Contact center as an alternate channel for PSU · PDF fileContact center as an alternate channel for PSU banks 5 ... the majority of call center activities ... Contact center as an

Contact center as an alternate channel for

PSU banks

October 2012

ForewordThe power of choice in the banking industry has seen a paradigm shift from the banks to the customers. With the banking products becoming commoditized, customer service has increasingly become the means of differentiation amongst different banks. An inherent part of customer service is reaching out to the customers through multiple delivery channels, while maintaining consistent experience across channels. A comprehensive customer servicing strategy – focusing on the customer and giving them excellent service across the channel of their choice is therefore, the need of the hour. Banks recognize the need and importance of doing so and have invested heavily to accomplish it.

This report is an attempt to highlight the contact center channel, what role it plays today and what potentially the Banks could do with this investment. While the channel has hitherto been viewed as little more than low cost customer servicing and problem resolution channels with the exception of a few Banks, it has the potential of becoming a powerful means of delivering differentiated service delivery and provides a potential for substantial revenue generation. The report further compares the deployment models prevalent across the industry today and makes a case for the way forward for the best of the options by making better use of technology.

The primary data for this report was collected through an Ernst & Young administered survey among leading banks as well as interviews with industry players. I hope the ndings of this research provide you with valuable insights and I encourage you to share with us your comments, questions and suggestions.

Eric Anklesaria Partner, Financial Services Ernst & Young

1. Introduction 4

Channels used in banking 6

Comparison of banking channels used 8

2. Contact center channel — a closer look 12

Evolution 14

Usage of phone banking channel 16

3. Operationalizing the contact center channel 18

Management 22

4. Way forward 24

5. Insights 26

Typical contact center architecture 28

Contact center ecosystem 28

Cont

ents

This paper presents the results of a study on usage and adoption of alternative channels by Banks in India, focusing speci cally on the contact center channel. The report has been prepared by Ernst & Young Pvt. Ltd. in partnership with CISCO. We would like to thank Anant Gupta, Pratik Khandwala and Jagat Narayan Sabat, who contributed to the development of the thought process and structure of the report. This report would not have been possible without the support of Sarang Shah (CISCO) who supported the effort with the technology insights, market research and provided inputs on technology as a service provider for the contact center industry.

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1Introduction

Contact center as an alternate channel for PSU banks 5

Channels used in banking

Comparison of banking channels used

Contact center as an alternate channel for PSU banks6

Channels used in banking While banks use several channels to service their customers, their major channels include their branches, ATMs, contact centers, the internet and mobile phones. Exhibit 1 depicts the delivery channels used by banks and details of their beginnings.

The Indian banking industry has undergone a sea change over the past two decades. Increased competition in the industry has resulted in banking products becoming commoditized and customer services increasingly becoming a means of differentiation among banks. It has therefore become imperative for banks to adopt a comprehensive customer service strategy — from developing into uni ed customerservicing organizations to leveraging and adopting innovative technologies to reach out to customers.

Today, banks offer a range of products and services through an intricate web of complex business processes and high volumes of customer interactions. Customers tend to have more than one product with a bank. In a recent study conducted by Ernst & Young1, 86% of the respondents claimed to have more than two products with their main banks. However, most banks have fragmented customer strategies that may even vary between their different business units. The service organizations of banks often need to work across business units to put in place a single strategy for their customers.

An inherent part of customer service is reaching out to customers through multiple delivery channels, while maintaining a consistent experience across these. The role of the branch as a customer touch point has changed progressively as other channels have found favor as a means of transacting with and servicing customers. Technology has kept pace with the implementation of enhanced features, aiding the adoption of new channels and enabling a unique banking experience through each channel.

However, adoption of alternative channels by customers has not picked up consistently across all channels and banks. Therefore, banks need to adopt a holistic approach, looking at their customers’ needs, channel features and product support capabilities while making their investments in these channels, to successfully transition their customers to alternative channels. This paper presents a study of the alternative channels used by banks, and in speci c, the contact center channel, focusing on its usage, features, deployment models, current use by banks in India. In addition, it, elaborates on the pros and cons of using the channel.

Introduction

Exhibit 1. Delivery channels used in banks

ATMs This is one of the primary channels beyond bank branches. Only used to withdraw cash originally, it has evolved to support a wide variety of services and now has an innovative touch screen interface with customized shortcuts to meet individual user requirements.

Internet banking

This was a channel that emerged in the 1990s. It has become popular due to the reduced cost of internet connectivity. Initially used as a marketing platform, this has now become a convenient way of conducting anytime anywhere transactions.

