Innovation of Products & Services in Banking

1. Prepared by: Saad Arif Sair

2. • The innovations in the banking field is mainly depends upon
rapid growth in the technology.
• The banking industry has become one of the developed
service sector industry in Pakistan.
• Information technology is one of the most important
facilitators for the transformation of the Pakistan banking
industry in terms of its transactions processing as well as for
various other internal systems and processes.

3.  Anywhere, Anyplace and Anytime banking
 Timeless and Placeless Banking
 Convenience Banking
 Dismantling of Physical Structure
 Goodbye to Traditional Instruments and Invitation to
New Instruments.
 Disappearance of Conventional Risk and Arrival of
New Risks.

4. Automated Teller Machines(ATMs):
 ATMs are widely used as electronic channels in
banking. It is operated by plastic card with its special
features.
 It is a computer controlled device at which the
customers can make withdrawals, check balance
without involving any individuals.

5. Point of Sale(POS):
• The point of sale (POS) is the time and place where a retail
transaction completes. It is the point at which a customer
makes a payment to the merchant in exchange for goods or
after provision of a service.
• Point-of-sale (POS) terminals – the electronic device deployed
at merchant outlets to accept major credit and debit cards.

6. Mobile Banking:
 Refers to the use of a smart phone or other cellular
device to perform online banking tasks while away
from your home computer, such as monitoring
account balances, transferring funds between
accounts, bill payment and locating an ATM.

7. Smart Cards
 It is a chip based card (micro chip)
 It is used for making purchases without the need of
any pin.
 It is a powerful card which carries out functions of
ATM card , Credit Card , Debit Card.

8.  Debit card is a plastic card which provides a
alternative payment method to cash for purchases.
 Functionally, it can be called an electronic check, as
the funds are withdrawn directly from either the bank
account, or from the remaining balance on the card.
 It is used instead of a credit card to pay bills such as
utilities, insurance and car payments.

9. I4 MAESTRO DEBIT CARD
FIRST DEBIT GOLD CARD

10. 1: ONLINE DEBIT CARDS
 Online debit cards require electronic authorization of every
transaction.
 The debits are reflected in the user’s account immediately.
 The transaction may be additionally secured with the personal
identification number (PIN) authentication system and some
online cards require such authentication for every transaction.
 In the United Kingdom, Solo and Visa Electron are examples
of online debit cards.

11. 2: OFFLINE DEBIT CARDS
 Offline debit cards have the logos of major credit cards or
major debit cards and are used at the point of sale like a credit
card.
 This type of debit card may be subject to a daily limit, and/or
a maximum limit equal to the current/checking account
balance from which it draws funds. Transactions conducted
with offline debit cards require 2–3 days to be reflected on
users’ account balances.
 In the United Kingdom, Maestro and Visa Debit are examples
of offline debit cards.

12. 3: PREPAID DEBIT CARDS
 Prepaid debit cards, also called reloadable debit cards or
reloadable prepaid cards, are often used for recurring
payments.
 The payer loads funds to the cardholder's card account.
 Particularly for US-based companies with a large number of
payment recipients abroad, prepaid debit cards allow the
delivery of international payments without the delays and fees
associated with international checks and bank transfers.

13. 4: ELECTRONIC PURSE CARDS
 Smart-card-based electronic purse systems (in which value is
stored on the card chip, not in an externally recorded account,
so that machines accepting the card need no network
connectivity) were tried throughout Europe from the mid-
1990s, most notably in Germany.

14. 5: CARDS FOR MAIL, TELEPHONE & INTERNET
USE ONLY
 Special pre-paid Visa cards for Mail Order/Telephone Order
(MOTO) and Internet use only are made available by a small
number of banks. They are sometimes called "virtual Visa
cards".
 Such a card prevents fraud by a card number thief even if the
card is not blocked, because the customer normally does not
store any money on the sub-account and fraudulent
transactions do not get authorized by the bank.

15.  A credit card is part of a system of payments named
after the small plastic card issued to users of the
system.
 It is a card entitling its holder to buy goods and
services based on the holder's promise to pay for
these goods and services.
 The issuer of the card grants a line of credit to the
consumer (or the user) from which the user can
borrow money for payment to a merchant or as a
cash advance to the user.

16.  E-Banking or Electronic Banking is a major
innovation in the field of Banking.
 In the past Banking was conducted in a very
traditional manner, there were no such innovations.
 Information revolution led to the evolution of
internet , which lead to E-Commerce continued by
evolution of E-Banking.

17. WHAT IS AN E-BANK?
 Internet
 WAP (Wireless Application
Protocol) based mobile
network
 Automated telephone
 ATM network
 SMS and FAX messaging
 Multipurpose information
kiosks
 Web TV and others …
 E-channels enable financial transactions from anywhere
and allow non-stop working time.

18. Types
 PC Banking
 Digital TV Banking
 Text Phone Banking
 Internet Banking
Services
 Bill Payment
 Credit Card
 Insurance
 Customer services
 Recharge your prepaid
phone
 Shopping

19.  Faster & more convenient transaction
 No longer required to wait in long queues
 Opening of account is simple & easy
 Apply for bank loan
 Cost effective for banker side
 Fund transfer becomes faster & convenient
 Stock trading, exchanging bonds & other
investment.

