G Gopalakrishna: The importance of customer service
Speech by Mr G Gopalakrishna, Executive Director of the Reserve Bank of India, at the "Axis
Champions Awards", Mumbai, 1 October 2013.
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I acknowledge with thanks contribution of Shri R Kesavan, GM, Dept. of Banking Supervision, RBI, Central Office
in preparing this speech.
Dr. Sanjiv Misra, Chairman Axis Bank, Smt. Shika Sharma, MD and CEO, Sr. Executives and
ladies and Gentlemen, I have great pleasure in being a part of an event that hosts and toasts
achievers who have excelled and left an indelible impression on customers by dint of
exemplary work and service. I must congratulate Axis Bank for instituting these awards and
felicitating their personnel, which I am sure will spur them on to better their own record and
possibly also inspire many more to follow the example. Banking is essentially a service
oriented industry and no service is deemed complete unless it is accompanied by satisfaction
of the people who avail the service. Customer satisfaction and customer protection are the
hallmarks of banking service. Regulators and supervisors across the financial world have
built policy edifices on strong foundations of consumer protection and customer service. In
this context, it is indeed a commendable initiative on the part of the bank to train the
employee to focus on customer service and reward exemplary service rendered by
employees. I am sure that the bank will reach even greater heights in customer service while
simultaneously enhancing the skills of personnel in this area.
Attributes of customer service have changed over the years. Customers are more aware,
there is a predominance of masses seeking tangible action to ensure that their rights as
customers are upheld. More importantly, customers are becoming increasingly aware of
Banking Ombudsman schemes, legal channels of redressal, consumer courts etc. The same
has also been made possible on account of leaps that information technology has taken over
the last one decade with information on the above channels being available widely. Banking
penetration through use of technology and the increase in number of non - face - to - face
transactions adds a different dimension to the customer care paradigm. Banking has truly
become 24 X 7 locally and globally as well. These attributes have brought in more
challenges than we had earlier assumed and banks have been compelled to not only live up
to contemporary expectations but also look at enhancing skill-sets in information technology,
human resources and transactional analysis for meeting future needs. It is not without any
reason that we at RBI specifically institutionalized the customer service aspects by carving
out an entire Department dedicated to the subject.
Customer service is not an exact science that can be condensed in pre-defined formulae and
equations; nor is it a subject where answers to all queries lie in an unequivocal "yes" or "no"
.Human nature is complex and diverse and hence an approach of one-size-fits-all to
customer service can't be adopted. The word "customer" has the inbuilt attribute of
"customization" - to design, develop and deliver a product as per the customer's needs. In
the wake of extensive use of technology we seem to be migrating too much towards products
and process standardization, which perhaps can lead to mis-selling. Customer service needs
can thus be best met by a judicious combination of social sciences, HR skills, technological
innovations and appropriate training intervention.
In the rest of my brief talk, I would pose a few generic questions and attempt to present
answers.
What comes first in customer service - need or innovation? Whether needs create
innovations or innovations create new needs? There are arguments in favour of both
precepts. While at most times, one could say that need would precede innovation, there is no
doubt that banks also invest hugely in technology and personal banking initiatives to achieve
a better reach and rapport with their customers to keep abreast with competition. In the
process, they offer new services resulting in the creation of new needs. At the same time, as
long as the innovation is not understood and appreciated by consumers the efforts of banks
to expand the customer base and satisfaction may not actually fructify. For instance, while no
one can deny that advanced mobile banking or internet banking products have enabled
customers to communicate their needs to banks and process their banking requests, they
could possibly have not survived if the awareness of such products and facilities were bare
and minimal. A technology driven solution to customer centric problems will not work where
customers do not know how to use such technology devices and contrivances. In such
scenario, a lot of impetus on customer literacy, education and inclusion would be required.
Very often, such initiative stems from the regulators who propagate the advantages of using
paperless instruments, electronic payment systems etc. that gain acceptance from public
over a period of time after customers have transcended barriers of reticence, resistance and
technology. The point being underscored is that, apart from need alone, there would be
certain other factors such as (i) willingness of customers to embrace customer service
methods and innovations, (ii) level of comfort while using an advanced technique including
technological platforms, and (iii) cost that service providers incur to put in place an advanced
technique to attract customers. Prominent examples of such innovations used in the banking
industry, which came to be embraced by more customers willingly with passage of time
include MICR technology, electronic payment systems viz. ECS, EFT, NEFT, NFS, CTS,
various type of plastic cards etc. These products and innovations were primarily supply
driven with a purposeful push by regulators themselves. These products were rolled out and
banks were encouraged to make use of these products to render better, faster, safer and
secure services to their customers. Thus, at times, in the larger interests of customers and
the financial world, certain initiatives have to be pushed forward by authorities and a need
created for them.