Mobile banking

This is a relatively new channel, which used as a push/pull tool for information text messages. It has not gained popularity with customers due to security issues and the maturity of the internet banking channel.

Contact centers

Implementation of such centers has seen many organizations moving to centralized customer service centers (often with a self service option) with voice recognition systems. However, despite efforts to move customers away from personal interaction, the majority of call center activities still require the services of representatives, particularly in the case of transactions.

Social Media

Banks feel the need to increase their contact with their customers on a perceived one on one basis and have accordingly created pages on Facebook, Twitter, etc. Although most social media platforms still rely heavily on marketing content, the trend is rmly set toward the development of more interactive services. 1 Ernst & Young’s Global consumer banking survey report, 2011


If we take the share of transactions per channel and compare these, we notice that while branches account for 39% of total transactions, internet banking (30%) and ATM (18%) follow in close second and third positions.

The contact center channel accounts for 13% of transactions. uring the past ve years, usage of internet banking has

nearly doubled across all geographies. However, while transaction volumes in the contact center channel have increased considerably in developed countries, a similar uptake has not been witnessed in other geographies.

While the branch continues to be a core banking channel, customers are increasingly moving toward alternative channels. As Exhibit 2 depicts, the proportionate share of transactions on alternative channels has progressively increased across all the regions in the country.

As a customer touch point, a branch is fast evolving from merely being a servicing channel to an active relationship management and business expansion medium. Today, alternative channels are maturing and adoption of these by customers has been steadily increasing due to the large number of Indian banks investing in core banking technologies. A Tower Group survey2 conducted on usage of different delivery channels highlights the fact that use of branches has gone down and customers increasing prefer using alternative delivery channels.

Exhibit 2: Transaction volumes across delivery channels (bn)

Source: Ernst & Young’s Global consumer banking survey report, 2011

18 18.59 9

24 24

5 6

25 30

19 19

1 1

16 16

1 1

15

231119

1 1

18 20

1 1

9

1113

26

4 8

19

34

3 4

13

30

0

10

20

30

40

50

60

70

80

90

100

2006 2010 2006 2010 2006 2010 2006 2010 2006 2010

Branch ATM Contact Center Online

North America Latin America Europe Middle East & Africa Asia aci c

Increased competition in the industry has led to banking products becoming commoditized. Banks offer a large range of products and services with high volumes of customer interactions across multiple channels

Banking channels have developed over a period of time and respond to customers’ requirements, with each channel satisfying a need to a certain extent. Banks should have a portfolio of channels to service customers at all times.

2 McKinsey, Banking on Multichannel, November 2010


role. Alternative banking channels provide further options for customers to interact with their banks for their queries. We take a closer look at the changing roles of all delivery channels in Exhibit 4.

ATMs were initially installed purely for transactions, but have now evolved into a more sophisticated channel to respond to queries, transfer funds, make utility payments, provide information on products, set preferences. In addition, they have marketing capabilities. The nature and volume of transactions conducted on ATMs has been consistently increasing over time.

Internet banking is a relatively new channel, used for banking transactions as well as sales, and has all the features that can be made available in a remote manner. Usage of internet banking has rapidly increased due to it being a low cost channel.

Mobile banking had a promising start, but its overall adoption has been low and it is yet to emerge as a banking channel of choice.

Contact centers are gaining traction. With social media becoming a popular means of communication, especially among the younger generation, banks are looking to utilize the channel’s unique capabilities to reach out to this segment of customers.

Comparison of banking channels usedBanking channels have evolved in response to changing customer needs — from providing access to basic banking needs across geographies in the 1970s to adding features to increase convenience and provide personalized experiencebased services. While the initial focus of establishing a presence was effectively managed by setting up a network of branches, as customers adopted to banking practices, the need for convenience in accessing their funds led to the development of ATM as a channel. As their basic transactional needs were ful lled, the need to provide personalized customer service led to the development of a phone banking channel. Mobile and internet banking, two relatively new channels, extended anywhere, anytime access facility to customers. Exhibit 3 traces the origins of the different channels available today – starting from branches as a channel to the most recent mobile banking channel.

