Saturday, August 18, 2012

A true Online Banking Experience, in the Indian context


I think banks in India started offering online banking towards the end of 90's, at least as far as I know; I got my first ICICI account then. I was so thrilled that those days I used to login to my account almost every day just to look at my bank balance and logout. It was also the first time I got an ATM card which made my money withdrawal branch visits negligible. It was a great experience compared to the SBI and Canara bank experiences I had till then. But even after 10 years Indian online banking hasn’t changed much considering the changes the World Wide Web has undergone over the last decade.

Even now most of the Indian online banking services are restricted to checking account balance, money transfers, bill payment and address change requests. This is not bad at all but I think a lot more can be done to make it a true online experience.

Account Opening

Account opening is still an offline process in most cases. Why not have an account opening/registration page like any other login based website? I know opening a bank account is an involved process of having an introducer, submitting "Know Your Customer" (KYC) documents etc.

Let’s start with the need of the introducer first. The bank gets a first level of trust if their existing customer recommends a new applicant. So may be as the first step towards registration the applicant should have an invite code from any of their existing customer.

So how will I find out if any of my friends have an account with this bank? I should be able to connect my Facebook account with the bank's site which shows my friends who are already with them. It should also allow me to request for an invite code. My friend will receive a notification when s/he login to his/er account or on email, enters my email into the invite box and invites me. I will then receive an email from the bank which has the invite code using which I can now start filling the registration form online. I would say this is more effective and trustworthy than the current process of getting random people to introduce me.

Btw ICICI's take on marrying social media is to bring out a Facebook app for account access. WTF.

Now to the KYC documents. Of course I will upload the scanned copies of all the documents as part of the registration process. But how will the bank make sure they are genuine? May be the bank can give me the flexibility to set up an appointment with the nearest branch manager to show him the originals to get verified. Or a bank with lesser branches can send someone to me and get things verified. However the bank account shouldn't wait for this to happen. It should start functioning on an unverified mode with the "first level of trust" but for a fixed time period and probably restrict some features like money transfer, cheque book till I complete this.

That said, why does a bank need the KYC documents? KYC documents mostly consists of a photo ID proof, Address proof and PAN card to bring in the second level of trust. The photo ID must be to prove that I exist :P am law abiding. I really don't understand how an address proof will help a bank in anyway. However in India a letter from my bank is accepted as a valid address proof by utility service providers like Mobile phone companies. Again it’s a chicken and egg problem. I have experienced this myself. PAN card is obviously to capture my income tax account number. I agree that a second level of trust is required for the banks, but there should be a better way to do this. But more on that later.

Money Bags

I usually use my online banking account for balance checking, money transfers and utility/credit card bill payment and they seem to do it well even though a good amount of UX enhancement could go into the user interfaces. I'm happy if my account has just the 3 things listed above and some other useful things rather than the junk of features they show now.

Money BagMoney Bags is an idea my cousin Nikhil thought of. He wanted an easy way to organize his money into bags/folders in order to manage his money better. So let’s say I want to keep away some money to buy a gift for my wife. I can move some money to a bag every month so that it doesn't show up in my regular liquid cash balance. Once my bag is full/achieved target I can use the money to buy the gift. Like that I can have multiple bags for different needs. It’s a simple digital Piggy bank concept. My current bank allows me to create a fixed deposit for this purpose, for which I have to set duration, think of an interest rate and type of calculation and all the works. The Money bag concept takes away all this complexities. The bank policies have nothing much to do with this. It’s just a layer at the online account level for better user experience.

Unify

I have always wondered why I had to re-enter applications, give bank statements and submit KYC documents for credit cards issued by the bank I have an account with. Why can’t I have the ability to apply for a credit card online once I have an account opened? The bank has all the information about me and also decide on the credit limits based on my bank balance and credit rating. They could probably also allow me to club my credit card and debit card points. The same goes for loans.

Address Proof Docs and Home Loan Statement

Easy way of printing these documents for proof submissions to utility services and Income Tax submissions. Also allow easy document submissions as and when its available. I don't know about others, my Home Loan provider, Federal Bank, doesn't allow me to do this. I have to mail the manager and also follow up by calls to get the statement.

Mobile Banking

I have the Citibank mobile application installed on my phone but I never use it. Most of the times I login to my bank account on desktop. So I'm thinking of more realistic use cases for mobile banking.

  1. I know that in the US you can take a picture of a cheque on your phone and deposit it online. Don't know if technically that's possible in India but why not? After all America lays the path in technical advancements.
  2. Check-in to a branch so that you can let them know you have arrived and get automatically queued up for appointments
  3. Allow me to make direct debit payments online and in-store
Help

Most of the times if I need some help I contact them using the messaging feature behind the secure login. I'm pretty sure that a lot of questions get repeated here coz of this. The bank can actually run a public Help forum or a User Voice like forum to share the information to all. This can also be used as a place for people to ask for more features etc. and gauge how many people are asking for it, people can vote up questions and answers to make them popular. They can then think of broadcasting the popular queries on Twitter. Also accept queries on Twitter and create a forum entry themselves. Not that the messaging feature is not needed. I'll still use it for secure information.

Single Point Verification

So earlier we talked about submitting KYC documents for banks to make sure that I'm a genuine and law abiding customer. But this gets repeated all the time. eg If I have to open an account in another bank all these documents have to be submitted again. How can we make this better?

Have a single point independent verification provider with whom I will get myself verified with all my documents and other information. I will update this service on a regular basis. Banks can use this service to get customer information authenticated. Banks are not alien to this idea. They do this with CRISIL to get my credit rating validated before giving me a credit card or a loan. Why not CRISIL take this up? ie I contact CRISIL to get myself verified independently and then I let the bank know about it by a CRISIL OAuth during registration. How is it?

Btw Adhar is for this purpose but I don't know when it’s going to be effective. Also no one really knows about its potential benefits. I will talk more on the problems of Adhar in another post.

Can you think of anything unique in the Indian context that can be achieved by the right use of internet? If you have used foreign banks’ online services which feature of their can we adopt to make life easier?
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