution are very important. banks first established in-house call centers,
the majority of them later outsourced them for
economic reasons.

Thanks to progress in call center / IVR

The Automated Teller Machine (ATM) – popularly technology, banks are able to offer more
known as Any Time Money – has been around functionality to investors over these channels.
since 1960. This channel has been helpful in The facility to speak to a call center executive at
reducing the teller counters efforts. Most any time during the transaction adds the all-
banks offer wealth management products important human element and enables a
through the ATM, which acts more like a Point branch-like experience, albeit without the face
of Sale counter rather than an advisory channel. to face meeting. Although wealth management
Although customers still seek research and services are still not provided round the clock
advice from their relationship manager, ATM by most banks, the call center does help to
adds convenience and quick solution to the bridge time and distance.
well informed customer. The ATM allows
the customer to track and schedule their It also allows customers of any area in the world
investments, redeem holdings and purchase to transact with a single setup of the call center.
additional products at their convenience.
Banks must bear the following in mind while
Before offering the wealth management services offering wealth management services over the
through the ATM, banks must understand that: call center / IVR:

• It is not suitable for first time investors who • It is not convenient for financial planning,
are also seeking advice. which is a primary step in wealth management.
• It is not timely for certain products because
it works in a service request mode. • No manual intervention for understanding
the financial decisions if made by IVR,
• It offers no human interaction to help customers
makes it difficult to cross sell or provide
understand various transactions.
alternate solutions.
• More utilized for service requests / inquiries /
redemptions and hence the cost involved in • The cost benefit equation is directly
setup vis-à-vis a revenue generated would proportional to the average call time. Wealth
be low compared to other channels. management decisions / transactions are
more time consuming.
Technology Point of View
Technology Point of View
Banks should look for strong back end systems
in wealth management, with the capability to Banks should look for strong CRM back end
honor and respond to service requests without systems with the capability to provide a 360
delay. Strong expertise in service oriented degree view of every investor portfolio. Also
architecture would be an added functionality to access to the backend should be made in quick
the bank from the IT vendors. and accurate data should be fetched in order to
save the integrity and accuracy of the data.
Call Center / IVR
Mobile Banking

The call center, also known as IVR (Interactive

Voice Response), is another channel that Development in mobile technology has turned
banks use in wealth management. Like the the mobile device into much more than an

Role of Alternate Channels in Banking

and Wealth Management
instrument of voice communication. Indeed, when every bank around the world is searching
high end devices can perform tasks similar to for solutions that can reduce costs without
a PC and provide users access to an enormous impacting customer service. It is important that
range of applications. This channel provides banks efficiently manage vendors for different
banks viable access to outreach areas and service delivery channels along with the versions
at the same time enables them to improve of software. Although alternate channels are
customer convenience and profitability by not the most effective at generating new sales,
mobilizing wealth management products. Mobile they improve customer satisfaction and retention.
alerts and smartphone applications help With the help of technology, the banking industry
investors take informed decisions and perform can develop or expand into new channels to
transactions similar to those on Internet banking. survive in the current competitive environment.
All the tools available online can be provided to Any new channel involves cost and in alternate
smartphone users through mobile applications. channels, technology plays a vital role in terms
of providing a near to branch experience to the
Technology Point of View well-informed wealth management customer.

Implementing mobile banking technology does

not involve the cost and lead time associated
with branch or even Internet banking setup.
However, as is the case with other channels,
mobile banking also needs an efficient and strong
back end support system . Author

Conclusion Pavan Valluri

Lead Consultant – Finacle
Channels play an important role in the ever- Infosys Limited
changing banking environment. Especially now,

Role of Alternate Channels in Banking

and Wealth Management