The role of banking channels has undergone a sea change. The branch was the main channel for sales as well as transactions. However, its role and usage as a transaction processing center has been consistently diminishing over time. Customers are increasingly feeling that the branch is playing an advisory

Exhibit 3: Customer needs and delivery channels

Source: Ernst & Young research** Phone Banking evolved into a contact center, in the 2000s

Branch

ATMs

Phone banking/ Contact center**

Internet banking

Mobile banking

1970 1980 1990 2000 2010

Need for bank presence

Convenience in doing

Customer servicing

Banking to the doorstep-popularity of internet

Anytime anywhere banking-increased usage of mobiles

Evol

ving

cus

tom

er n

eeds


Source: Ernst & Young research

Exhibit 4. Changing role of banking delivery channelsSe

rvic

ing

chan

nel

Branch

Low HighSales channel

Low

Hig

h

Contact center

ATM

Mobile

2010s

Serv

icin

g ch

anne

l

Branch


Low

Hig

h

Contact center

ATM

Mobile

2020s

Serv

icin

g ch

anne

l

Branch


Low

Hig

h

Phonebanking

ATM

Mobile

1990s 2000s

Serv

icin

g ch

anne

l

Branch


Low

Hig

h

ATM

Phone banking

Internet Internet

Internet

Role of branch as transaction processing channel is diminishing and increasing as sales channel

ATM has evolved from pure transactions to a sophisticated channel with marketing capabilities

Internet banking, a relatively new convenient and low cost channel, has seen increased usage over the years

Phone banking evolved into a contact center in the 2000s with integration of value added services like live chat, social media, email, SMS and more

Exhibit 5: Relative performance of channels in meeting customer needs

Source: Customer needs parameters taken from EY Global Survey

Customer needs Branch ATM Internet Banking

ContactCenter

MobileBanking

Personalized Attention

Service Quality

Convenience

Access & Availability

Security

Advisory

HighLow Medium

Customers’ expectations are met in different degrees by these channels. They expect advice and personalized attention from their banks, convenience and access to banking touch points,

exibility and security of transactions. Exhibit 5 compares the delivery channels across parameters on satisfying customer needs.

Branches score the highest in service quality and security due to their face to face interaction with their customers. They also incur the highest operational costs for banks.


While meeting customer needs, banks need to choose a portfolio of channels as well as products and services they will offer through each channel. While face to face interactions with customers cost the highest to a bank, they are also the most personalized service they can provide. Industry estimations relating to the cost per transaction incurred across channels vary from INR32–40 in branches to as low as INR0.1–0.5 in the self service option of the contact center channel. Plotting the degree of personalization in the channel vis vis the cost incurred per transaction highlights the tradeoff between the choices offered by the channel.

Internet banking and contact center self service options cost the least as far as personalization is concerned. Banks are therefore focusing on developing these channels to increase their adoption for customer transactions.

Contact centers are a close second in terms of interaction with customers. Service quality is lower as compared to branches, but they score high on customer convenience.

The others are primarily transaction channels for banks and offer easy access and convenience.

Exhibit 6. Cost per transaction of delivery channels

Delivery Channel Cost per transaction

Branch INR 32 – 45

ATM INR 10 – 16

Contact Center (Non IVR) INR 6 – 9

Internet Banking INR 0.4 – 0.8

Contact Center (Self Service) INR 0.1 – 0.6


Technological advancements are driving steady improvements in alternative channels. These channels now perform a large percentage of transaction processing that earlier took place in the branch. They also generate additional revenue streams at low costs, reduce operational costs, improve time to market, gain an increased market share, and reduce customer acquisition and servicing costs.

Ernst & Young has conducted a survey among Indian banks to study the products and services offered by them through different channels. It was observed that branches have the capability to offer almost all the products and services of the bank. However, usage of alternative channels to support transactions varies signi cantly between PSUs, and private and foreign banks. Private and foreign banks lead the way with by supporting more products on these channels. A similar

trend is seen in all alternative channels. Foreign banks extend the highest offerings and PSUs the lowest. The contact center channel supports only 14% of the products and services in PSU banks, whereas its utilization by private and foreign banks stands at 32% and 57%, respectively.

Today, customers expect to be able to connect with their banks via any channel. Setting up alternative delivery channels and channel integration are therefore means to meet their expectations. One of the biggest priorities of banks is to achieve seamless, multi channel integration. They recognize the need and importance of doing so and have invested heavily in accomplishing this. In addition, as channels become more integrated, they are increasingly capable of managing customer relationships in a way that earlier occurred exclusively in branches.

