Banking Finance

What holds the key for banks prospertiy? – Innovations in banking

Dr.R.Maria Inigo & Ms.G.Kalaichelvi

Innovation calls for vision and conviction. Innovation helps us make the product/provide services highly suited for the targeted application.  Successful innovation is not about the ideas or inventions; it’s about the people. Innovation can be defined as the key process by which products, processes and services are created, and by which businesses generate jobs and wealth. Innovation isn’t all about great ideas. Innovation is a chain that requires strength at every link to succeed. The chain starts with idea generation, but then moves to prioritizing and funding ideas, to converting those ideas to products/services and finally to diffusing those products/services and business practices across the institution/bank.

Innovation calls for certain discernment on the part of the service delivery system of banks to design the services in such a way that the customer is much delighted as to how the business process is effectively carried out and how easily with least time and distress is delivered to them.

In a situation of global economic crisis, institutions will need to shake hands with a new generation of price optimization system, customer relationship management platforms and Web-enabled tools that expand relationships and grow wallet share.  Customers who have adapted to the mass customization of the Internet’s long tail – and who are used to getting personal recommendations from e-retailers can’t understand why an institution that has so much information about them can’t offer tailored products and services. Banks that change that perception by using automated tools to fine-tune products will be well-positioned. Today banks dive deeper than ever before to connect with consumers. To this the government at the Centre (Indian central government) through the RBI fine tunes the banking system by reducing the CRR and lowering repo and reverse repo rates.

Looking for new frontiers in revenue growth, banks are discovering interesting opportunities in the way they satisfy their customers. What are the key factors that appeal to bank customers and entice them to do more business? As in most service industries, overall responsiveness and behavioral attributes account for a 10-percent margin in customer satisfaction.

When it comes to speed of service and the attitude of the people who deliver that service, banks should improve their personal touch. Furthermore, advanced technologies provide bank managers and staff valuable help because convoluted legacy systems hinder the prompt delivery of banking services and the integration of customer information. Notwithstanding a positive service attitude, ailing technology systems could severely constrain the ability of bank personnel to satisfy customer demands. Technology also plays a role with other drivers of customer satisfaction, such as quality of service and product innovation. In order to be effective in luring customers, banks should invest in fundamental improvements in their people, process, and technology capabilities.

Service delivery

Most business houses believe that they do deliver superior things to their clients. But at most times they do not satisfy at least half of their expectations. Which means that business fail to understand their customers and there is no innovation in business. When customers appreciate the way a business is carried then there should be necessarily innovation taking place. Following are some aspects which will make a bank to be more innovative in its service delivery.

Alerts to keep customer on budget:  Informing customer when they near their minimum balance requirement and intimating every time drawls are made through sms alert or email service.

Easy Deposit: Scanning cheques from home and the same may be directly deposited into the account of the customer, provided the cheque has the MICR code and other security features. Informing the issuer of the cheque for counter- checking the amount details through email or sms alert can be another innovation for safety of banking transactions.

Account-to-account transfers. Make a transfer to or from an account at another bank or credit union or consortium arrangement – already banks are doing under the core banking system. But the cost of service has to be made very less.

Free bill pay. Paying bills automatically through registration with the banker. Many banks are doing such innovative services. When the system turns more competitive, easy and cheaper, many customers will opt for electronic payment.

Live chat support. An interactive voice support system or a 24 hours online chatting system with the banks representative have to arranged after ensuring with the system a fraud-free chatting.

View every transaction. Customers have to given the choice to see a list of each deposit and withdrawal, along with images of cheques/drafts that have been cashed and provide a running statement online – including credit card and debit card accounts.

Enhanced online security. Innovation means also ensuring more security features.   Banks should customize a security phrase and image at login for even greater protection. This will ensure accidental visitor online from entering into one’s account details.

Creditor/debtor online clearing: Though some organizations have resorted to the practice of direct credit of customer accounts instead of issue of cheque/DDs, but many organizations has not taken this route as there are some practical problems like, accountability for tax and online checking of credits and debits.

Charges/fee notification: There is a general criticism of customers, especially of individual customers that, banks charges for deposit in other branches (from non-base branches), cheque collection, annual ‘card’ charges, charges for issue of statements and the like are charged without notifying the quantum of charges to the customer. It becomes known only when a customer updates his passbook or get a statement from the bank. Annoying the customer by these of charges could be avoided and at the same time the banks could continue charging them, by giving an sms alert or email that such and such charges are levied and such rate.

