1. Alternative Delivery Channels in Banking – A New Direction
Part I : ATM
When online banking was first introduced in the region, banks were keen to move their
customers online spurred by the doctrine of migration and reduction of transaction costs based
on research and models from the US and Europe. By 2010 a reported 5.5 million customers
were registered users of online banking in the Middle East, and an estimated 30% of banking
transactions were conducted online.
Some banks claim higher migration rates but there is a vast difference not only between
registered and frequent users, but also between financial and non-financial transactions.
And what about online banking for corporate and SME users?? How many L/Cs are generated
online, and how many back office processes are automated? What about B2C? How many local
online shopping portals are still in business?
However, by the time the last of the those banks that were lagging launched their online
services, the mobile has grown to a formidable channel not only because of its ‘mobility’ and
ability to offer several browsing and application options, but also because of the launch of
competitive mobile payment services from mobile operators who saw a clear gap in the mass
market and low value transactions that were previously not a priority for bankers.
Lessons to be learned
1. Banks should not let online and mobile become commoditized as is the case with ATMs.
2. Until the financial challenges that faced banks in the last two years as a result of the
dampening of their two main income earners; Personal Loans and Cards, bankers
viewed channels as complementary services that were costly but necessary because of
customer demand. The potential for fee income from these channels is so great that it
cannot be overlooked.
3. Alternative channels were often associated with large investments in technology; now
that these investments have been made and many have by now been amortized, it is
time to generate income and aim for ROIs.
4. The silo-based structures of IT systems in banks prevented the optimization of the bank-
customer relationship with very few initiatives undertaken to invest in data marts and
middleware that are now boosting customer acquisition and retention to those who
invested in CRM and supporting systems. However, it is not too late to do so as there
are wide alternatives today to benefit from the valuable customer and transaction data
that these channels provide.
5. Bankers offered functions through alternative channels free of charge; this has branded
ADCs as FREE; it has now become difficult or anti-regulatory to justify new charges on
services, even when transaction costs are showing upward trends in some cases.
©FANERA LTD - 2012

2. Reversing the Trend
Automated Teller Machines
Although ATM networks and usage are expanding, there have been limited additions in
functionality when we consider that an ATM can perform over 70 functions. Considering the
number of transactions performed at an ATM by customers and non-customers in the course of
a financial year, how many cross selling and up selling opportunities are created?
Banks normally follow a “Service” or “Convenience” model in contrast to a business model; the
responsibility for ATMs in the Bank is generally distributed across several departments:
Department Function
IT Operations center 24/7 monitoring
Cash Forecasting
H/W Purchase
Communication
ATM Monitoring
S/W
Maintenance
Switch
Debit Cards
Administration CIT
Security
Locations
Contracts
Cash
Channel Management Functions
P&L
Testing
Business
Offsite locations
Third party alliances
Marketing Campaigns
Promotions
Screen Management
Branches Reconciliation
Cash Replenishment*
Basic FLM
Branch Operations Procedures
Monitoring and Control
Central Vault Movement of Cash to CIT
This has complicated the development of ATM functionality so far; but with advent of advanced
©FANERA LTD - 2012