Banking
Big data help banks but benefits should be passed on to customers as well
Banks collect and use client data for better targeting. They should also reduce operational costs by using technology and pass on the benefit to customers
 
I recall what Greg Baxter, global head of digital strategy at Citigroup mentioned almost a year back (reported in Financial Times on 1 February 2015) that big data is a big opportunity, making a big difference in how the banks serve their customers in future. Financial health barometer can be read by every customer, not just how much balance one has in the account as much as how much the money is likely to be overdrawn every month.
 
Indian banks have introduced all the available technologies that make the banks’ life comfortable but not that much for a customer. One can go to a bank branch and update his passbook at the kiosk meant for it. He can draw his deposited money but has to pay a price for it if he draws even the allowable Rs40,000 more than twice in a day because several ATMs allow withdrawal only up to Rs10,000 to Rs20,000 at a time. You use net banking only to pay up for several transactions without separate fees. Use plastic money to buy a rail ticket – you end up paying 10% more than you pay at the counter. Buy an air ticket with credit card – you dish out about Rs350 additionally. After paying up for each transaction through debit or credit card, you pay up for every service, some with notice and some without. 
 
On top, you keep receiving SMS on the real estate road shows, credit camps, loan melas, insurance policies and mutual fund investments, on mobile eating up your mobile space, time and money. Banks are taking advantage of the mobile link to customer’s account to advertise their products freely whether customer requires or not.
 
Banks have been very good at rolling out mobile applications, at the front-end. It is however doubtful whether they have done equally well on back-office. For example, the banks should know pretty well that after a particular age one is not eligible for insurance cover. 
 
If the know-your-customer (KYC) data is integrated into the system, then, there should be no message relating to life insurance cover for all those who are beyond the eligible group. This would also make the system availability for more useful services rendered by the bank. 
 
No wonder that RBI Report on Trend and Progress 2015 mentions that public sector banks (PSBs) accounted for more than 70% of the complaints received during the year, while the private banks accounted for over 25% of the complaints related with ATMs, debit and credit cards and non-observance of fair practices code. 
 
AMEX Card captures from the use of the card data relating to the consumption pattern and dishes out information to its client on how much he has spent on clothing, utilities, transport, air tickets, rail tickets, electronic goods, groceries and the like once a quarter. This analytical output of card consumption enables the personal budget formulation. This is done at no extra cost. Of course, initially one may have to buy the card at a higher price than others. If each debit card also is enabled to provide such data, the customer would not grudge paying up for the service. The aggregates can help even the tax authorities to tune up their policies and actions.
 
Coming to loan products, less said the better. The PSBs’ armchair lending to huge corporate enterprises has been continuing to increase corresponding level of non-performing assets (NPAs). Another area is retail lending – auto, real estate and housing loans that do not require supervision. Efficiency in lending operations has declined. 
 
The portfolio that required supervision – like the micro, small and medium enterprises (MSMEs) and agriculture – has been on the decline. Growth in credit to agriculture declined to 12.6% from 30.2% in the previous year 2014. MSMEs’ share in total advances is 7.9%. At the system level, the NPAs in MSME portfolio are 5.1%. 
 
It is a matter for introspection that if the guaranteed advances under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) need not attract provisioning, how this percentage is high and where it is occurring needs more critical examination. My analysis reveals that those SMEs that are suppliers to the NPA corporates became victims at the hands of the banks. Most banks are also averse to introduce corrective action plans and restructure the MSMEs as per the guidelines of the Reserve Bank of India (RBI).
 
The current and savings account (CASA) deposits have declined. Non-interest income increased. Net interest margins showed a decline. Senior citizen associations have to maintain only current account with a minimum balance of Rs10,000. Most of these associations have small means and by locking up Rs10,000 of their daily operations for small services have become very difficult. With declining interest rates, people started actively moving out of bank deposits in search of more remunerative but certainly more risky investments. Quite a few of them also receive remittances from their non-resident Indian (NRI) wards. This group also would like to chip in their money where they can easily and safely access. 
 
The Finance Minister would do well to increase the cap of tax-free deposits for senior citizens to Rs2.50 lakh in the next budget because it is this group that adds stable deposit flow to the banks.
 
So, where are the banks performing? 
 
Recently, lenders like State Bank of India (SBI) rolled out wealth management and corporate banking products on a separate platform with their launch at Bengaluru. With 2.5 lakh millionaires in the country, moving to such services could enhance the bank’s profitability. Such initiative required more technology, less number of employees. PSBs like this are making obvious to the small customers they are on their backburner. 
 