New technologies for customers: The use of technology like Smart card, mobile ATMs, coverage of post-offices under electronic payments network in far flung areas, etc. in providing financial services to the people holds a tremendous potential for the business growth.

Having human touch: Although today’s banking system has become mostly online and a customer need not visit the branch at all for further transactions, yet most customer walk-back to their branches to have a human touch and see their account operations done manually atleast once in a month and once in two months. This requires a sort of human touch by the bank employees with the customer- innovations could be introduced in receiving and dealing with a customer and minimize his number of visits to the branch.

Virtual banking

Various technological and payment systems developmental initiatives are undertaken in the Indian banking and financial sector. The system has moved to a ‘virtual’ banking system gradually in view of IT penetration in every sphere of banking.

The Core Banking concept to a great extent emerged from the IT infrastructure and this enabled the centralization process and has since received a complete and focused attention from all the banks for its rapid implementation. The banks have also undergone a massive change in terms of improvement in the IT Communication network which has greatly facilitated not only the networking of the internal communication processes but the integration with the external payment systems gateways as well.

The offering of electronic banking service channels like Internet Banking, Mobile Banking, real time fund transfer, ATM Applications and other forms of upcoming electronic banking channels have become important vehicles of offering banking services in a cost-efficient manner with wide geographical spread; enhancing the banks’ reputation and brand building addressing the competitive forces as well.

Operational comfort and convenience of operations in a highly challenging environment for banks. The most important requirement relates to looking at the convenience of customers either online or offline.

Operative efficiency

It’s important to recognize that customers’ needs, priorities, and choices are different now than the past.  Any organization that relies on an outdated set of beliefs about customer is more likely to accelerate their irrelevance than ensure their success. Reorienting the organizations toward operational efficiency needs the following corrective steps.

Observe changes in the environment in real time… while aggressively avoiding the strong tendency to just see what you expect or hope to see
Orient yourself quickly to what those changes mean… being careful to challenge and revise outdated assumptions and beliefs
Decide on a course of action… chosen from range of creative alternatives most relevant to the changing environment
Act in a coordinated and unconstrained manner… while being ready to observe, orient, decide and act to ensure progress and enable course corrections as necessary.

Future challenges and prospects on service delivery and innovations

The future opportunity lies in the form of integration of the Indian banking and financial system with the Government’s e-Governance initiatives. The electronic benefits in this regard would be passed on to the beneficiaries directly thereby preventing the leakage of the funds provided under various Government’s schemes like e-payments, etc. for the upliftment of the people. The collective efforts of the Government, banks, financial institutions and the IT firms to provide innovative solutions for an inclusive growth of the Indian economy will certainly go a long way not only for the sustained growth of the financial system but the Indian economy as a whole. 

Customers are continuing to opt for and engage in experiences that are designed to meet their needs.  It’s just that their needs and priorities are changing significantly.  Banks that understand and quickly adapt to these changes can not only preserve but enhance revenue in the short term. When a customer enters a bank branch, checks into a hotel, enrolls with a health insurance provider,  etc… they have a set of constructs they’ve learned from past experiences and that operate within a perceptual framework that enables gist processing.  Experiences designed based on this perceptual framework and set of experiential constructs become inherently easy to navigate.

Many organizations have placed an increasing amount of attention on the quality of the experience their customers have.  However, the first mistake most organizations make is focusing on what the company does to deliver a customer experience rather than taking a step-back and thinking first about how customers actually have experiences.  The second biggest mistake is the way most banks listen to and react to customers’ suggestions about what to do to improve the experience.

Emotional touch on customers, change how they feel.  This can be brought through delivery of innovative solutions to people’s underlying, end-to-end problems. Finding these solutions requires getting below-the-surface of existing touch points.  

http://www.trayee.com/index.php?option=com_content&task=view&id=54&Itemid=77

Innovation in Banking is going to be the key in FY 2010-2011 and beyond!

Innovation has always been an important area of focus for all industries, not just for Banks. However, in view of the economic slowdown, it is common knowledge that banks have been taking a very conservative approach over the last two years as many have been consolidating their portfolio and innovating products had lost its importance and has taken a back seat. We have not seen many innovative products designed for customers during the consolidation phase, and rightly so, as the primary focus of Banks has been in cleansing their portfolio and tightening credit extension apart from being extremely guarded in getting only credit worthy customers in their books.