We could, in the same vein, cite financial inclusion as an example, that has been extensively
driven by the regulators and the Government of India to substantiate the above point. Here is
thus a classic case of customer need that is "identified" (inclusive banking), targeted(publicity
and outreach exercises, financial literacy initiatives),implemented (usage of business
correspondents, face to face interactions, exhibitions and fairs to propagate the habit of using
and operating bank accounts) and innovated (technology based transfers of funds to
accounts [EBT] and the entire "Aadhar" exercise to uniquely identify individuals and embed
the same in opening/operation of bank accounts by customers). That also leads us firmly to
the premise that, perhaps in contemporary times, technology at the right time and juncture
will help in furthering the cause of customer service.
Is technology the panacea to all customer service challenges? Mostly yes, since
technology speeds up ease of access of customers to service providers, enables easier
communication and possibly also speeds up operations. However, there is an interesting and
contrasting evidence that I choose to draw from one of the examples adduced by Shri G
Padmanabhan, Executive Director in the Reserve Bank of India, who made a telling
comment on the number of mobile banking accounts that had been opened in India. While
the number seemed staggering and really impressive, a comparison with the number of bank
accounts opened in India revealed that the former was but a relatively insignificant proportion
of the latter. This thus goes to support the idea that the extent of customer awareness about
certain techniques and technologies would, at times, decide how effective an innovation
would be. Thus, this presents a contrast to an otherwise appealing concept like technology
driven solutions and also highlights the need to popularize the same with extra initiatives,
features, safeguards and possibly sops too.
The potential of information technology, however, can positively be utilized better by banks
and financial institutions in processes relating to prevention of frauds, unique identification of
customers for effective adherence to KYC/AML/CFT norms and generally putting in place
risk based transaction monitoring systems in the larger interest of consumer protection and
safeguards. Further, there is an overarching need to integrate technology in the field of KYC
compliance in the present scenario. That is one more reason why RBI has advised banks
very recently to implement e-KYC across various customer service points (CSP) through
appropriate software solutions that can best integrate UIDAI defined Application
Programming Interface(API) protocols. Thus, it is not need alone that would prompt the use
of technology as an option but the associated security features that would appeal to the
common man's psyche and attract him to banking innovations.
How does one tap the common man's psyche? What are the possible methods to
communicate with the customer? A very obvious initiative by RBI in this regard is the
significant emphasis on Hindi for bettering customer service. The reason and rationale is
extremely simple and comprehensible. The use of the official language in circulars, customer
centric pamphlets and brochures, notices and notifications etc. appeal to a wider category of
people and attract them to banking products. Further, the usage of Hindi has been advocated
in banking technology as well by way of use of bilingual software, which would enable
customers to access self operated kiosks, electronic platforms and bring them closer to the
adoption of banking practices. The use of official language, local and vernacular languages
as well, may also further the cause of financial inclusion, a cause that RBI and banks alike
espouse strongly. I would like to mention in this context that one potential, but untested
option/method to tap common man's psyche, is survey to gauge the evolving preferences of
the customers.
How does the edifice of customer service in banks work? Institutional structures to
monitor, implement and innovate in the field of customer service must necessarily factor in
exact needs of customers and suitability/appropriateness of products being launched for
them. The credibility of a bank's grievances redress mechanism is dependent on the robust,
responsive and reliable nature of this structure. The number of complaints actually never tells
the true story. The customers and staff alike must be encouraged to bring on board every
service deficiency. We seem to take very defensive and evasive action when it comes to
admitting service deficiency.
While institutionalizing such structures for monitoring customer service at various levels, right
from the Board to branch levels, RBI has always insisted on the following aspects:
(i) customer inclusiveness by co-opting customer members in branch level customer service
committees to generate feedback, which would in turn, trigger fresh initiatives and inventions
in customer service and (ii) an appropriate product approval process overseen by the Board
level customer service committees to determine suitability and appropriateness of products
being launched so as to target appropriate customer profiles. Further, for any and every kind
of service deficiency, apart from the grievances redress mechanism, what is the
compensation policy that the banks have put in place? The compensation must be timely,
adequate and effective. In many situations the payment of compensation for lapses on the
part of the banks is viewed purely from the staff accountability angle, leaving the customer in
the lurch for months. This attitude must change.
What kind of balance can be struck between competition and correctness? Are
customer service and compliance mutually exclusive or inclusive?
