Covid 19 - Changing strategies for Banks

Ever since Banks started with computerization and moved away from manual records handling to banking software for processing of transactions, constant efforts are being made to 'debug' the software bugs and tackle the security threats from 'software viruses' using anti-virus measures. Never it was imagined that a day will come when a 'Virus' which causes biological threat to human beings must be tackled. Yes, Covid-19 has brought in a situation now, where Banks need to find ways to 'disinfect' and 'distance' from this contagious Virus. The present crisis has accentuated the need to reduce or even eliminate the need for direct contact and brought an immediacy of purpose to go fully digital. That being a long-term strategy, being an essential service, Banks can't be remaining shut for long time. So, for the near future, Banks need to find ways to stop the spread of the virus where vulnerabilities exist for the virus to be picked up from customers or transmitted to customers.

With the arrival of internet and network connectivity, Banks started channel-based banking. Multiple channels such as online, mobile, ATM etc. evolved over a period of time. The idea here was to move away from branch banking and provide services to customers at their convenient place, time and using their own devices. Banks wanted to reduce the foot fall at the physical branches so that the staff can be effectively used for other operational and cross sell activities. This eventually proved to be a cost-effective measure. Debit cards and credit cards were widely accepted as medium of payment transactions and it reduced the usage of hard cash.

Then came the 'digital' era which demanded end to end process automation. Digital disruption forced banking industry (like any other industry) to adopt digital solutions and means for carrying out banking transactions. Soon Banks started embracing digital technologies with the intention of 'digital transformation'. Digitalization lead the way to be 'paperless' wherever possible. Central Bank (RBI) and Government of India brought several measures to enhance digital payments by reducing cash-based and paper-based (cheque) transactions. Demonetization helped reduce the cash-based transactions in a big way. The emergence of PPIs and other major players in the Payments Ecosystem utilizing the UPI framework for digital payments, paved the way for a digital revolution in the world of 'payments.

During the current lockdown many customers could easily do their banking transactions over channels and make their regular payments using their cards or in a 'digital' way without visiting bank branches. This came with ease as most of the Banks are well equipped with channel-based banking using online and mobile. And majority of the payments – to vendors and other purchases can be effected through google pay, Paytm etc. without having any physical contact with the other party. Though the 'digitalized' environment in the banking system helped to face the current situation in a larger way, there are still some areas or rather 'touch points' which necessitates 'human contact' or 'surface contact with vulnerable Virus' that has to be handled very cautiously by the Bank Staff to protect themselves as well as their customers from the spread of the deadly disease. Some of those touch points are mentioned below:

ATMs: ATMs are widely used for withdrawing cash in urban as well as rural areas. Even with digital payments facilities around, there are still requirements for usage of hard cash. Even if we go by 'contactless payments' without using a debit/ATM card, the customer has to key in the unique pin number for getting cash from the Machine. Some of the ATMs can be used to deposit cash and perform other transactions. Hence ATMs are always in use by the Bank customers where physical contact with the ATM machine is a must. Hence disinfecting becomes mandatory after every customer usage.

Another aspect is ensuring distance near ATM's so that customers are not coming closer than the recommended distance from one another.

Kiosks: Though kiosks reduce customer contacts with Bank staff, this is another area where the transactions involve 'human touch'. As this can be vulnerable in spreading the Virus, proper disinfecting is required after each customer uses the machine.

POS: POS machines are an integral part of payments transactions. Every merchant outlet which handles card-based transactions uses POS machine. This requires physical swiping of cards and hence would need disinfecting every time it is used.

Branches: Branches maintain multiple 'touch points' where direct interaction and 'contact' with customers are unavoidable. Some of the main areas are

Cash counter: Cash counters are still maintained in the Bank branches for payment and receipt of cash. Though some tech-savvy banks have facilitated the cash payment requests using mobile, the hard cash will be handed over by the Bank Staff to the customer visiting the branch for cash payment. As cash itself is a medium of transmission of virus, here both the customer contact and the surface contact with hard cash has to be tackled.

