Banks need not lose face in the age of digitisation

In a world where convenience is increasingly important, many companies, banks included, have had to change their customer service strategies.

Banking customers today are looking for increased digitisation and ease of access, such as “anytime, anywhere” payments via online platforms and mobile phones.

But does the shift towards automation come at the expense of trust in the customer relationship, and just as importantly, security?

“Trust” used to mean face-to-face interaction at the bank. However, many customers these days want less contact with their bank as long as their needs are matched, not more.

So banks have had to become more technology inclined and innovative in offering value added solutions. This has its advantages, of course, not least in terms of cost efficiency. And these savings more often than not are passed on to the customer.

Previously, many people weren’t able to access banking services. Technology has changed that. Today, more and more people around the world are able to use banking services other than traditional approach of visiting bank branches, through online banking channels, ATMs, Electronic Deposit Machines, and increasingly through mobile applications.

From the perspective of increasing financial inclusion and moving towards a more cashless society, several countries have supported emergence of payment banks in recent years. Unlike regular banks, payment banks don’t issue credit cards or provide finance facilities. They can receive deposits and pay a profit just like a savings bank, enable transfers through a mobile phone, issue debit cards, and perform cashless transactions like the payment of bills.

More competition

In summary, the payment bank has allowed less affluent customers to take their first steps onto the banking services ladder. This is just one example of how technology is now enabling financial inclusion to all segments of society, providing access to cards and electronic needs of payment — and lessening the need for cash. But while promoting inclusion on the one hand, technology has also given rise to more competition on the other.

Banks today are competing with non-bank payment service providers offering payment services, such as “Google Wallet” and “Apple Pay”. The trend in mobile banking means ever-increasing demand for real-time transactions, such as payments with a simple tap of a smartphone at restaurants or the shopping mall. Understandably, more and more companies are seeking to cater to this demand with their own innovations and applications.

To stay ahead of the game, banks need to be receptive to collaborate with other specialists to ensure they provide the most competitive and value-added solutions. It is no longer sufficient for banks to rely on their traditional expertise in handling payments by cash, credit or debit cards in a marketplace increasingly driven by the mobile app.

For example, at Noor Bank we recently partnered with Yvolv, the joint venture between Dubai-based Holding company Meraas and AliCloud, to introduce a unique mobile wallet solution — “YVO”. In essence, users will be able to top up their YVO wallet and then make payments conveniently through their mobile phone at a cinema or restaurant, order home deliveries, and do much more.

Security strategies

Despite the benefits, there are inevitable concerns about security as banking migrates online. Banks are becoming increasingly innovative in their efforts to protect customers, introducing fingerprint scanning, one-time passwords, OTPs and secure site connections, among a host of security strategies, which the UAE government has been quick to support. Balancing flexibility and convenience while ensuring strong security architecture is an ongoing challenge the banks face and should be prepared to constantly overcome.

Questions about security and the impact of automation on the human dimension of banking should be taken seriously. However, they must also be weighed against the great benefit of digitisation: customer empowerment.

Dubai’s Smart Government initiative, championed by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, understands this.

By reducing the amount of physical cash in the economy, financial transactions will ultimately become more secure not less, minimising fraud, tax evasion and more serious criminal activity. A more financially inclusive society is a core objective all governments have in common, and banks have an important role to play.

Digitisation is also allowing the banking community to collect more accurate data on monetary flows and in turn customer behaviour, achieving a better understanding of their needs. At the end of the day, a bank that truly understands its customers is best positioned to deliver the best service.

The writer is Head of GTS and Corporate Strategy, Noor Bank.