The scene in the Indian Banking industry is changing; the various global economies have started showing signs of revival leaving behind them the worst recessionary phase and moving towards growth. The Prime Minister of India, during the recent platinum jubilee celebrations of Reserve Bank of India, has encouraged Banks to be more innovative. Please recall the budgetary announcement by the Finance Minister on opening up the Banking space by offering additional banking licenses to private players and NBFC’s. It is expected that at least 5 more International Banking giants will set up operations in India in the next 1-2 years, bringing with them superior technology. These are exciting times for customers in India and challenging times for existing Banks, more so for the Public Sector Banks.

The choice before the customer today is far wider both in the selection of banks as well asproducts than ever before. The future growth is largely in retail banking. Innovating products backed by superior service are vital to provide the cutting edge.

Here’s a quick look at some factors which may probably be the key drivers for Innovation in Banking, keeping in mind customer expectations and behavior changes:

1.    With intense competition between banks which is going to be more severe in the coming years and with more private players waiting to step in, adopting new technology has assumed added importance, especially for public sector banks. The key to success is adopting state-of-the-art technology and continuously accelerating business processes.

2.    Investment and innovation in technology will result in further advancement in credit analytics systems that will help them assess customer behavior and enhance portfolio profitability. Experience in matured markets has proven the value of credit bureaus in the development of consumer credit. With the possibility of more credit bureau’s competing with CIBIL looming large, further advancement and innovation to quickly assess customer credit history will be a critical factor to provide convenience banking to customers. The day is not far away where you call up your Bank for a loan, provide your UID/PAN Number, your credit score verified, eligibility calculated and the processing is completed almost instantaneously and the loan amount gets credited to your account within 24 hours.

3.    The 3G spectrum auction expected in mid 2010 across various circles to private telecom providers in India will further open up immense migration possibilities to more convenient channels. It may not be too long where the customer would access his bank account using a secured application through his mobile phone. Needless to say, a secured and fast internet banking platform will become a basic necessity.

4.    RBI’s recent directive on payment of interest on daily balance maintained in the savings account effective 1st April 2010 will result in higher outflow to Banks. This will also result in the interest rates for short term deposits (7 – 90 days) undergoing an upward revision as against the 2.5% – 3.5% being paid currently by banks on these deposits. While most Banks seem to have enhanced their technology to comply with this interest calculation methodology, this change however would result in an increased outflow of around 20% in interest credits. Banks will find ways to innovate and encourage customers to use their debit cards for purchases, bring the average daily balance down and gain the differential between interchange spend and interest payouts. These strategies of promoting debit card usage will also keeps the banking system going, interchange revenues flowing in and ensuring that credit exposure by way of credit cards is minimized.

5.    Continuous innovation on the product offerings by Banks is paramount to ensure that their products stand out from the crowd. A lot of effort and innovation from Banks is required to make their product the preferred choice of the customer. This needs to be backed by a powerful and customized loyalty program for customers to be continuously encouraged to keep using their card. Service is an extremely vital cog in the wheel and the Banks which make the investment to have superior service levels as their USP will have a clear advantage. Investment in providing a chat interface as a service channel for routine enquiries would be in line with times to come.

6.    Ten years ago, a customer would have been happy to bank with those who provided just a fixed deposit or a recurring deposit in addition to his savings account and a credit card. Today, there is a need to spread the wealth around, diversify the savings into shares, fixed de¬posits, mutual funds, pension products and insurance. Banks have a choice – offer all these as part of their Convenience Banking to customers or lose him. This desire and the compulsion to be the one-stop shop for the entire customer’s investment and borrowing needs will ensure a lot of banks adopt this model increasingly.

7.    Smart Cards embedded with microprocessors or memory chips will become tamper proof and replace the existing plastic cards, offering customers a secure digital identity. This will also provide convenience to customers; provide access to bank’s website and individual accounts, accurate tracking of usage, spend analysis and manage long term customer relationships through efficient, timely and valuable services to them.