Exhibit 7. Products and services offered by banks


14%

32%

57%

10% 11%19%

27%

43%52%

13%

24%

37%

0%

10%

20%

30%

40%

50%

60%

PSU Banks Private Banks Foreign Banks

Contact center ATM banking Internet banking Mobile banking

The role of a branch as a transaction processing channel is diminishing and is increasing as a sales channel. Alternative channels such as ATMs, internet banking and contact centers offer a low cost option as compared to branches, and have seen increased usage over the years.

In India, the products and services offered by PSU banks are the least, as compared to private and foreign banks that utilize these channels better.

12

Contact center channel — a closer look

2

Evolution

Usage of contact center channel


Evolution As a concept, phone banking has been used by banks for several decades, starting with a live conversation with a bank employee. While somewhat labor intensive, this approach made it possible for the customer to conduct a number of banking transactions without visiting a branch. From this simple setup with a large number of phones, it transitioned to a centralized of ce for receiving and transmitting a large volume of requests by telephone and became known as a “call center.”

Being at the customer forefront of organizations, all customer touch points play an important role in building customers’ perception about them. According to a customer survey, 80% of customers feel that service has a major in uence on their opinion about an organization. Financial institutions are in the midst of major changes in their choice and investment in delivery channels. Contact centers, which had previously been viewed as little more than low cost customer servicing and problem resolution channels, are quickly becoming a powerful means of service delivery with substantial potential for substantial revenue generation.

Contact center channel – a closer look

1990s

2010s

Evol

utio

n of

tech

nolo

gy

1980s

2000s

1970 1980 1990 2000 2010

ACD helps route incoming calls to

and lower response time & costs

forecasting & scheduling agents for optimized utilization

IVR enables doing basic tasks through machine

customer information available real time

Queue Mgmt helps route theincoming calls to the most appropriate agent

PD helps in making outbound calls when agents are not responding to queries

More sophisticated automated response

enablement of secure transactions through IVR

of agents while responding to queries

Seamless interaction with customer across all channels

Greater acceptance

leads to hosted contact centers

Automatic Call

Management

Basic Interactive Voice

Advancements in IVR and CTI

media integration

1970s

Predictive Dialing

Exhibit 8. Evolution of the contact center channel



Fueled by advances in IT and the plummeting costs of data transmission, this has become a cost effective channel to provide services and sales to customers. The rst Automatic Call istribution (AC ) technology was introduced to the market at the beginning of the 1970s. This, along with Work Force Management (WFM) principles, developed into an ef cient call center setup with optimized utilization of resources. Technology helped in the development of key areas such as Interactive Voice Response (IVR) to limit human intervention to only when required and Computer Telephony Integration (CTI), which helped call center agents by providing information about the customers with whom they were interacting in real time. Signi cant innovations in the area of Outbound (Predictive) Dialing took place in the early to mid 1980s and further enhancements in basic technologies such as CTI, Queue Management (QM) and Customer Relationship Management (CRM) ocurred in the 1990s.

Shift from call centers to contact centers There is a move in the industry to change call centers from a transactiondriven channel to a cross selling and up selling one. Interactions with customers have become more complex with the use of new channels. Earlier, call centers only answered telephone calls. They now handle queries from multiple channels — phone, fax, email and through web interaction. “Contact center” is an umbrella term that refers to a communication infrastructure supporting “live” agents and automated applications. These are linked to back of ce databases and systems to support myriad channels, regardless of how they are organized or what types of transactions they handle.

Today, contact centers have multi channel support and provide back end services on all kinds of interactions with customers by phone, email, text, instant messaging or SMS. The industry is also making a transition to fully hosted, scalable, on demand contact center solutions. Hosted contact centers offer a compelling value proposition of state of the art technology at reduced costs and also shift capital outlay to operating expenditure by leveraging the pay as you grow model. However, integrating and maintaining on premise call center infrastructure and applications is a signi cant overhead expense in the case of banks that have geographically distributed operations. Therefore, hosted contact centers have become an attractive option for them. A detailed view of the contact center service providers according to leading market research rm, Gartner is given in Section 5 Insights

The evolution of call centers to contact centers provides banks with an integrated option of service delivery at a reduced cost and also makes transactions more convenient for customers.

deployment models. The results of the study indicate that foreign banks support 57% of their total portfolio to transact through the contact center channel; public sector banks lag behind with only 14% product support.

The products and services studied were spread across four broad areas – opening of new accounts; applications for non

nancial transactions such as enquiries, demand drafts, pay orders, re issue requests for passbook and PINs., as well as

nancial transactions such as funds transfer, cash deposits, withdrawal and other dealings. It was observed that most of the products and services are non nancial in nature. The majority of the banks provide new issuing and re issuing transactions and also respond to enquiries. This has resulted in penetration of contact centers as a channel for customers being low and their preferring other channels to transact with banks.

