Month: May 2018

Across industries, businesses, financial institutions, and service providers, there has been a constant focus on establishing omni-channel presence for access to the services offered to the clients. This has resulted in a challenging competition for designers to present innovative and simplistic designs to catch the attention of the customers and the industry. The end-customer is always the beneficiary receiving new updates with a wow factor on the devices. It’s a constant endeavor by designers to understand the psychology of the consumer’s mindset, behavior patterns, predictive decision making and to design the systems accordingly.

On the other hand, the demand of the consumers and the reviewers on this front has increased manifold. There is a constant ‘invisible’ audit. It’s such a thing where each consumer of the service can have their own point of view. We have teasers, pre-launch reviews, launches, forums, day-1 review, day-7 review, day-30 review and many more. This has been fantastic for customers, who are well informed before actually making an investment.

However, in my opinion, the role, industry and requirement for each business user is of paramount importance at the time of freezing or finalizing the design. The requirement of each business, each user, each role is very unique. This should be the primary and the most important factor for decision-making in the constant effort of the service providers to beautify and revamp the screens. There are lots of efforts in terms of ideas which technology companies and service providers invest in to incorporate them into the platforms. The inputs of subject matter experts are critical in designing. The nuances of every business are best understood by the experts themselves. The client accessing the information on a device app for inputting information is totally different from the profile of a back office user of an organization. The ease of usability and the depth of information required is directly proportional to the role of the user. For instance, considering an Insurance business application, the front-end design for a prospect customer navigating an app for policies vs a customer actually buying a policy vs the company representative selling a policy to a customer vs a back office user creating an actual policy for a customer have absolutely varied needs. While a prospect customer requires an intuitive screen which can show him the comparison of the features and premium amounts with minimal information, the customer who buys a policy would require to know all the fine print in the policy before making the premium payment. The sales representative would require analytical data and key selling points of a policy, whereas the back office user in the insurance company would require an application which has the facility to capture detailed information about the customer in the most efficient way.

Although we understand less is good, designers have to do their research, take help of subject matter experts, understand the nature of business, geography of business and many more factors to be able to meet the expectations of the users and receive a pat. For those businesses, financial institutions, service providers who are yet to take the plunge, are being forced to think and re-think to invest in redesigning the UI to increase business and meet the demands of their customers, get appreciation from internal users, peers, competitors, market analysts. This is a critical decision with long-term impact which has to be taken by the product managers along with the overall strategy of the organization. So don’t do it in a hurry.

Corporate Loans occupy a significant size in the asset portfolio of large banks. Most banks have a well-defined corporate credit department comprising relationship managers, credit appraisal officers, risk officers, approvers and department heads. Corporate loans not only generate interest and fee based income but also build the asset side of a bank’s balance sheet. Related businesses of corporates such as current accounts, forex businesses, salary accounts of staff, financing options for employees of corporates, travel cards for top management/executives, remittance business, cash management are an added attraction for banks to pursue corporate banking clients.

Banks follow multiple methods for corporate credit appraisals and assessment. Credit appraisal and assessment has evolved from manual processing for balance sheet analysis, credit monitoring and assessment (CMA), credit worthiness and credit rating checks, to partially excel based tools for CMA analysis over a period of time. The complexity of the processing for corporate credit necessitated the need for development of a software with all the rules/checks/workflows built in, but it took a large time for a vendor to build the same. However currently most banks use software for corporate credit appraisals, decision making, etc.

The software is required to have organization level policy checks, customer specific checks, industry checks, credit worthiness checks and financial / cash flow comparison to ensure automatic credit decision. There could also be support in the software to overturn the workflow based system decision for credit approvals by manual intervention based on manual approvals/committee approvals with deviations and exceptions. Depending upon the criticality of exceptions to be overridden, multiple levels of approvals can be enabled. Any automated decision / manual process decision needs to be captured in the audit trail / report in the software, and stored so that the same can be referred to at a later point in time. Many a times, decision making is dependent on corporate relationships, reputation of share-holders, past history and precedence which may not reflect totally in the financials or cannot be captured in the credit report / software. It is important to have a decision from the software and record / capture the reason for overriding system approvals by a credit officer. The software can play the role of a watchdog oblivious of customer stakeholders and subjectivity. The software may also open up the hidden nexus between staff and corporate.

Corporate loans can go bad because of multiple reasons – non-performance or project failures, market risks, diversion of funds, operational failures, bad structuring of finances, people/process issues in the company, management issues etc. Needless to say, the quality of credit assessment using software or manual processes cannot be compromised, the credit projects should be in line with prevailing market conditions and the approving authorities should be aware of market trends for the future. The checks and expertise do not prevent a corporate loan from going bad.

However, the bank and the credit committee are always looked at with suspicion by the larger public when a loan goes bad for reasons beyond inaccurate credit assessment by the officer. The transparency which a software can provide with data capture, validations and workflow cannot be equated to a manual process, and the blame game can be avoided if the data and measures taken to approve with exceptions and deviations are recorded in the software with details of approval authorities.