8.    Biometric ATM’s will replace the conventional ATM’s across the country, apart from all banks investing in additional ATM’s. Banks can authenticate the identity of the customer in three ways; most common being something the user knows (passwords or personal identification numbers), something the user has (a security token etc) or something the user is (a physical characteristic like fingerprint, palm geometry etc., called as biometric). With increasing threats on compromise of passwords and account take over’s and misuse of cards, biometric form of authentication (which have withstood the test of scrutiny coming out as the most secure form) for ATM and POS transactions would be the way ahead. Statistics show that India’s ATM density is around 35 ATM’s per million people which is abysmally low compared to the US’s ATM density of 1300. This is an area of focus for many banks clearly, offering a branding and marketing proposition for their investments apart from interchange revenues on usage.

9.    Cheques will gradually be phased out and replaced by RTGS and NEFT and other electronic forms of money transfers and payment mechanisms offering superior turnaround times. Operational efficiency in processing electronic payment mechanisms will undergo a radical change, with the beneficiary receiving the credit real time online.

10.    The 2010 Census process which has begun is going to throw up interesting focus areas for Banks. The demographics of our country, with 54% of the Indian population being under 25 years of age and 60% within 40 years of age, will be a key driver to create a large retail customer base. With increasing income levels and an annual GDP growth of 8.5-9% predicted for the next 2-3 years, this segment is a good target market to sell insurance, mutual funds, credit cards etc.

With so much of talk about inclusive growth and focus on rural development, there is a considerable gap between demand and supply for all financial services, especially in rural segments. Almost 70% of the rural population does not have a bank account, 85% do not have access to credit and less than 10% have any kind of insurance (life, health, crop insurance etc). More importantly, still 60% of the rural poor borrow from moneylenders, friends and other sources.

While banks have largely stayed away from lending to this segment leaving it to the microfinance companies and institutions, the statistics suggest that non-performing loans in the rural sector are similar to urban averaging between 1-2%. It would make enormous business sense for banks and over the next few years, we would be seeing many banks enter into micro finance which will, hopefully narrow the gap between banking services provided in urban and rural India.

Here’s a look at some statistics on how the various segments within the Banking industry today are placed in terms of financial strength to take on these challenges:

•    SBI & Associates have been aggressive in their ability to attract capital, deposits and investments and have been in the forefront in advances, followed by nationalized banks and other scheduled banks. This also shows in their increase in income from interest and other incomes. Foreign banks have been very cautious in their advances.

•    Foreign Banks have a distinct advantage – their Business per employee is almost 100% better than most banks in India and their profit per employee is 400% higher. Their cost of funds (CoF) is also significantly lower by almost 25% compared to all banks and they have performed well to get superior returns on assets. A superior CRAR, higher than the overall industry average gives a lot of comfort but a significantly higher net NPA ratio at 1.80 is still a cause of concern.

Source: www.iba.org.in, www.rbi.org.in, www.images.google.co.in

For those individuals and companies considering Panama as an offshore banking venue… we have some advice: BE CAREFUL.

We are Ballinphort Corporation, a company well-versed in setting up trusts, asset protection and offshore companies.  Ballinphort has nearly four years of experience working with a variety of banks in Panama.  This experience has been on behalf of clients from Europe, North American and the Pacific Rim.

Panama banks operate like no other banks in the world.  Firstly, no one person makes a decision: every decision is a group process with an anonymous group membership.  These group decisions are based upon unknown requirements and the customer is seldom provided with any definitive reason for the decision.  For example, the bank can take six months to determine if they will open a new International Business Company (IBC) checking/savings account.  During this period they will require business plans, marketing plans, trade references, bank letters of introduction and all standard “due-diligence” documentation.  They may require this information from all officers, directors and stock-holders.  They will often require that the principals travel to Panama for a bank interview.  And once all the paperwork is submitted they may tell you that your business has been refused without providing a substantive reason.

Secondly, Panama banks have at least a two-tiered fee schedule; one for Panama citizens and one for foreigners (regardless of their domicile.)  Clearly, the foreigner fee schedule is much higher than the fees charged their own citizens.

Thirdly, if you plan on internet banking you will be sadly disappointed.  Most of the smaller, Panama owned banks do not have websites in English, French or German.  Those that do have some translated web-pages do not permit complete functionality, for example, most will not allow the user to send a wire via internet banking.  Instead, the client must send overnight courier mail with an original bank wire transfer request signed by the approved signatory.  Just because you have requested a wire transfer, the transaction is given no priority over other bank business.  That means that if the person in the bank to whom the wire transfer request was addressed happens to be out sick or on vacation, your request will not be acted upon until that person returns to work, whether that is one day or two weeks.  Normal wire transfers routinely require two weeks from the date courier mailed to be received into the receiving bank account.