Here, I would talk about implications of compliance for privacy, customer awareness and
customer protection.
Privacy and compliance
While uniform application of rules, regulation and direction across banks will possibly pave
the way for good customer service, there is need for striking a balance between privacy and
compliance. The recent customers' resentment of compliance, perceived to be bordering on
intrusion with regard to updating KYC information is a case in point, as they included details
like date of anniversary of customers, number of foreign trips undertaken, etc,. Thus,
overcompliance can probably kill customer service.
Customer awareness and compliance
Another aspect that needs attention in the context of compliance could be customer
dissatisfaction stemming out of non-comprehension of underlying regulatory and supervisory
guidelines; this is where customer communication plays a stellar role in assuaging aggrieved
feelings, calling for leveraging customer awareness for better compliance. Customer
awareness, education and interactive communication campaigns can go a long way in
redressing and minimizing such grievances. Banks and RBI alike have established help
desks, may I help you counters, grievance redressal cells and citizen's charters to
disseminate information with that objective in mind. Thus, the point is that compliance and
customer service have to co-exist, strike a balance with each other and iron out
inconsistencies in application so that the larger good of customers results, aided and abetted
by able customer communication.
Customer protection and compliance
Customer protection is the basic premise on which most regulations focus. All financial
operations have an underlying requirement of ensuring customer protection, and in the
process, where necessary, co-operating with civil and criminal authorities when customer
grievances result in litigation and instituting quick and effective compensation practices for
customers who have incurred losses on account of negligence on part of banks/frauds etc. It
is this sense of caution and precaution that has increasingly found a voice in RBI's regulatory
and supervisory guidance to banks for optimum use of technology to advise customers to not
fall prey to fictitious offers for cheap funds, prevent on-line frauds and scams, advocate
judicious use of debit, credit and ATM cards, not compromising security features such as
passwords with a view to prevent phishing mishaps and deploy an adequate risk based
transaction mechanism to serve the best interests of customers. Banks also hugely benefit
by adopting such precautionary steps. While some of these regulatory and supervisory
missives may be a tad too repetitive, it must also be understood that they are a re-iteration of
RBI's concerns to address operational risk in banks, prevent escalation of legal risk in the
form of disputes and litigation and enhance confidence of customers in banks in the long run.
Where stricter rigors of compliance harp on safety and security of the customer, there would
possibly be no harm done if the customer is displeased to some extent.
Is complaint handling an art or science? Can dictates be employed in such art or
Complaint handling, by itself is a complex art requiring references from customers
science?
being identified as grievances or requests for information. Once the reference has been
slotted as a grievance, all efforts should be undertaken for prompt and satisfactory redressal.
Handling customers adequately as well as creditably requires more than banking and
technical knowledge. It requires humanitarian and human resource skills which can be
accentuated and enhanced with training initiatives. Here, I would recall the experience with
services of Direct Sales Agents, employed by banks, which in some cases, generated
resentment among the customers. An element of sensitivity and sensibility has to underscore
the behavior of such agents when banks outsource credit card operations etc. with emphasis
on ensuring appropriate behavior by personnel involved in debt collection and ensuring
employment of fair and prudent processes. Coercive actions, in the wake of increasing
customer awareness can throw open gates of litigation on such grounds as negligence,
mental agony or hurt, defamation, invasion of privacy and trespassing, with all their obvious
and extended legal connotations.
When one talks of redressing customer grievances and complaints, an obvious reference to
the Banking Ombudsman scheme is but inevitable. The scheme operates on the principles of
mediation and arbitration resulting in awards. In order that such schemes function
unhindered and for the common cause of scores of aggrieved customers, it is imperative that
banks implement awards passed by Ombudsmen in right earnest. RBI attaches a lot of
importance to this function and compliance by banks in this area is monitored through RBI's
supervisory processes and appropriate regulatory disclosures diligently. Thus, serving the
customer satisfactorily is at once, an art, an inexact science as also a mandatory obligation
governed by regulatory dictate and institutional arrangements to ensure compliance.
To conclude, Customer service deserves an outlook that puts a check on targets sought to
be achieved by customer service executives by way of a rigor of compliance with extant rules
and regulations. Profit seeking is the basic ethos that governs any business entity but the
same cannot and must not override the genuine demands and requirements of customers. I
am sure, the employees being honored today have set an example in not just customer
service alone but also for adhering to the compliance diktat. I wish them all success in their
career and also congratulate Axis Bank on their endeavour to enhance the awareness on
customer service.
Thank you.