One metric to gauge the effectiveness of contact centers in public and private sector banks is the number of customers per agent deployed. While leading private sector banks have around 6000 to 9000 customers per agent and utilize the channel to a great extent, PSU banks have a similar ratio that runs into a several thousand accounts per agent. While i is expected that the ratio for PSU banks is higher due to their wider customer base and presence in rural areas, an agent

Usage of contact center channelContact centers are in operation in several industries. A study conducted on the Australian contact center industry found that around 77% of all customer interactions are carried out through contact centers. While 56% of all customer interactions in contact centers are related to customer service enquiries, 25% focus on either inbound or outbound sales. An Ernst & Young study3 has analyzed the global scenario of deployment of phone banking as a channel by banks and found that 17.2% of all transactions are conducted through contact centers. However, usage of the channel has been low and stands at less than 1% in India, even in the case of the top ve public and top ve private banks.

An Ernst & Young study to understand the current operations of the phone banking services offered by banks entailed surveys of a mixture of public sector, private and foreign banks as well as insurance companies operating in India. It covered aspects such as the products and services offered, the technology deployed, the human resources used and the

3 Ernst & Young’s Global consumer banking survey, 2011

16

handling more than half a million customers is less effective and discourages adoption of the channel by customers. Exhibit 9 compares the numbers pertaining to the leaders in the banking space and can serve as preliminary benchmarks for deployment by the industry.

Insurance companies have similar needs with the customer experience being a key differentiator and multi channel interaction becoming the norm. Industry trends indicate that while organizations opt for an in house contact center

to service customers, acquisition of new customers through outbound sales is outsourced to vendors. The driving factors for keeping inbound calls in an in house contact center include its employees’ better understanding of products and incentives provided to them to ef ciently service customers, as compared to outsourced agents. Acquisition of new customers, conducted on a pay per conversion model, is driven by reducing the cost of sales.

Exhibit 9. Comparison of customers per agent across leading banks

Bank No. of accounts No. of agents* Accounts per agent

Leading Pvt. Sector Bank 1,95,43,994 3200 6,107

Leading Pvt. Sector Bank 2,03,56,665 2100 9,694

Leading New Pvt. Bank 1,93,28,224 700 27,612

No.1 Public Sector Bank 24,27,52,000 500 4,85,504

One of the Top 5 PSU Bank 5,68,00,000 500 1,13,600



Source As per customer survey and industry knowledge

Contact centers have been sparingly used by banks till date. Only one fth of major public and private sector banks have an advanced contact center setup. However, they have been better utilized around the world.

17

18

Operationalizing the contact center channel

3


Meeting imperitives of the management


centralized management and supervision, and enables training and quality assurance (QA) for their staff at a single location, as well as reduces support costs and technical resources. However, contact centers (or phone banking centers) are mostly distributed due to the varied location of banks. Decentralization leads to geographical risk mitigation, provides access to resources pro cient in the local language, reduces salaries as well as transmission costs (since these are handled at locations that are the nearest to the customers) at different locations.

Outsourced In-house Hybrid

People Provider In house Provider

Technology Provider In house In house

Contact centers, being a direct customer touch point, have a signi cant impact on business in their contribution to customer retention, market research and the feedback they provide. In addition to deployment of technology, different aspects of a bank’s operational processes play an important role in delivering services to its customers. These include aspects such as centralization or decentralization of its operations, the services it provides through a contact center, its implementation of integration processes with other bank systems, its management of agents, as well as the policies de ning the latter’s performance, responsibilities and privileges. Please refer to Section 5 Insights at the end for the architecture of a typical contact center.

As banks look for ways to decrease their costs without reducing the customer experience, they seek to take a decision on whether they should centralize or decentralize their contact centers. Centralization leads to economies of scale in handling transactions (calls, emails, chat sessions, etc.),

Operationalizing the contact center channel


The channel primarily operates across technology and people aspects adopting one of the three basic models of implementation — complete outsourced technology and management, complete in house technology and management, and a hybrid structure where technology, management of technology or of resources is divided between in house and outsourced services. In India, the majority of banks have opted for the outsourced model, since it is the least expensive and does not incur an initial capital expenditure. In a survey conducted by Ernst & Young, 65% of the banks in India have outsourced their technology contact center and 78% have outsourced agents.