Fourth, Panama banks do not require their chartered banks to maintain their required reserves in Panama.  That means, if the bank keeps its reserves in England, Canada or the United States and any judge in those venues seizes the assets held in their country, the bank in Panama will be immediately closed by the Panama Superintendent of Banking.  The Stanford Banking debacle is a good case in point.  A U.S. Federal Judge (in Texas) ordered the Stanford Banks assets held in the United States to be frozen pending litigation.  Stanford Bank Panama was immediately closed and no funds were available to depositors for over a year.  Many of the banks customers are still waiting for their funds to be returned as the wire transfers are taking weeks instead of days.

Panama boasts hundreds of banks and scores of international banks.  Some have translated websites and seek international accounts, but don’t expect world-class services.  Email often goes unanswered for days and then the respondent did not understand your request… so additional days are lost re-translating and resubmitting your original request.  Despite fairly good internet connectivity and reliability, the banking staff is often unprepared for fiduciary services.  The banks employ a layering approach to employees that grants little authority and even less responsibility to its service employees.  A typical bank employee earns between US$ 500 to $800 per month.  They feel little empathy for foreign clients whose checking/savings accounts remind them how little they are worth to their employers.

Finally, a word about Panama bank credit/debit cards; Most Panama banks issue the typical Visa/MasterCard debit and credit cards.  Typically, credit cards require 125% of the desired credit limit be held in a savings account.  For example, if the customer requested a US$ 5,000 limit, a secured balance of US$ 6,250 would be required.  Additionally, most Panama banks will only permit US$ 2,000 cash (ATM) withdrawals per billing cycle.  Debit cards seem to work similar to European and American standards but again may be subject to daily limits and other restrictions such as the maximum ATM withdrawal example above.  Importantly, we have had clients lose their cards in ATMs outside of Panama.  When this happened, our Panama attorney called the bank manager to request the card(s) be cancelled due to loss only to be informed that such action would require the card holder to travel to Panama and make the request in person in the bank.  While this is contrary to Visa/MasterCard rules that individual bank manager may insist.  In the above example, our attorney threatened to sue the bank for any and all loses caused by their refusal to cancel the card and the bank manager capitulated.  However, the bank manager won the day by refusing to issue any replacement cards for our client.

Depositing and withdrawing funds from a Panama bank is not a routine matter for a foreign account owner.  Money laundering and drug money are international problems and Panama banks are very interested in erasing the poor image and reputation they earned during the Noriega years when Panama was a transit site for all manner of illegal financial transactions.  Consequently, Panama now has laws and enforcement regulations that require bankers to know the source of deposited funds and to make a good effort to determine that the funds are clean.  Do not be surprised if your Panama bank refuses to deposit a large wire transfer into your account.  If you have not “pre-cleared” the sender and satisfied the bank that these funds are legitimate payment for services or products that you have provided, the funds will be held until such time as the bank and/or government auditors are satisfied that the wire transfer funds meet their requirements.  There are procedural steps that an account owner can take in advance to minimize these delays, however, you should remember that the bank clerk receiving US$ 500 per month has been told to screen wire transfer deposits for large amounts and that is exactly what she will do.  The suspect deposits will then be reviewed by an unnamed committee and forwarded to senior bank management for final approval or hold.  We have found this to be a bottomless pit with major delays and high levels of frustration when the bank manager tells us his hands are tied and they cannot accept payment from Fortune 500 firms without complete due diligence disclosure from all of their officers and directors.

While some of the cited problems with banking in Panama can be found in other venues, it has been our experience that Panama is not a good choice for international banking.  They experience all of the cited problems and there seems to be a new and different short-coming every week.  Our advice is to avoid banking in Panama if at all possible and regardless of where you bank, it would be both wise and productive to thoroughly investigate how the banking system works in each venue before deciding where to keep your money.

1.      Mobile Commerce

Mobile Commerce is a transaction where the transfer of ownership or rights to use goods and services are initiated and / or completed by the customer using a mobile phone. Mobile commerce was first started in 1997 in Finland when Coca Cola used SMS messages to send the payment details to their vending machines.

