innovation of products & services in banking

Topic: Innovation of Products & Services in Banking

Prepared by: Saad Arif Sair

Banking and Technology

• The innovations in the banking field is mainly depends upon rapid growth in the technology.

• The banking industry has become one of the developed service sector industry in Pakistan.

• Information technology is one of the most important facilitators for the transformation of the Pakistan banking industry in terms of its transactions processing as well as for various other internal systems and processes.

Benefits by Adopting IT in Banking

Anywhere, Anyplace and Anytime banking Timeless and Placeless Banking Convenience Banking Dismantling of Physical Structure Goodbye to Traditional Instruments and Invitation to

New Instruments. Disappearance of Conventional Risk and Arrival of

New Risks.

Recent Technological Products in Banking Industry

Automated Teller Machines(ATMs): ATMs are widely used as electronic channels in

banking. It is operated by plastic card with its special features.

It is a computer controlled device at which the customers can make withdrawals, check balance without involving any individuals.

Contin….Point of Sale(POS):• The point of sale (POS) is the time and place where a retail

transaction completes. It is the point at which a customer makes a payment to the merchant in exchange for goods or after provision of a service.

• Point-of-sale (POS) terminals – the electronic device deployed at merchant outlets to accept major credit and debit cards.

Contin….Mobile Banking: Refers to the use of a smart phone or other cellular

device to perform online banking tasks while away from your home computer, such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM.

Contin….Smart Cards It is a chip based card (micro chip) It is used for making purchases without the need of

any pin. It is a powerful card which carries out functions of

ATM card , Credit Card , Debit Card.

DEBIT CARD

Debit card is a plastic card which provides a alternative payment method to cash for purchases.

Functionally, it can be called an electronic check, as the funds are withdrawn directly from either the bank account, or from the remaining balance on the card.

It is used instead of a credit card to pay bills such as utilities, insurance and car payments.

I4 MAESTRO DEBIT CARD

FIRST DEBIT GOLD CARD

TYPES OF DEBIT CARD

1: ONLINE DEBIT CARDS Online debit cards require electronic authorization of every

transaction. The debits are reflected in the user’s account immediately. The transaction may be additionally secured with the personal

identification number (PIN) authentication system and some online cards require such authentication for every transaction.

In the United Kingdom, Solo and Visa Electron are examples of online debit cards.

Contin….2: OFFLINE DEBIT CARDS Offline debit cards have the logos of major credit cards or

major debit cards and are used at the point of sale like a credit card.

This type of debit card may be subject to a daily limit, and/or a maximum limit equal to the current/checking account balance from which it draws funds. Transactions conducted with offline debit cards require 2–3 days to be reflected on users’ account balances.

In the United Kingdom, Maestro and Visa Debit are examples of offline debit cards.

Contin….3: PREPAID DEBIT CARDS Prepaid debit cards, also called reloadable debit cards or

reloadable prepaid cards, are often used for recurring payments.

The payer loads funds to the cardholder's card account. Particularly for US-based companies with a large number of

payment recipients abroad, prepaid debit cards allow the delivery of international payments without the delays and fees associated with international checks and bank transfers.

Contin….4: ELECTRONIC PURSE CARDS Smart-card-based electronic purse systems (in which value is

stored on the card chip, not in an externally recorded account, so that machines accepting the card need no network connectivity) were tried throughout Europe from the mid-1990s, most notably in Germany.

Contin….5: CARDS FOR MAIL, TELEPHONE & INTERNET USE ONLY Special pre-paid Visa cards for Mail Order/Telephone Order

(MOTO) and Internet use only are made available by a small number of banks. They are sometimes called "virtual Visa cards".

Such a card prevents fraud by a card number thief even if the card is not blocked, because the customer normally does not store any money on the sub-account and fraudulent transactions do not get authorized by the bank.

Credit Card A credit card is part of a system of payments named

after the small plastic card issued to users of the system.

It is a card entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services.

The issuer of the card grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

E-Banking

E-Banking or Electronic Banking is a major innovation in the field of Banking.

In the past Banking was conducted in a very traditional manner, there were no such innovations.

Information revolution led to the evolution of internet , which lead to E-Commerce continued by evolution of E-Banking.

WHAT IS AN E-BANK? Internet WAP (Wireless Application

Protocol) based mobile network

Automated telephone ATM network SMS and FAX messaging Multipurpose information

kiosks Web TV and others …

E-channels enable financial transactions from anywhere and allow non-stop working time.

E-Banking

Types PC Banking Digital TV Banking Text Phone Banking Internet Banking

Services Bill Payment Credit Card Insurance Customer services Recharge your prepaid

phone Shopping

Advantages

Faster & more convenient transaction No longer required to wait in long queues Opening of account is simple & easy Apply for bank loan Cost effective for banker side Fund transfer becomes faster & convenient Stock trading, exchanging bonds & other

investment.

DEVELOPMENT OF E-BANKING

The concept of Internet banking has been simultaneously

evolving with the development of the world wide web.

The online shopping promoted the use of credit cards through

Internet.

The first online banking service in US was introduced, in Oct

1994.

The service was developed by Stanford Federal Credit Union,

which is a financial institution.