20.  The concept of Internet banking has been simultaneously
evolving with the development of the world wide web.
 The online shopping promoted the use of credit cards through
Internet.
 The first online banking service in US was introduced, in Oct
1994.
 The service was developed by Stanford Federal Credit Union,
which is a financial institution.

21. Warid Launches Mobile Paisa
 Warid Telecom first soft launched its branchless banking
service in January which was followed by an official launch in
July with 2,000 agents in 500 cities. It has collaborated with
Bank Alfalah Limited and Monet as a technological solution
provider.
 Now, all five telecom operators are operating with their own
branchless banking service in the country.

22. Telenor Introduces IBFT
 Telenor Pakistan and Tameer Microfinance Bank, the pioneer
and market leaders, have launched an innovative product of
Interbank Fund Transfer Facility (IBTF) for its customers
under Easypaisa which enabled their customers to transfer
funds between a number of banks.
 The IBTF service is one of the most highly utilized services
since its launch in the banking industry.

23. Upaisa Launches Debit Card Facility
 Umicro finance Bank has introduced a Debit Card Facility for
customers of Upaisa. This Debit Card facility is available on
ATM card as well. The card is workable at shopping places
having service partnership with Union Pay.
 Upaisa has also signed an agreement with Meezan Bank in
which its customers having ATM cards could use its more
than 300 ATMs without any charges.

24.  Bullish about the mobile banking scene in Pakistan, Visa Inc –
a global payments technology company launch its own mobile
financial services (MFS) platform in Pakistan.
 The product will use Visa Net technology and function on
interoperability model, a first in Pakistan’s mobile banking
market.
 Visa Net is the world’s largest retail electronic payments
processing network, handling an average of 150 million
transactions every day, according to the company’s website.

25.  Visa entered the mobile banking segment earlier this year after
Fundamo partnered with Monet to provide MFS platform for
Bank Alfalah’s mobile banking solution.
 Mobile banking has managed more than 31 million
transactions worth $1.5 billion in the last quarter of 2012,
according to the State Bank of Pakistan.

26.  As Pakistan remains at the forefront of the War on
Terror, the lives of ordinary people are affected
tumultuously in event of any terrorist act.
 According to the agreement, Allied Bank will
exclusively offer “Terrorism Protection Insurance” to
all its customers, which will also provide additional
insurance cover for accident related injuries.

27.  ABL was experiencing performance issues in
running its core banking application. Due to the
high number of transactions in the Online
Transaction Processing (OLTP) system.
 By implementing Oracle Database Machine with
Oracle Storage for backup and recovery, the bank
aims to significantly accelerate their OLTP
performance, protect its data, and speed up their
critical close of business processes such as daily
transactions.

28.  Bank Alfalah has announced the launch of ‘’Alfalah
Care – Health Insurance Plan for Senior Citizens”.
 This new innovative health insurance feature of the
Bank Alfalah CARE account, aims to provide quality
health care to individuals within the age bracket of 55
years to 75 years, in case of hospitalization due to
any illness or accident.

29.  NBP signed a Memorandum of Understanding
(MOU) with Mobilink and Waseela Microfinance
Bank during a graceful ceremony held at Mobilink
House, Islamabad.
 It provides Mobicash Services for the purpose of
facilitating payments under Prime Minister’s Youth
Business Loans.

30.  General purpose information like interest rates, branch
location, bank products and their features, loan and deposit
calculations are provided in the banks website.
 Facilities for downloading various types of application forms.
 No interaction between the customer and bank's application
system.

31.  The system provides customer- specific information in the
form of account balances, transaction details, and statement of
accounts.
 The information is still largely of the 'read only' format.
Identification and authentication of the customer is through
password.
 The application systems cannot directly access through the
internet.

32.  Social media monitoring
to engage customers,
mitigate risks and
promptly react to issues.
 Social digital marketing
to define the best
content for individual
customer profiles and
attract them.

33. 1: SOCIAL CUSTOMER SERVICE
 Integrated CRM module for Twitter and Facebook.
 Virtual branch on Facebook.

34. 2: Social Banking
 Online bank account integration on Facebook.
 Social banking and payment integration.

35. 3: P2P Transactions
 P2P payments via digital wallet
 P2P payments via bank account integration.

36. Customers today demand payment methods that :
Conform to the highest standards
Don’t have onerous identification methods
Are completed within hours
Use devices that exist for other reasons
Are 100% accurate and reliable
Are widely accepted by businesses
Are globally usable
Are value for money
Use data to enhance the bank’s offer, but not
intrude
Do you agree?

37. INTELLIGENT DEPOSIT
SAFES
 Service piloted in live customer
premises
 Proposition under assessment for
potential full delivery
 Secure solution for cash takings
 Technology counts cash reducing
errors and saving time
 Combats fraud from employees
and counterfeit notes
MINI CASH IN TRANSIT
PICK UP
 Regional customer pilot
conducted of Bank Branch
alternative
 Proposition under assessment
for potential full delivery
 Bank provides small CIT vans
collect notes/coin from
customer premises
 Order coin to be delivered
with collections
 Business cheques also
collected

38. Definition of Innovation
The act of starting something for the first time
Introducing something new
A new method of doing something
“If at first the idea is not absurd, then there will be
no hope for it.” (A. Einstein).

39.  Final Thought: Banks should manage risk
rather than avoid it