Digital banking hype: More to be done to make it inclusive

Recently, a popular science writer and social activist had posted on X his frustrating experience with a leading private bank in Sri Lanka. Naming the bank, he had said that Sri Lankan banks may use digital marketing hype but in practice, they are still very much paper-based taking cover behind regulations issued by the Central Bank. He had warned that digitalisation, which the Government is promoting as its hype project, cannot succeed with such archaic service providers and regulators 

Sri Lankan banks which are still harbouring dead-Aristotle type web sites are far behind global advancements. Hence, the whole digitisation that they talk about is only a hype. They should have facilities for digitalisation which enables them to use the big data available for productive use. It will enable both banks and their customers to work together for their mutual benefit

The websites of banks, the Central Bank included, belongs to the dead Aristotle category. There is no attempt by them to shed this outdated web communication and adopt more effective systems of web communication

Frustrating experience of a leading bank customer

Recently, a popular science writer and social activist had posted on X his frustrating experience with a leading private bank in Sri Lanka. Naming the bank, he said that Sri Lankan banks may use digital marketing hype but in practice, they are still very much paper-based taking cover behind regulations issued by the Central Bank. 

His woe had been that when he wanted to add an account to his portfolio of accounts as an existing customer, the bank had insisted that he should fill a paper form manually. This is despite his personal information is with the bank in question and he had assured them that none of that had changed. They had even failed to give him a fillable Portable Document Format or PDF form which could be filled by using a device like a smart phone. He had warned that digitalisation which the Government is promoting as its hype project cannot succeed with such archaic service providers and regulators. 

Digitisation, the first step

What this science writer had highlighted is a major weakness in the process of converting an economy from a paper-based system to a digital-technology-based one. Governments and institutions have taken pains in introducing the first step in this conversion process. That step involves converting a manually operated system with hard copies of papers and documents into digital form where information is stored in a server and made available for use through a computer or a digital device. 

That step of the process is called digitisation. A basic example is the use of a smart phone to capture the image of a photo into a digital version saved in a folder of the phone. That digitised version can be shared with others via internet, printed into a hardcopy by using a printer, or simply kept in preserve in the photo album of the user. This is good but not good enough; new versions like ChatGPT conversion of the photo into a hilarious or a cartoon form are yet to be made.

Digitalisation, the second step

This second step comes from a further process called digitalisation in which the already digitally available information is used for further analysis, inference, or decision making. 

Accordingly, if information is already available in a bank on a customer in digital form, that information, updated periodically, should be used for providing banking services to that customer. If the customer seeks to open a second account with the same bank, he should not be bothered to provide the needed information again in a hardcopy form. It could be copied from the data store already with the bank. This is sharing of information by one branch of the bank with another branch duly authenticated by the data management officers. 

Need for adopting open banking platforms

Information is precious and there is now a tendency to share information across various institutions and entities to facilitate better management, cut costs eliminate inconvenience. This is what is known as the ‘big data management’ systems. Even outside parties can make use of the big data stored in a server for better data management thereby facilitating the smooth functioning of the system. 

When applied to banks, it is called ‘open banking’, and it is practised by allowing specific data users called Application-Programming-Interface or APIs. As at mid-June 2020, open banking had been permitted in the UK, EU, Singapore, Australia, the US, Japan, Mexico, and China [1]. This list is growing every day and recently, India, Nigeria, and Bahrain have joined the group. In Sri Lanka, though some private banks have ventured into selective and standardised API platforms, it is yet an unexplored territory for the country’s bankers. 

Young innovator dumped by Sri Lankan banks

I have written about a young innovative entrepreneur named Ashan Jayasinghe, who had used the big data available in banks to create an API platform to reduce the search cost of prospective bank customers who shop around to find the best option for deposits and loan products [2]. 

Right now, that information just sits idle in the servers of banks. Explaining how his API platform will help prospective bank customers and banks themselves, Jayasinghe said: “Making that information available in a single platform is convenient to customers on many counts. One is that they don’t have to incur any search cost now. In the previous model, they had to visit several banks to get that information. Time is costly and if you can help them to keep it at a minimum, you are in fact doing a good service to customers. This’s beneficial to the banks too. They can ensure that customers won’t keep a distance from them because of the inconvenience to visit banks in person. It will cut down their advertising budgets too. It’s also beneficial to the nation. When individual banks engage in cut-throat competition by undertaking their own advertising campaigns, there’s a lot of resources being wasted for nothing. If this advertising can be done from a single place for all banks together, it saves the nation’s scarce resources too” [3]. 

Jayasinghe failed miserably when he sought to make his API platform accepted by banks. Banks were simply not interested in such new innovations. That was the end of a young innovator in the country, and he is now with his innovative brain located in a foreign country which offers a value for his skills.

Communicating with employees and customers

In the present digital age, the way institutions communicate with their own employees and those outside has undergone rapid transformation. This is common to banking institutions too. Banks, like other institutions, which have considered an online presence as a necessity to do business effectively have developed websites to attain that goal. 

