Will we be able to cash in on the cashless society?

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.