BANKING AT THE TIME OF SOCIAL DISTANCING*
By Booshan Rengachari
Touching anything touched by others is a risk at this scary time of coronavirus and social distancing. Our heart goes out to all those servicemen, health workers, and communities who are helping and supporting each other at this challenging time.
Thanks to the internet and digital devices. They are weaving all the communities, businesses and families together. While most of the technology-focused businesses have been practicing working from home options, and some businesses conduct their business over the phone/online, many other businesses and community gathering places had a need to be at a physical location. Schools are starting to plan to offer virtual classrooms. How can the banks help manage our community’s finances when nobody wants to venture out? What are the most important capabilities banks need to have to support people and businesses when everything is online?
Branchless Banking
It’s obvious that branches are going to have the least or no foot traffic. This means everything that was done in the branches needs to go digital. Most commonly used services at the branches are
1. Cash Withdrawal & Deposits
2. Check Deposits
3. Account Opening
4. Loan Origination
5. Digital Channels
Cash Withdrawal & Deposits
While cash is needed when we have to venture out, it is actually not needed when everything is digital. People and businesses should start transacting only through digital channels such as Zelle, Venmo, Paypal, ACH, and Fedwire. In fact, the government and the banks should start discouraging the use of cash by taxing those who use cash, as there is a cost in printing, moving, managing and securing those papers.
Check Deposits
Checks which were invented in the 16th century are still in use. While the technology has advanced so much, the way we exchanged money didn’t evolve fast enough with the technology. When people complained about writing the check, stamping, and mailing, banks, and its technology vendors came out with an idea of doing all that work for bank’s customers, and “invented” bill pay. When the businesses who receive the checks complained about the pain of collecting and depositing the checks, the banks and its technology vendors “invented” lockbox and remote deposit capture. For consumers, it gave mobile deposit capture.
Unfortunately, the banking industry continued to live on its legacy inventions, only patching the effect of the problem without seriously addressing the cause of the problem. Modern digital technology never reached banking mass. While remote deposit capture still enables some digitization, it’s only applying lipstick on a pig. The underlying animal is still a pig and the underlying instrument is still a check. Checks have more painful processes for the bank operations team, require a more human touch and also invites fraudsters. The government and the banks must discourage the usage of checks and taxing those who use them.
Account Opening
Consumers and businesses must be able to open a new account, add new products and services without visiting a branch. It’s not an option anymore to plan about offering account opening solutions. Without this solution, and with everyone practicing social distancing, banks will not be able to acquire any new customer or sell any new products to existing customers.
Technology is available to validate the identity of the customers, and move funds from another bank to fund the new account.
Loan Origination
Similar to account opening, applying for a loan, whether it’s a home purchase, home refinance, auto, business or any type of loan, banks must make it easy for its customers to apply online. There are many digital solutions available to onboard a loan, verify, manage the collateral, manage approval workflow and everything can be fully automated.
Digital Channels
Any banking services, whether it is account opening, loan origination, account services, payment services, card services, treasury services, and everything should be digital. Let each individual and business do their banking for the device of their choice, without even touching a device touched by others. As the banks enable this level sophistication, it will drive all businesses and consumers to manage their finances and money 100% digital.
About The Author
Booshan Rengachari is the founder and CEO of Finzly, which is at the forefront of enabling digital enablement, banking transformation and provides the path to innovation in a cost-effective and painless shift from legacy to the future. Booshan believes in out of the box, fresh thinking, solving most complex problems in a simple easier way with all the technology that is available today. Booshan can be reached at booshan@finzly.com
*Editor’s Note: Finzly is helping to restore access to banking again by offering 90 days of Free Account Opening solution to banks in the USA. Banks can contact Finzly at sales@finzly.com to learn more.