Website development is not an easy task, and it involves seven different steps which must be followed one after the other: Identification of the institution’s goals and strategy, building a structural skeleton of the site, visual design in terms of the institution’s brand guidelines, content creation, turning the approved designs into a functional website, testing and quality assurance, and finally launching and maintaining the website. Hence, it is costly and administratively inconvenient for a bank to change the content, scope, and style rapidly to meet the emerging new developments in the system. However, it is a must if a bank’s interest is to provide the best services to the public. 

Evolution of websites

In the last four decades, websites have undergone rapid transformation along with the advancement of information and communication technology or ICT. I have observed several phases of web development which I would like to brand as Web 1.0, Web 2.0, and Web 3.0. 

Web 1.0: Dead Aristotle type webs

Web 1.0 is a one-way communication in which the bank or the institution involved simply loads it with information which it wants the viewers to know. It is like the Gazette of the Sri Lanka Government or any newspaper in print form. The viewer will read it but cannot ask any question if he does not understand it. This is a fundamental issue for an intelligent reader. This was a problem for the Apple empire Co-Founder Steve Jobs, then a 28-year-old young entrepreneur, when he addressed the International Design Conference in Aspen in 1983 [4]. He told his audience, humorously of course, that when he read Aristotle, he had several questions to ask him but could not do so because Aristotle was no more. So, Web 1.0 is just like the dead Aristotle. You read the Web but if you do not understand what the Web developer has said or if you have some objections to what he has said, you have to keep those comments to yourself. That is not effective communication. But the websites of banks, the Central Bank included, belongs to the dead Aristotle category. There is no attempt by them to shed this outdated web communication and adopt more effective systems of web communication. 

Web 2.0: Permitting questions or chatting with an AI assistant

Web 2.0 is an improvement over the dead Aristotle category but not the ideal communication method. By adding an ‘ask a question box’ or a Chatbox to talk with an artificial intelligence or AI assistant, it has partially opened its communication to readers’ response. Ask a question method is a time borrowing tactic because once the reader puts the question in written form in the relevant space, the Web manager is expected to read it and answer it. The reader must wait until his question is answered. Most often these questions are never answered as I have experienced with a leading bank in Sri Lanka. 

Once I asked the SWIFT code of a given branch of this bank through the ‘ask a question facility’, but I did not receive the answer. Later. I had to use Google to find the relevant answer. The Chatbox featuring the AI assistant is a better way of communicating with the web manager and if internet facilities are available, it is a real time communication. But only a single person could chat with the AI assistant at a given time and multiple communicators are not permitted. Further, the AI assistant is also not thoroughly knowledgeable of all aspects of the bank. It is given a limited range of information and when a question outside that range is raised, the response is just an apology because it is not available. This was my experience with web managers of some leading institutions in Sri Lanka.

Web 3.0: Multiple 

real-time communication

Web 3.0 provides a real-time multiple chat facility to more than one communicator at a given time. It enables the communicator to chat simultaneously with the AI assistant and other communicators who have logged into the system at that time. It is a more advanced system because it enables the exchange of multiple views which keeps the interested people connected to each other. A recent paper published by Istrate and others has documented how this multiple communication system works [5]. 

The users can participate in the chat by using their real names or a pseudonym. Accordingly, with the help of chat, several people can talk at the same time, either verbally or in writing, thereby each having the possibility to see in real-time what the others have written. Once a user enters the channel, he can see that other users are also present. Next to each of these users, an ID number is displayed with a description of the person concerned as well as his status. It eliminates the participation of mischief makers in the chat. 

When a registered user receives a message, a pop-up window informs the user and by selecting the text, they use can read and respond to it. Say Istrate and others: “Chat is a fantastic way to communicate with people around the world.  Online chat allows users to communicate in a brief time, as in the case of popular forums, but the data is not archived. They can access it at any time and share it with someone else” [6]. 

This is democratic web management which offers opportunities for bank customers to participate in live discussions with bank management. It also permits banks to solicit suggestions from bank customers to identify weaknesses in the system and remedies for same. For instance, if a bank proposes to introduce a new banking product, say a new savings scheme for minors, the live multiple real- time chat system involved in Web 3.0 enables the bank management to get feedback from the customer base as to how the product should be designed and implemented. It is a better way to introduce new products in consultation with the prospective users so that its success can be assured even before it is implemented. 

Sri Lankan banks which are still harbouring dead-Aristotle type web sites are far behind global advancements. Hence, the whole digitisation that they talk about is only a hype. They should have facilities for digitalisation which enables them to use the big data available for productive use. It will enable both banks and their customers to work together for their mutual benefit. 

(The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected] )

 

1 https://www.imperva.com/blog/open-banking-around-the-world/ 

2 https://www.ft.lk/columns/Profiling-young-entrepreneurs-Part-1-COVID-19-is-an-opportunity-for-innovative-minds/4-706307 

3 Ibid

4https://www.youtube.com/watch?v=t9HmOz8H0qI 

5 Istrate, George Alexandru et al, 2022, Institutional Communication in the Digital Age, Journal of Financial Studies, 7(13), pp 104-19 (available at: https://www.researchgate.net/publication/365279826_Institutional_communication_in_the_digital_age )

6 Ibid