Outsourced contact centerFor a contact center setup, outsourcing continues to be a viable model for organizations, since they recognize the overall bene ts customer and company interactions deliver to the organization. In this model, banks need to either pay per call or pay per agent. The associated vendor already has an established contact center. The bene ts and challenges of the outsourced model are as follows

Bene ts Challenges

No initial capital expenditure required

Lower cost

Setting up and implementation of services faster and more economical.

Cost effective trained agents — cost of training minimal for agents and is managed by outsourcing partner

Flexibility in provisioning and de provisioning agents as well as in technology according to changing business needs.

Lack of control on operations, since they need to rely on the managerial abilities of the vendor.

No focus on customer experience due to lack of motivation of vendors and the skill sets and inadequate training of agents

No incentive for continuous improvement in technology, since payment is based on the number of agents or calls handled due to vendor earning more if customers speak to agents

Data security and possibility of data manipulation

Inability to imbed corporate culture in third party agents

In-house contact centerAn in house call center is one where work is performed by and for the company — internally — and is generally secondary to its main function and the products or services it produces. The center is generally a division of the company and provides call center services to it if it does not work for other companies.

Bene ts Challenges

Direct control over operations, performance and quality

Greater ownership of agents when they answer customers’ queries

Faster changes in response to business needs

Bank not having expertise in managing a contact center

Inability of bank to attract the best talent

An in house contact center can be a cost center or a pro t center and that is a strategic decision that needs to be taken. If it is only used as a customer servicing and support function, it is a cost center and the costs are allocated to the business units using its services. A pro t center, on the other hand, generates sales or business activity in addition to servicing customers, and thereby covering its own operating expenses as well as making pro ts.

Hybrid structureA hybrid deployment model contact center divides the solution into technology and agents. The decision to outsource or not takes place individually for each component. The model becomes a natural extension to solve the limitations of the outsourced model. Total outsourcing of a contact center’s operations places the technology in a support role with the agents being the parameter on which vendors are paid (on a pay per call or pay per agent basis). Therefore, there is no incentive on the part of the vendor to invest in technology. In addition, control over operations and tracking also remains with the vendor. Separating technology from the outsourcing agreement and keeping it in house gives control back to the bank. The model therefore needs to deploy in house technology as well as outsourced or co sourced human resources. It enables organizations to outsource agents to multiple vendors or use a combination of in house and outsourced agents. The table below highlights the pros and cons of the hybrid deployment model.


Bene ts Challenges

Control over the technology since it is managed in house

Security of bank and transaction data

Easier to manage agents, since performance can be tracked through technology according to needs; provides exibility to appoint many agent vendors, and/ or a combination of in house and outsourced agents

Need for management of technology to be carried out by the bank — without the bene t of total outsourcing of having onepoint contact responsibility

Initial capital expenditure needed for ownership of technology

Meeting the imperatives of the managementAs a part of its customer relationship management strategy, delivery channels are expected to satisfy various management imperatives. The table below presents a view on how deployment models fare on each of these business requirements.

While the in house model fares very well on many parameters, the need to manage it on an operational level leads banks to opt for an outsourced model. However, the latter model does not fare well on other equally important parameters. Therefore, there is a need for a carefully crafted hybrid model that implements the best of both options.

Till date, banks have been using complete outsourcing due to ease in management, but are now, facing issues such as lack of incentive to improve technology, as well as de cient control on operations, focus on customer experience and data security.

Technology is the key enabler for enhanced control of operations and security. Therefore, there is a need for banks to adopt a model with in house technology and outsourced manpower.

Management imperative In-house Outsourced Hybrid

Security High Medium Medium

Ease of management Low High Medium

Control over operations High Low Medium

Quality of service High Low High

Total cost High Low Medium


24

Way forward

4


and have begun implementing it as recently as this quarter. Most other banks have very small phone banking setups with basic IVR options and 5 to 30 agents to respond to customers’ queries.

Till date, banks have been choosing the complete outsourcing option because of ease of management. However, their experience has been mixed. Lack of control on operations and a focus on customers’ experience are the drawbacks of this model. However, the greatest hindrance stopping bene ts accruing to customers is that there is no incentive for continuous improvement in technology. Since vendors’ payment contracts are generally based on the number of agents they deploy or the number of calls handled by them — they get paid more if customers talk to their agents. Therefore, vendors have no incentive to improve technology to encourage customers to opt for automated call resolution.

With technology beginning to play an important role in contact centers, keeping services in house enables an organization to have better control over its operations. It becomes easier to manage agents, since performance can be tracked through technology. It also provides the exibility to appoint many agent vendors, and/or a combination of in house and outsourced agents.