Biometric devices: Biometric devices are common in branch banking. And most of it uses fingerprint for biometric authentication. Starting from onboarding a customer to processing of financial transactions, biometric authentication is carried out as a method of authentication. As multiple customers use the same device, it poses a threat considering the current situation. Some banks use biometric authentication for staff authentication as well.

Paper based transactions: Paper based transactions are still part of branch banking. Customers deposit cheques and use various paper-based slips and application forms for carrying out various transactions. For all the practical purposes, Banks do collect paper-based documents from customers such as ID proof, address proof etc. wherever it is required. Though research is going on, some studies say that corona virus can survive on the surface of paper for few hours to few days. This again calls for disinfecting all the paper-based documents collected at the branch. This could be in the form of quarantine rooms which are heated to sufficiently high temperatures where the virus cannot survive.

Lockers: Lockers could be avoided during lockdown period as it is not a necessity. However, if there is an emergency, locker operation needs to be carried out which involves direct human contact by the customer as well as the Bank staff. So, disinfecting the lockers becomes a must after every operation.

Though regular cleaning and occasional disinfecting is done as part of housekeeping and maintenance activities in Bank premises and ATMs, the Covid-19 condition demands much more. An ideal situation would be a completely 'contact less' way for transactions in the real literal sense. Some of the following can be adopted to make it 'contactless' transactions at branches and ATMs

Robots can be used wherever human contact is required, especially in cash counters. The Robots can be designed for a self-sterilizing process after the transactions are processed.

Automatic disinfecting mechanism for cash before keeping it in storage/Double lock of the Bank has to be introduced

ATMs can be devoid of manual input of pin number. Instead, QR code based authentication for cash transaction can be introduced. An App which reflects the transaction features of the ATM can be designed and can be used to operate the ATM for various transactions. For the customers who are not having smart phones, the above wouldn't be possible. Hence suitable solution has to be designed to avoid direct contact with card/ATM machine.

When it comes to Kiosks, instead of manual keying in to choose the transactions requests, Robots can be used to do the transactions on behalf of the customer based on the customer instructions. Voice based customer instruction can be explored though voice conversation may be unhealthy due to the droplets from Saliva. The required 'distance' can be emphasized to avoid the risk.

For transactions at POS machines, the system of swiping cards need to be changed. Proximity payments using Near Field communication Technology without swiping or touching anything can be used.

For Biometric devices, fingerprint-based authentication needs to be replaced with other alternatives which doesn't need a direct contact with the device.

The customer can use the fingerprint in his/her own device such as mobile or tablet. The fingerprint thus captured should be able to be mirrored in the biometric device to carry out the authentication.

Facial recognition based on computer vision technology is another solution for authentication of customer identity.

Paper based transactions need to be completely avoided. Wherever it is unavoidable such as loan agreements, account opening application forms at branches etc. the same need to be handled in digital form and authenticated using digital means such as digital signature etc.

When it is required for the branch staff to use the official key to open the locker, the same should be facilitated using a remote-control system. Eventually the physical handling of lockers to be replaced with 'digital locker' facility where the customer can operate his/her locker by themselves with proper authentication mechanism.

Banking solutions/apps based on Virtual Reality/Augmented Reality are to be explored further which can provide near real experience while ensuring a completely contactless and safe way of banking.

The present crisis is an opportunity to herald a new era of digital only transactions. While efforts are being made by the RBI and Govt. of India to move towards a cashless and fully digital society, the crisis has ensured that this transition has to be completed sooner than later. The other option, considering that pandemics are going to be more frequent in future, is to have a foolproof 'disinfecting strategy' just like Fire policies are articulated for buildings. But disinfection doesn't seem like a scalable solution in the long run. The virus itself is constantly mutating, is poorly understood and future pandemics can be more deadly, invite prolonged lockdowns and can be even more contagious than Covid-19. That being the case, Banks will be prudent to hasten the drive towards going completely 'contactless' in order to reduce the risks of business continuity as well as eliminating the health hazards posed by the virus contagion.