Page 167 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes branches. The share of the net is higher at 15% while the lion’s share of nearly 80% is shared by
telephone and ATMs.
The derived advantages for banks through technology adoption are many:
1. Cost effective: It helps keep costs low. The cost per transaction on an ATM is just 30 per cent
compared to a branch based transaction. Savings are higher in smaller cities and towns
due to lower real estate housing costs for the ATMs. HDFC Bank has been successful in
trebling its active net-banking customer base to over 3 lakh. There are over 6.5 lakh
transactions performed per month on the net, the bulk of which (85 per cent) are non-
financial transactions.
2. Force multiplier: Technology can help generate business leads, which can then be followed
up by the bank’s personnel. An ATM can bring in fresh revenues when credit or debit card
customers of other banks transact through it. UTI Bank has been eyeing this business,
targeting customers of foreign banks which do not have adequate either branches or off-
site ATMs to service a widespread customer base. The bank had earlier entered into an
alliance with BNP Paribas (the latter closed its retail operations) and is having liaison with
other banks. Non-UTI Bank customers account for 10-12% of transactions at UTI Bank
ATMs, which accept both Visa and MasterCard. With over 600 ATMs in 70 cities, UTI
Bank’s network is the second largest among private Indian banks after ICICI Bank (1100-
plus). SBI is already the largest ATM-networked bank; in addition to it’s over 18,000
manned branches (including the branch network of its seven Associate banks). This gives
the Indian banks an enviable reach in India.
3. “Hub-and-spoke system”: The ATM networks of UTI Bank function on a hub-and-spoke
model in which a branch is never 2-3 km away from an ATM in a city like Mumbai, and
more than 5 km in smaller cities. They serve as powerful tools for customer acquisition
and retention.

4. Locations: ICICI Bank has strategically placed its ATMs for maximum benefits. It has
chosen petrol pumps, major business districts and corporate campuses like Infosys to
selectively target a large number of customers.

5. Value-addons: Customers can pay their tax and utility bills and have multilingual facilities.
ICICI Bank’s ATMs display information in six languages: English, Hindi, Kannada, Tamil,
Malayalam and Marathi.
6. Workload reduction: Paperwork and the volumes in mass banking overwhelmed good
public sector banks like SBI. As a result, they were not only perceived as inefficient but were
also not able to give quality time and attention to aspiring middle class and high net worth
individuals. ATMs, bar code and Magnetic Ink Character Recognition (MICR) scanners,
Automatic Ledger Posting Machines (ALPM), etc. have reduced the workloads in banks in
general and Indian banks in particular. In addition, new functionalities are being added.

7. Cross selling: The banks are able to get the benefit of cross-selling their different products
through their alternate channels. The embedded technology also greatly helped them in this
regard. For example, a customer can ask for more information on other products of ICICI
Bank on their ATMs. The machines have six options currently: home loans, car loans, credit
cards, life insurance, mutual funds and online trading (icicidirect.com). Any information
request by a customer on the ATM, say on life insurance, is automatically recorded and the
lead is given to appropriate marketing personnel (of ICICI-Prudential) for follow-ups.

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