To conclude, the software should have the capability and workflows for manual/automatic decision making, so that the policy makers at a bank can decide on the course to be followed to ensure transparency in the system. With mounting NPAs and bad loans, bankers are looked at with a great degree of skepticism by customers, fellow bankers, and the general public. It is high time banks come up with a mix of manual and automated credit decision skills where each and every action is captured, monitored, tracked and recorded. The staff cannot prevent some of the loans from going bad and cannot control the external factors contributing to bad loans. Inherent risk control measures need to be inbuilt in the software for monitoring and control. Furthermore, automated credit monitoring system during the life cycle of the loan must be put in place to provide an early alarm to banks to taking adequate measures before loans go bad beyond repair. This can go a long way in reducing the gross NPA of a bank.

While old age brings with it wisdom from the experiences of life, it can pose difficulties in certain areas such as Financial Management. Managing life time earnings is fraught with challenges for the elderly. A decline in cognitive ability, general health, hearing, vision, or mobility impedes the ability of the elderly from performing even the basic banking transactions. Older people are often not digitally savvy and therefore may not be adept at using digital banking channels which need them to remember passwords, navigate through websites or understand call center menus.

There is a high dependence on children, relatives or caretakers to withdraw cash, check account balance or apply for things like cheque books on their behalf. This makes the elderly vulnerable to financial fraud. Studies show that the ability to manage one’s personal finances deteriorates with age and hence old people are at risk of messing up their finances or making bad investment decisions.

It is therefore imperative to offer the elderly appropriate banking experiences that help them manage their money easily and safely.

Growth potential

While there is a latent need for old age-friendly banking products and services, banks need to first assess the potential of the target market.

According to Census 2011 India, there are nearly 104 million elderly persons (aged 60 years or above) in the country, including 53 million females and 51 million males. (Source: PHD Research Bureau). This offers a huge potential for banks to expand their customer base and build a reputation for old age-friendly banking service. While banks and financial institutions do offer products for senior citizens, no one seems to have developed a comprehensive program to fully address the middle to low income older adults’ unique financial concerns.

At present, Indian banks offer some specialized products for senior citizens, such as Life Plus Senior Citizens Account ( ICICI Bank), Senior Privilege Savings Account (Axis Bank), Senior Citizens Account ( HDFC Bank) etc.

Drawing on the banking experiences of my father and other elderly family members and relatives, here are my thoughts on how to make banking not just simple, but even delightful for the elderly.

My thoughts

Dedicated customer service counters

Studies show the elderly prefer visiting the branch and interacting with bank personnel to using their mobiles or laptops for banking transactions.

Banks can

Provide exclusive counters for senior citizens in their branches.

Train the staff / tellers to listen to and understand the needs of old people, identify instances of potential fraud/financial abuse, and respond appropriately.

Provide facilities such as picking up cash and instruments against receipt, delivering cash withdrawn from accounts, delivering demand drafts, or submitting Know Your Customer (KYC) documents and Life Certificates at the customers’ doorstep.

Simplified product design

Design products with a transparent low fee structure, and benefits such as zero minimum balance, higher interest rates on deposits, credit and debit cards with zero maintenance fee, free bill pay services etc. These will be preferred to premium accounts with complex features and fee structures.

Provide easy access to simple financial products and services that can help older adults with low or moderate income to effectively manage a limited budget.

Customized channel offerings

Provide customized digital channel offerings such as easier navigation, large and bright fonts, simple text, and easy access and authentication.

Enable older people to structure their accounts online such that caretakers or relatives are allowed only limited privileges (for example, may only view).

Old age-friendly marketing materials

Development of old age-friendly materials such as marketing collateral printed in a large font.

Miscellaneous

Collect and analyze data such as spending patterns, products used, retirement savings, loans outstanding etc. and use it for rolling out customized products and services for their elderly customers.

Chart out financial protection guidelines that deal with the various aspects of financial health of such customers.

Provide retirement and financial management plans helping the elderly customers to plan their future cash flows as well as meet any unforeseen medical expenses.

Conduct financial seminars to create awareness of products and services relevant to that group and help them make informed financial decisions.

Design senior-friendly bank branches with adequate seating, non-slippery floors, rest room access, railings for support etc.

Final thoughts

With increasing life expectancy, banks and financial institutions have the opportunity as well as the responsibility to serve a growing elderly population (beyond 65 – 70 years) with the right products and services. Banks need to examine the holistic financial needs of their senior customers in the light of a changing retirement structure and provide a framework that ensures financial inclusion and access.

Ease of access to banking services, simply designed products at transparent costs, and the fulfillment of typical and atypical needs will make banks old age-friendly, and establish trust and the much needed financial security among senior customers.