2.     Mobile Banking

Mobile banking services are provided by the banks by they allow their customers to access their account information and carry out banking transactions. Mobile banking is an integral part of the Mobile commerce. Checking account information, cheque status, setting alerts like payment reminders, locating ATMs and bank branches, placing orders for cheque books etc are some of the popular services offered by mobile banking. Mobile banking has the potential to bring the banking services to the lower segment of the Indian population who have no access to internet connections and banking services. This will be an innovative way to achieve the Government goal of financial inclusion and reaching the banking services to rural India. Mobile Banking is the hottest area of development in the banking sector and may even replace the credit/debit card system in future. However as the Reserve Bank of India has certain restriction on allowing non-bank organizations in carrying out money transfer, development of mobile banking applications is being sponsored primarily by banks in India.

3.     ATM and Internet banking

ATM and internet banking have been around in India for a long time now and they have achieved a reasonable level of success in terms of penetration. Future growth of ATM and internet banking is restricted due to higher cost involved in ATM roll out and inadequate growth in the use of PC and internet in the country as compared to mobile growth. The Mobile penetration has already reached 58% from 4% during the last 10 years in the country and there are 630 million mobile users. The monthly addition of mobile users is 15 – 20 million which is the highest in the world. Mobile banking reduces the cost of banking operations when compared to other options like ATM and branch roll out.  

4.   Categories of mobile banking services

Mobile banking services are classified on the basis of how information flows to the customer. A mobile banking service may be a pull or push transaction or it may be a transaction based service or inquiry based service.  A pull transaction is one in which a mobile phone user requests a service or information from the bank. For example, inquiring about an account balance is a pull transaction. A push transaction, on the other hand, is one in which the bank sends information based on a set of rules. A minimum balance alert is a good example of a push transaction. Transaction-based services are those services where a fund transfer or a payment is made from one account to another. An inquiry based service could be push or pull transaction like account balance enquiry, minimum balance alert etc

5. Modes of mobile banking

a.     Interactive Voice Response (IVR)

In the case of IVR service, the customers dial the IVR number from their mobile phone; they are greeted with a menu of options; the customer selects an option and a text-to-speech program reads out the desired information. It also only allows for inquiry-based transactions.

b.    Short Message Service (SMS)

SMS banking has several advantages like it is available in every mobile phone and user friendly. It is cost effective and accommodates two way communications. The disadvantages of SMS are related to the inherent limitations of 160 characters in length.

c.     Wireless Application Protocol (WAP)

WAP technology facilitates accessing Internet pages from a mobile phone. WAP banking has its disadvantages like smaller screen, requirement of smart phone, lack of anti-virus and firewall protection.

d.    Standalone Mobile Application

Some banks provide a downloadable client through which subscribers can access banking services. These applications facilitate complex transactions to be carried out. However these applications are expensive to develop and require smarter phones.

6.     Challenges of mobile banking

a.    Mobile banking services are limited to network coverage provided by the mobile service provider.

b.   Mobile banking is prone to frauds and the mobile service providers and the banks need to have a strong fraud monitoring systems in place.

c.  Government and RBI guidelines need to be complied by both the mobile service provider and the banks.

d.  Customer identity verification is a major issue for the mobile operator. More than 80% of the customer base in India is prepaid where the address and ID proof are difficult to establish.

e.  Money laundering is another major concern for the banking system

7. Semi closed Wallet

RBI has started issuing licence to mobile operators to operate semi closed wallet. The operators are allowed to accept up to Rs 5000 from their customers which can be used at the selected outlets for making payment.

These semi closed wallets are the prepaid payment instruments that are redeemble at a group of selected outlets.   The mobile user is not allowed to withdraw cash and the money cannot be converted to talktime.  The telecom operator is not allowed to create money or credit. The money thus collected from the customers need to deposited in an escrow account with a bank.

8.     Mobile Banking in Africa

Even though mobile banking is now available in all western countries, Africa is considered as one of the leaders in mobile banking with advanced solutions and successful references.  In Kenya, M-PESA service of Safaricom allows the customers to send money to their family and friends throughout the country using a mobile phone. The recently introduced M-KESHO allows the customers to deposit money into bank account and earn interest on deposit. Interestingly, Africa’s underdevelopment has also played a major role in the success of their mobile banking.