Customers still consider the branch as the best channel for carrying out their banking business, despite the growing in uence of direct channels. Varying customer needs, demands, tolerance for impersonality and multiple other factors require banks to have a portfolio of channels to provide distribution coverage to their customers, while constantly encouraging migration to lower cost channels.

The delivery channel faces challenges in providing the desired quality while servicing customers due to improper implementation and lack of supporting policies. Limited products and services offered through an alternative channel limit its usage for a customer. Banks’ apprehension in sharing core banking databases with third party vendors that handle the operations of alternative channels and too many restrictions on agents to cater to all customer queries end up in improper implementation of channels. These are some factors that hinder the adoption of a channel and should be an areas of resolution for the management of organizations.

As a channel, contact centers have been used cautiously by banks. According to Ernst & Young’s survey, only 22% of major public and private sector banks have advanced contact center setups. These leading banks had implemented this channel in 2008–09. Some banks are taking the requisite steps now

26

Insights

5


Typical contact center architecture

Contact center ecosystem


Contact center ecosystemContact center service providers combine different technologies to form a comprehensive solution. Contact center infrastructure includes all the equipment, software and services needed to operate a contact center with multi channel support. It includes a wide range of related technologies such as telephony infrastructure, routing and prioritization engines, IVR and voice portals, CTI, predictive dialing, integration tools in CRM, web chat and email management, as well as work ow routing and management, among others.

Gartner has a “Magic Quadrant” (Refer Exhibit 11) for the contact center industry, which analyses industry players in terms of the completeness of their vision in developing solutions and their ability to execute the vision effectively. It divides industry players into market leaders, challengers, niche

Typical contact center architectureA typical contact center architecture (Exhibit 10) comprises the technology deployed in the data center and disaster recovery center of a bank. All systems, including IVR, ACD, etc., reside within these, and contact center agent setups at various locations are connected to these through leased lines or the IP wide area network. Each such setup has a number of agents. Bandwidth is also provided across these centers so that calls can be transferred across locations to handle call overloads.

Insights

Data center/DR

Contact center 1

IVR ACD/ PBX MIS

Core banking Database

Data center/DR

Exhibit 10. Typical contact center architecture in a bank

Source: Ernst & Young Research

IVR ACD/ PBX MIS

Core banking Database

PSTN PSTN

Contact center 2 Contact center 3

IP WAN

PSTN PSTN

Leased line


Source: Gartner

Exhibit 11. Gartner Magic Quadrant for contact center technology

Completeness of vision

As of June 2012

Abi

lity

to e

xecu

te

Challengers

Siemens Enterprise Communications

NEC

Leaders

AvayaGenesys

Cisco

Interactive IntelligenceAspect

SAPZTE

Enghouse Interactive

Vocalcom

Mitel

niche players visionaries

Altitude SoftwareAastra Technologies

HuawaiAlcatel-Lucent

players and visionaries. Leaders provide mature offerings that meet the market demand and also demonstrate the vision required to sustain their market position in future. Challengers have the ability to execute, but may not have a clear vision to enable them to maintain a strong value proposition for new customers. Visionaries, on the other hand, have a view on how the market can evolve, but have inadequate proven capabilities to deliver that vision. Niche players do well in a

particular segment of the market. Avaya, Cisco, Aspect and Genesys are the market leaders in this space, while there are multiple other players such as Huawei, Mitel, Vocalcon and ZTE that cater to niche technology products.

Service providers and integrators such as Infosys and TCS provide nal end to end services with technology providers as partners.

References:Gartner Magic Quadrants for Contact Center infrastructure Worldwide, June 2011.

Inter bank comparison of operational ef ciency & pricing, June 2011.

Call Centers in Financial Services Strategies, Technologies, and Operations, Michael Pinedo, Sridhar Seshadri, J. George Shanthikumar.

Banking on Multichannel, McKinsey Report 2010.

Ernst & Young’s Global consumer banking survey report, 2011.

IT Service Delivery Models And Frameworks, Richard M. Kesner, 2010.

Celent Model Bank Case Studies of Effective Technology Usage in Banking, Bob Meara, Stephen Greer, 2011.

GlossaryContact center solution providers use many tools to enhance the end customer experience as well as optimize the use of resources. Technologies include IVR for self service options, ACD for reducing call answering time, CTI for integrating customer information to agents and multi channel support. Provided below is a brief description of each of these.

