Will we be able to cash in on the cashless society?
By Zatni Arbi
JAKARTA (JP): We once talked enthusiastically about prospects for the paperless society, but it is now time to talk about the cashless society.
Well, the paperless society has turned out to be an illusion. Despite the fact we have transferred a lot of transactional activities into the on-line world, we still see growing demands for computer printers and printer paper. We now have electronic data interchange (EDI), we have the Web and E-commerce, but we still have paper-based documents piling up everywhere.
The cashless society may turn out to be another illusion.
However, just like the digital documents, we are seeing more and more use of "digital money", with smart cards one example.
When I wrote about Internet banking in this column a couple of months ago, I gave you U.S.-based Bank of Hawaii and Wells Fargo as examples. Unknown to me at the time was that our local banks were already busy preparing their own Internet banking facilities.
And, as you may have read in this paper last week, Bank Papan of the Tirtamas Group won that race. Courtesy of Neil Gamble and James Tilley, two of the people behind the deployment of Papan's Internet banking, I was able to have hands-on experience with the new system.
No question about it, Internet banking will be part of our lives in the third millennium, with transfer payments made via the Internet. Of course, you will still need paper cash and change to pay for a plate of gado-gado as the hawker may not have a bank account into which you can directly transfer your payment!
Real time
I have a savings account and current account with Bank Papan. The system is still in English, but since my accounts are in Indonesian, they appear as Rekening Tabungan and Rekening Koran'. As you can see in the accompanying picture, I can keep track of both accounts in real time with the help of the bank's Internet facilities, and I can do this with my Web browser.
To access my account statements, I have to first enter my ATM card 16-digit number. Luckily, Bank Papan uses this number to access all my accounts with them, so I don't have to memorize multiple numbers. I also have to enter my PIN, which is also the same as the PIN that I have to enter before I can use my ATM card. Once I pass the security checkpoint, I can access the summary of all my accounts. I can click on any one of them to get a detailed statement and the history of all transactions.
There are undoubtedly many advantages of having access to constantly updated account statements. Each time I receive a transfer payment from one of my clients, for instance, I'll be able to see it immediately. Similarly, each time my check gets cleared and the amount has been transferred to somebody else's account, I'll be able to get that information, too. If my balance in the current account is dangerously low, I can immediately transfer funds from my other accounts into it in order to avoid an overdraft. In the past, this could be achieved through the phone and the fax, but now I can do it directly from my PC.
The procedure for transferring funds from one account to another is very straightforward, as you can see on the bottom right corner of the illustration. First, I specify the amount of transfer that I want to make. Second, I specify which account I want to withdraw the funds from. Bank Papan has made this part very simple; all I have to do is select the account from the drop-down list under the "From Account" heading. Each of my accounts is shown in the list, and it's shown complete with the balance to avoid me withdrawing from an account with low funds.
"To Account" drop-down list also has all my accounts, with respective balances, as you can see in the picture.
When all has been correctly set, I scroll down a little until I see the "Transfer Funds" button. I click on this one, and the system asks me to verify whether the accounts and the amount are all correct. If they are, I click on the "Process Transfer" button and the data will be sent directly to the bank's front-end HP system and consolidated against its Informix database. Then I get a statement of the transfer, which I can print out as proof.
Security
Response time is always a concern of Internet service providers. Surprisingly, I've found that the part that seems to take the longest time is the waiting for Bank Papan's home page to be completely displayed on the screen. The subsequent steps are fairly fast. Even the retrieval of my detailed account statement doesn't seem to take a very long time, despite the complicated authentication process that it must involve.
What about security? Neil told me that the Internet banking facilities are built on the so-called SSL, Secure Socket Layer.
You'll know that the SSL is being used by the appearance of a closed padlock icon on the status bar of Internet Explorer. It means that the data sent back and forth from your PC to his system will be encrypted, and nobody else can make sense of it even if they could intercept it, an impossibility.
The encryption technology used by this bank is the 128-bit version, which the U.S. government used to ban for export outside the U.S. The U.S. government has finally agreed to let financial institutions in other countries use it, and Bank Papan was the first to get the license to use it outside of the U.S.
What if you access your accounts at the office but are suddenly called into the boss's office? Well, in the worst scenario, somebody could change the target account to his own. In Bank Papan's Internet banking facilities, it is possible to transfer payment to somebody else's accounts, and you can even pay the installment for your mortgage loans on-line, too.
Fortunately, by default the account access is automatically disabled after five minutes of no activity.
Neil explained to me that Bank Papan's Internet system is still under development and enhancements need to be made. However, the account management system already works without a glitch. Eventually, we will have the option of having the pages in Indonesian or English. Bank Papan also plans to integrate their Visa accounts into the system, and this will allow us to manage our credit card accounts as well -- just as customers of Wells Fargo have been able to do.
I tested the system by withdrawing an amount larger than the balance in one of my accounts, and the system gave me an error message. It didn't really tell me that I didn't have sufficient fund in the account I wanted to withdraw from, it just told me to contact the bank. I'm sure this will be fixed in the future.
Another feature I think Bank Papan should add to this new Internet facility is a sample of the account statement page. As this is quite a new facility for the majority of our bank customers, a sample statement will help a lot in getting them familiar with Internet banking.
Final word
Now that the race to be the first to come up with Internet banking is over, I believe our banks should concentrate more on the business plans behind their services. As one recent survey indicated, customers normally base their decision to stay with one bank or move to another not because of the products, but rather because of the quality of services that they get from them. Quality of services is of paramount importance.
Indeed, Internet banking services allow banks to offer more convenience to their customers, which will increase the perceived quality of their services. I'm sure the other local banks will soon start offering their own Internet-based services, but for now we should congratulate Bank Papan for being the first to bring us Web-based services that really work.