9.     Conclusion

The RBI guidelines have restricted the mobile banking transactions to Rs 2500 per transaction subject to an overall cap of Rs 5000 per day per customer. RBI has reservations about any non banking organizations creating credit and there are fears over money laundering. The expansion of banking services particularly to rural India through the traditional banking model of branches and ATM has got restriction due to high cost involved. To achieve the goal of financial inclusion, Government and RBI need to change the present approach. The only option left to the Government is to allow the telecom operators to join the banking industry to carry the banking services to millions of Indian people who reside in Rural India. The telecom industry over the last decade developed the expertise in handling large volume of small transactions and they are highly successful in spreading their distribution network and reaching the customers over the entire country. There should not be any more delay in trying a new model which will usher the country to the next level of banking revolution. The scope for mobile banking is tremendous considering the cash transaction of Rs 15 trillion carried out in the country.

10. Some statistics on mobile banking in India (source HT dated 19-Aug-2010)

19.7 million people visited business / finance web sites in June 2010
Year-on-year growth in online traffic to finance web sites is 45%
Banking / financial web sites share 50% among the total internet users in June 2010 
72% of the visitors to the business / finance sites were men
Web sites of ICICI bank, HDFC group and SBI attracted most traffic
A siginficant portion of people accessing Indian baning sites are from abroad. ICICI topped with 12.3% visitors outside India.
1% (8 million) of the country’s 650 million cell phone users avail mobile commerce services. This is expected to go up to 50 million by 2012.

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Start your own photography websites as you do all the necessary details be it for a simple personal picture portfolio, a site where you could keep your professional photography works, a site where you could keep your memories such as wedding albums, anniversary albums, birthday albums, or everything you may hold so dear. The web editor sites would surely take care of your memories and showcase them to the world in the best way that they could possibly be starred in.

Introduction

Banking Investment or investment banking is part of the financial services industry that offers wide variety of services to corporations and organizations all over the world. The range of products and services is increasing rapidly that has made it difficult to distinguish the most important services because investment banks offer their services in different forms (Turnbull and Moustakatos, 1996) The service is an area that helps companies in funds acquisition, advising for wide range of transactions for future businesses (www.wisegeek.com).As it is clear that the investment banking deals with providing financial assistance to the companies for business matters, it is essential to ensure quality service in the area. Therefore quality assurance is the main pillar of any business including profit and nonprofit organizations, government and nongovernmental organizations as it affects the level of success in the business. The quality assurance further helps in conducting other evaluation processes like standards compliance evaluations, brand assurance evaluations, customer or guest experience evaluations, etc. which makes it essential and important in any business organization to maintain a dominant position in the industry market (www.totalqualityassuranceservices.com). In view of the importance of quality assurance, the present paper is intended to discuss the issues and importance related to banking sector particularly in investment banking.

Investment Banking

Investment banks have multilateral functions to execute in favor of various companies. The service mainly deals with companies like helping private and public corporations in issuing securities in the primary market, guarantee by standby underwriting or best efforts selling and foreign exchange management. (www.economywatch.com). Further it is committed towards providing assistance to capital markets as intermediary. These are the institutions that are regarded as counterparts of banks in the capital market in the function of intermediation in the process of resource allocation (Subramanyam, 2004, p.72)

Need for Quality Assurance in Investment Banking

Williamson (1988, p.55) stated that investment banking has been and will continue to be an increasingly intensively competitive business in order to strive in the market which is mainly dominated by the changes as part of strategy in the capital and  securities industry. The changes in the market include emergence of institutional investors, internationalization, innovative technology enabling investment banks and their customers to organize and distribute information, increasing complexity, and capital market capabilities are replacing institutional intermediating capabilities making the commercial banks increasingly active in investment banking. Quality assurances are essential in order to retain the customers on hand which shall be the top priority for any organization as they are the main source of revenue and to attract more customers with quality assistance in banking services. The assurance of quality in service sector brings the customer back to make use of the services and recommend the same to others which means increased rate of profit. Therefore quality assurance is essential in banking sector and especially in the investment banking sector.