Interactive Voice Response (IVR) is a menu system a customer accesses when connecting to a call center. The system routes a call to the most appropriate person or desk. The structure of the menu system can be a simple list of two or three items or a more elaborate decision tree. This tool enables the system and the operator to provide the service in minimum time. The technology is relatively inexpensive as compared to the time wasted in transferring customers via live operators.

Automated Call Distribution (ACD) is a service provided by telephone companies that makes physically dispersed operators appear to a caller residing at the same location. The system manages incoming calls and routes them to the appropriate queue and then to the longest idle agent within that queue. Some bene ts are reduced network costs

(phone bills), since phone companies connect incoming calls to regional representatives. ACD routes calls to the most appropriate agents, helps to support multiple networked contact centers and conducts dynamic queuing, skills based routing and prioritization.

ACD delivers the power and performance required in the most demanding contact center environments by providing costeffective use of pooled resources, improved customer service, distribution of workload and reduction in communication costs.

Computer Telephone Integration (CTI) refers to a combination of computers and telephone systems. Intelligent Call Routing is an application that reads the phone number of an incoming call, retrieves information relating to the caller from a database and presents it to the operator when the person takes the call. It provides information about the customer on the line.

Roughly, 15% of all call centers use some form of CTI technology today. Screen Pops and Whispers are pieces of information that either pop on to operators’ computer screens or into their headsets. They provide information about the customer the operator has on the line.

Eric AnklesariaPartner, Financial ServicesErnst & Young (India) Private LimitedTel 91 22 6192 0684email eric.anklesaria in.ey.com

Anant GuptaSenior Manager, Financial ServicesErnst & Young (India) Private LimitedTel 91 22 6192 0288email anant.gupta in.ey.com

Ahmedabad2nd oor, Shivalik Ishaan Near C.N. VidhyalayaAmbawadiAhmedabad 380 015Tel 91 79 6608 3800Fax 91 79 6608 3900

Bengaluru12th & 13th oor“UB City”, Canberra BlockNo.24 Vittal Mallya RoadBengaluru 560 001Tel 91 80 4027 5000 91 80 6727 5000 Fax 91 80 2210 6000 (12th oor)Fax 91 80 2224 0695 (13th oor)

Prestige Emerald1st Floor, No.4, Madras Bank Road,Lavelle Road JunctionBangaluru 560 001Tel 91 80 6727 5000 Fax 91 80 2222 4112

Chandigarh1st Floor, SCO 166 167Sector 9 C, Madhya MargChandigarh 160 009 Tel 91 172 671 7800Fax 91 172 671 7888

ChennaiTidel Park, 6th & 7th Floor A Block (Module 601,701 702)No.4, Rajiv Gandhi Salai, Taramani Chennai 600113Tel 91 44 6654 8100 Fax 91 44 2254 0120

HyderabadOval Of ce, 18, iLabs CentreHitech City, MadhapurHyderabad 500081Tel 91 40 6736 2000Fax 91 40 6736 2200

Kochi9th Floor, ABAD NucleusNH 49, Maradu POKochi 682304Tel 91 484 3044000 Fax 91 484 2705393

Kolkata22 Camac Street3rd oor, Block C’Kolkata 700 016Tel 91 33 6615 3400Fax 91 33 2281 7750

Mumbai6th oor, Express TowersNariman PointMumbai 400 021Tel 91 22 6192 0000Fax 91 22 6192 2000

14th Floor, The Ruby29 Senapati Bapat Marg,Dadar (W), Mumbai 400028Tel 91 022 6192 0000Fax 91 022 6192 0030

5th Floor, Block B 2Nirlon Knowledge ParkOff. Western Express HighwayGoregaon (E)Mumbai 400 063Tel 91 22 6192 0000Fax 91 22 6192 3000

NCRGolf View Corporate Tower BNear DLF Golf CourseSector 42Gurgaon 122002Tel 91 124 464 4000Fax 91 124 464 4050

6th oor, HT House18 20 Kasturba Gandhi Marg New Delhi 110 001Tel 91 11 4363 3000 Fax 91 11 4363 3200

4th & 5th Floor, Plot No 2B, Tower 2, Sector 126, NOIDA 201 304 Gautam Budh Nagar, U.P. IndiaTel 91 120 671 7000 Fax 91 120 671 7171

PuneC 401, 4th oor Panchshil Tech ParkYerwada (Near Don Bosco School)Pune 411 006Tel 91 20 6603 6000Fax 91 20 6601 5900

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