In essence, banks need to substantially scale up efficiencies in deposit accretion, customer service, lending operations in all the areas, recovery of NPAs. They should also reduce the cost of their operations by making use of technology more sagaciously to pass on the benefit to the customer, which Dr KC Chakrabarty, former Deputy Governor of RBI has advocated untiringly for five years. All these are possible, when the banks materially collect client data more responsibly and use it more purposefully. The cloud helps but today, banks are in a cloud. Banks should know how to shower rain from their cloud.
 
(Dr Yerram Raju Behara is a former senior executive of SBI and an economist and risk management specialist. The views expressed in the article are his personal.)

User

COMMENTS

Simple Indian

10 months ago

I believe, like Telecom Service Providers (TSPs), Banks are guilty of misusing the private and confidential information of its customers. I have often found a sharp increase in cold-calls from various telemarketers whenever I open a new Bank A/c, or get a new SIM Card. I have no doubt that my personal information is traded by the unscrupulous TSPs/Banks, which leads to harassment by Telemarketers, that too despite being regd in NCPR / DND. Sadly, the regulators in these sectors always turn a blind eye to such matters.

Gopalakrishnan Krishnan

10 months ago

A well written peace coming out of experience as a former banker and as a customer now. Banking has changed a lot and unfortunately for the worst.It has come to streets in different forms without having any knowledge of its own customers despite having supposedly stringent Know Your Customer norms verification.Competition among banks has taken away the principles of good banking and the greed to make money at any cost has taken away the banker customer relationship losing in the process the good money and the soundness of banking. The data is so to say misused and not put into strengthen the business of banking through improved Customer relationship. Machines alone cannot achieve the results and the Techonlogy not supported with human touch can only ruin the business in the long run. This is what is being wiitnessed these days in banking and other areas.. The deposits are falling, NPAs are increasing, profit margins are getting eroded day by day and the presnce of regulation and supervision is vanishing fast under some external pressures, have been unfortunately the result of too much of data , too much of technology and too less of human touch every where.Hope this article will turn out to be an eye opener of the powers that be.

Energy from cellphone towers ups pain in amputees: Study
New York : Living near cellphone towers that produce radio-frequency electromagnetic fields can amplify pain in amputees, suggests new research.
 
"Our study provides evidence, for the first time, that subjects exposed to cellphone towers at low, regular levels can actually perceive pain," said senior study author Mario Romero-Ortega, associate professor of bioengineering at University of Texas at Dallas, US.
 
Until this study, published online in the journal PLOS ONE, there was no scientific evidence to back up the anecdotal stories of people, who reported aberrant sensations and neuropathic pain around cellphone towers, the researchers said.
 
"Our study also points to a specific nerve pathway that may contribute to our main finding," Romero-Ortega noted.
 
Most of the research into the possible effects of cellphone towers on humans has been conducted on individuals with no diagnosed, pre-existing conditions. 
 
This is one of the first studies to look at the effects of electromagnetic fields (EMFs) in a nerve-injury model, Romero-Ortega said.
 
The team hypothesised that the formation of neuromas -- inflamed peripheral nerve bundles that often form due to injury -- created an environment that may be sensitive to EMF-tissue interactions. 
 
To test this, the team randomly assigned 20 rats into two groups -- one receiving a nerve injury that simulated amputation, and the other group receiving a sham treatment.
 
Researchers then exposed the rats to a radiofrequency electromagnetic antenna for 10 minutes, once per week for eight weeks. 
 
The antenna delivered a power density equal to that measured at 39 meters from a local cellphone tower.
 
Researchers found that by the fourth week, 88 percent of rats in the nerve-injured group demonstrated a behavioural pain response, while only one rat in the other group exhibited pain at a single time point, and that was during the first week. 
 
"Our model found that electromagnetic fields evoked pain that is perceived before neuroma formation; subjects felt pain almost immediately," Romero-Ortega said. 
 
The researchers believe that the protein TRPV4, which is known to be a factor in heat sensitivity, could be a mediator in the pain response for these rats.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

Nursery admissions: HC restores management quota
New Delhi : The Delhi High Court on Thursday restored the management quota in private unaided schools in the national capital for nursery admissions.
 
Justice Manmohan in an interim order stayed the January 6 circular of the Aam Aadmi Party government that scrapped 62 criteria, including the management quota.
 
The court said the Delhi government order was passed without any authority - without approval of Lieutenant Governor Najeeb Jung.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)