Quality Assurance in Investment Banking

Quality Assurance is a new topic that is been applied in banking industry that has been accorded the responsibility to evaluate the performance of system and practices and also suggested changes in the existing practices to improve quality assurance. The process of evaluation regarding the quality assurance in investing banking is initiated with the identification of suitable methodology with definition of goals and objectives of the organization (www.sbp.org.pk). The process is essential in investment banking as investment banks have unique role to play in bridging the worlds as mainstream investors manly rely on the quality assurance of the investment banks (Rhyne, 2009, p.51). In view of the importance of quality assurance in the investment banks, the process is carried out to strengthen the procedure and standards at corporate level, promoting efficient utilization of available resources so that different functions are carried out in an expeditious and cost effective manner and make recommendations for enhanced customer satisfaction. Initially quality assurance will be started by following three pronged strategy i.e. (i) develop the system, (ii) document the system, and (iii) analyze the feedback and make further recommendations (www.sbp.org.pk). Quality assurance is at its best at the times of negotiation with with single investment banker and stronger when registered in traditional manner instead of shelf registration (Williamson, 1988, p.69). According to Turnbull and Moustakatos (1996) service businesses can grow in various ways by retaining the existing customers and attracting new customers through great quality and eliminating the redundancies by the way of terminating the services of unsatisfactory customers and providing  services to new customers.. Further to clarify the scope of quality assurances to the customers in investment banking, reputation of the bank is important in terms of providing advice, integration, orientation and range of products and services offered that act as the major source of retaining and attracting the customers. Investment bankers seek to cultivate an image of competence and quality which is especially important in a competitive professional service business (Eccles and Crane, 1988, p.69). Neely (1999) states that quality assurance is achieved by managing the quality assurance activities system, quality control diagnosis, innovation, improvement, inspection, quality evaluation and audit, infrastructure, assistance in product usage, recycling,  customer satisfaction, reliability, safety, product liability and environmental protection. In order to provide all the facilities mentioned hitherto, quality assurance should begin at each level purely undertaken and supported by the quality assurance team and its members (Gillman and White, 2001, p. 215).

And of late, Total Quality Management (TQM) principles are in practice in most of the successful organizations which also lays down the principles in providing qualitative services to the customer. The TQM principles designed by various researchers are being adapted by many service industries to provide quality service to its customers or clients. It is important to note that the principles are more effective in service sector organizations than in any other firms necessitating the need to integrate the principles in the investment banking to provide quality services to its customers and achieve greater customer satisfaction (Cowling and Newman, 1995). Managers are required to be sensitive to different demands and needs when developing their operational, human resources and marketing strategies with a view to improving the quality of service they offer to their customers as they are willing to pay for better premium services (Spathis, Petridou and Glaveli, 2004). The increasing expectations among the customers, existing and those coming to the bank in search for better service than others in the industry has created a competitive climate thereby laying the impetus on quality of the relationship between the customer and the institution. There are various methods which can be used to ascertain the determinants of the concept of service quality as well as quality measurement techniques (Joseph et al, 2005). Quality is an important aspect in any industry, offering products or services, to attract new customers and retain the existing ones. And providing assurance about the quality is need of the hour for every business. As investment banking is a service oriented business with most of the profits coming through the investments in businesses and acting as consultant to many businesses, it is necessary that investment banking adopt suitable techniques, theories and principles related to quality assurance for customer satisfaction and retention.

Conclusion

The banking sector is growing day by day with new and complex services offered to the customers by various banks to strive in the competitive market. The whole gamut of business is surrounded with one aspect i.e. customer service. Therefore quality is important while providing service to the customers as any soar experiences will result in loss of customers as well as business. It is mentioned that investment banks must improve and emphasize various service dimensions resulting in better quality service. However it is important to mention here that just offering qualitative service is not sufficient but to assure the same service and much better service in the coming future is necessary for the investment banking which deals in higher segment as compared to commercial banking. As mentioned earlier, apart from acting as banks, the investment banks also engage in consultancy services providing assistance in financial and company matters. Basing on this, most of the companies turn towards the banks for suggestions and providing right advice at the right times demonstrates that the bank is reliable financial adviser and is able to meet the clients expectations. Moreover it is important to provide service far better than expected by the customers during the service process by being responsive, approaching the customer to help inspiring confidence, and adopting an institutionalized approach (Turnbull and Moustakatos, 1996). Service quality is being recognized as one of the key strategic value which aims to provide better service in order to retain the existing customers by providing optimum satisfaction, opportunities for cross selling, development of customer relationships, increased sales and market shares by attracting new customers all of which ultimately enhancing the corporate image and business performance (Joseph and Stone, 2003). In view of the above benefits associated with quality assurance in various organizations and particularly in investment banking, it is an integral part of the management process to achieve the goals and objectives of the investment banks. Thus quality assurance is an important element in attracting customers or client in the investment banking sector.