Branchless Banking Innovation and Expansion in

Pakistan 2014Warid Launches Mobile Paisa Warid Telecom first soft launched its branchless banking

service in January which was followed by an official launch in July with 2,000 agents in 500 cities. It has collaborated with Bank Alfalah Limited and Monet as a technological solution provider.

Now, all five telecom operators are operating with their own branchless banking service in the country.

Contin….Telenor Introduces IBFT Telenor Pakistan and Tameer Microfinance Bank, the pioneer

and market leaders, have launched an innovative product of Interbank Fund Transfer Facility (IBTF) for its customers under Easypaisa which enabled their customers to transfer funds between a number of banks.

The IBTF service is one of the most highly utilized services since its launch in the banking industry.

Contin….Upaisa Launches Debit Card Facility Umicro finance Bank has introduced a Debit Card Facility for

customers of Upaisa. This Debit Card facility is available on ATM card as well. The card is workable at shopping places having service partnership with Union Pay.

Upaisa has also signed an agreement with Meezan Bank in which its customers having ATM cards could use its more than 300 ATMs without any charges.

Mobile Financial Service: Visa to launch innovative product

Bullish about the mobile banking scene in Pakistan, Visa Inc – a global payments technology company launch its own mobile financial services (MFS) platform in Pakistan.

The product will use Visa Net technology and function on interoperability model, a first in Pakistan’s mobile banking market.

Visa Net is the world’s largest retail electronic payments processing network, handling an average of 150 million transactions every day, according to the company’s website.

Contin…. Visa entered the mobile banking segment earlier this year

after Fundamo partnered with Monet to provide MFS platform for Bank Alfalah’s mobile banking solution.

Mobile banking has managed more than 31 million transactions worth $1.5 billion in the last quarter of 2012, according to the State Bank of Pakistan.

Allied Bank Introduces Terrorism Protection Insurance As Pakistan remains at the forefront of the War on

Terror, the lives of ordinary people are affected tumultuously in event of any terrorist act.

According to the agreement, Allied Bank will exclusively offer “Terrorism Protection Insurance” to all its customers, which will also provide additional insurance cover for accident related injuries.

Allied Bank Selects Oracle to Run Its Core Banking

Applications ABL was experiencing performance issues

in running its core banking application. Due to the high number of transactions in the Online Transaction Processing (OLTP) system.

By implementing Oracle Database Machine with Oracle Storage for backup and recovery, the bank aims to significantly accelerate their OLTP performance, protect its data, and speed up their critical close of business processes such as daily transactions.

Bank Alfalah launches Health Insurance Plan for Senior

Citizens Bank Alfalah has announced the launch of ‘’Alfalah

Care – Health Insurance Plan for Senior Citizens”. This new innovative health insurance feature of the

Bank Alfalah CARE account, aims to provide quality health care to individuals within the age bracket of 55 years to 75 years, in case of hospitalization due to any illness or accident.

National Bank, Mobilink and Waseela Microfinance Bank

Sign MOU NBP signed a Memorandum of Understanding

(MOU) with Mobilink and Waseela Microfinance Bank during a graceful ceremony held at Mobilink House, Islamabad.

It provides Mobicash Services for the purpose of facilitating payments under Prime Minister’s Youth Business Loans.

INFORMATION ONLY SYSTEM

General purpose information like interest rates, branch

location, bank products and their features, loan and deposit

calculations are provided in the banks website.

Facilities for downloading various types of application forms.

No interaction between the customer and bank's application

system.

ELECTRONIC INFORMATION TRANSFER SYSTEM

The system provides customer- specific information in the

form of account balances, transaction details, and statement of

accounts.

The information is still largely of the 'read only' format.

Identification and authentication of the customer is through

password.

The application systems cannot directly access through the

internet.

Innovations in International Banking:The Socially Engaging

Social media monitoring

to engage customers, mitigate risks and

promptly react to issues.

Social digital marketing to define the best content for individual customer profiles and attract them.

The Socially Engaging Banks

1: SOCIAL CUSTOMER SERVICE Integrated CRM module for Twitter and Facebook.

Virtual branch on Facebook.


2: Social Banking Online bank account integration on Facebook.

Social banking and payment integration.


3: P2P Transactions P2P payments via digital wallet

P2P payments via bank account integration.

Fast growing expectations – consumers and

businesses

Customers today demand payment methods that :

Conform to the highest standards

Don’t have onerous identification methods

Are completed within hours

Use devices that exist for other reasons

Are 100% accurate and reliable

Are widely accepted by businesses

Are globally usable

Are value for money

Use data to enhance the bank’s offer, but not intrude

Do you agree?

Innovation Activity

INTELLIGENT DEPOSIT SAFES

Service piloted in live customer premises

Proposition under assessment for potential full delivery

Secure solution for cash takings Technology counts cash reducing

errors and saving time Combats fraud from employees

and counterfeit notes

MINI CASH IN TRANSIT PICK UP

Regional customer pilot conducted of Bank Branch alternative

Proposition under assessment for potential full delivery

Bank provides small CIT vans collect notes/coin from customer premises

Order coin to be delivered with collections

Business cheques also collected

Summary

Definition of InnovationThe act of starting something for the first timeIntroducing something newA new method of doing something

“If at first the idea is not absurd, then there will be no hope for it.” (A. Einstein).

Thank You

Final Thought: Banks should manage risk rather than avoid it