Better communication needed to promote digital banking

Better communication needed to promote digital banking

Mahendra Gautama, Contributor, Jakarta

For many bank customers, digital banking is no longer a
strange or unfamiliar term. Digital banking involves transactions
using the latest communications technology, like the internet or
mobile phones. Like any other technological development, digital
banking is meant to offer customers numerous advantages, while at
the same time being cost effective, convenient and less time
consuming for both sides -- the banks and the customers.

With all these advantages it is only natural that bank owners
and managers expect their customers to welcome digital banking
with open arms.

In reality, however, it has come as a disappointment to them
to find that in fact only a small number of customers are happy
with it. There are many factors that influence the adoption of
digital technology. Just like in conventional banking, one of the
most important of these is the security factor. After all, it is
the customers' money that is at stake.

A consumer survey report on e-banking was issued by a leading
research company, eMarketer, in December 2003. On reasons why
many customers are still reluctant to use digital banking the
report was an eye opener for bankers. Close to 26 percent of
respondents said they were worried about hackers or some other
form of digital crime.

A remarkable 22 percent found advanced technology
inconvenient. Fear of privacy invasion and losing confidential
personal data worried six percent of respondents. About 21
percent emphasized the need for one-on-one or personal
communication, even in today's sophisticated world, for their
banking transactions. That left only a quarter of the respondents
who were prepared to fully embrace hi-tech banking.

Meanwhile, another research company, Harris Interactive,
issued a surprising report on customer trust regarding banking
security. Its 2003 report clearly revealed a downspiraling of
customer trust over the last few years. The 2003 level was the
lowest: only 42 percent of customers believed that their banks
were taking good care of the security aspect. In 2000, the number
was higher, 54 percent of them trusted their banks on this
matter, while in 1999 close to two-thirds of customers felt their
financial transactions were in safe hands with their chosen
banks.

For banks, obviously, in order to provide trustworthy service
security is the top priority and has always been since the
earliest days of the banking industry.

From the sturdiest locks and iron deposit boxes behind locked
bars with security guards in the era of traditional banking --
most of which still exist today -- to surveillance cameras and
secure cards using PINs (Personal Identification Numbers), banks
always need to ensure their customers have a sense of real
security.

Digital banking includes features like SSL, encryption and
firewalls as some of the safeguard measures designed to make
transactions really safe. In mobile banking a wide range of
security features are also utilized, like WTLS, Visa 3-D Secure
Specification, MasterCard SPA, and Address Verification Systems
(AVS) to ensure customers that their transactions are
untouchable.

All these technological innovations do not come cheap.
However, realizing the need to provide customers with every
competitive edge, including convenience and less hassle, major
banks have gladly spent huge sums of money investing in security
technology. This is not a once-off investment, and periodic
upgrading of hardware and software is necessary from time to
time. This means more expenditure all the way.

However, with banks spending huge amounts of money in their
efforts to give customers the best in banking security on one
hand, and the reluctance of a major cross-section of customers to
use advanced banking methods on the other, indicates that there
is a missing link somewhere.

Johanes Saragih, one of Indonesia's most noted bankers, said
the missing link was most probably a lack of clear communication
from the banks to customers on the brand-new, strange-sounding
terminology and features associated with digital security.

While keeping a good balance between the huge investment in
technology and providing the best service to customers, bankers
should not belittle the role of communications, he said. "Most
customers are not familiar with all these new names, phrases and
abbreviations. They are simply lay people and we ram technical
words down their throats and expect them to appreciate what we
are trying to do. Two-way communication in simple language is
what is needed. What we are doing, technologically, that is, is
of course for their benefit. But we must familiarize them with
all this and make it simple for them to understand. Only then
will they feel comfortable with it, see the benefits, and
ultimately both sides will gain," he said.

Johanes added that bankers should also give information on how
customers can be active participants in further securing banking
transactions, like upgrading computers with the latest security
shields and changing their passwords periodically. Essentially,
he said, enhancing customer awareness and understanding about
digital banking security is not only for the benefit of
customers, but also of the banks themselves.

Once the communications hurdle is overcome, the advantages of
digital banking, including all its security aspects, will be
better understood. It is human nature to distrust something new
that is difficult to fathom. In this case, it is digital banking.
It should be made less complicated with all channels of
communications being availed of, including conventional means and
one-on-one communication. With all the advantages offered by
digital banking, it should not too difficult to gradually
convince customers to turn to solution-providing technologies,
which are only a click or a phone call away.