BANKING FOR BPS

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Prepared by Dr J Deepak Kumar
Asst Prof, Dept of BCom BPS
Sri Ramakrishna College of Arts & Science
(Autonomous), Coimbatore.
CUSTOMER SERVICE DATA & VOICE
MAINTENANCE
z 2. Voice Communication Management
Multi-Channel Support:
1. Data Management
Provide multiple channels for customer
Customer Relationship Management (CRM)
interaction, including phone support, live
Systems:
chat, and email.
Implement CRM software to centralize
Ensure seamless integration between
customer information, track interactions,
voice and digital channels for a cohesive
and manage service requests.
customer experience.
Use data analytics to gain insights into

Dr J Deepak Kumar
Call Center Operations:
customer preferences and behavior.
Train call center staff to handle inquiries
Data Privacy and Security:
efficiently and professionally.
Ensure compliance with regulations like
Implement call monitoring and recording for
GDPR and CCPA by safeguarding
quality assurance and training purposes.
customer data and maintaining
Automated Systems:
confidentiality.
Use Interactive Voice Response (IVR)
Implement robust cybersecurity measures
systems to direct customers to the right
to protect sensitive information.
department or provide self-service options
Data Quality:
for common inquiries.
Regularly update and clean customer
Consider AI-driven chatbots for initial
databases to eliminate inaccuracies and
interactions, escalating to human agents
duplicates.
when necessary.
Monitor data entry processes to maintain
high-quality data input.
 4. Continuous Improvement
Regular Training:
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3. Performance Metrics Conduct ongoing training sessions for staff to
Key Performance Indicators (KPIs): improve product knowledge, communication skills,
Track metrics such as average and customer handling techniques.
Encourage a culture of continuous learning and
response time, call resolution
development.
time, customer satisfaction Process Optimization:
scores, and first-call resolution Regularly review and refine customer service
rates. processes to eliminate bottlenecks and enhance

Dr J Deepak Kumar
Use these metrics to identify efficiency.
areas for improvement and Use data-driven insights to inform process
measure the effectiveness of improvements.
customer service efforts.
5. Technology Integration
Customer Feedback:
Unified Communications:
Implement post-interaction Integrate voice communication with other customer
surveys to gather feedback on service channels for a unified view of customer
customer experiences with voice interactions.
support. Use cloud-based systems for flexibility and
Analyze feedback to identify scalability in handling customer service operations.
trends and areas needing Real-Time Analytics:
attention. Implement real-time analytics tools to monitor
customer interactions and service performance.
Use insights to make informed decisions and adjust
strategies dynamically
DISPUTE AND COMPLAINTS
MANAGEMENT IN BANKING
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Effective dispute and complaints
management is crucial for banks to 2. Investigation and Resolution
maintain customer trust and satisfaction. •Thorough Investigation:
Here’s a structured approach to handling • Investigate complaints promptly by
disputes and complaints: gathering all relevant information from
the customer and internal records.
1. Establishing a Clear Process

Dr J Deepak Kumar
• Engage relevant departments if
•Complaint Submission Channels: necessary to ensure a comprehensive
• Provide multiple avenues for review.
customers to submit complaints •Timely Resolution:
(e.g., in-person, phone, email, • Aim to resolve complaints as quickly
online forms). as possible, adhering to any
• Ensure these channels are easily communicated timelines.
accessible and well-publicized. • Communicate clearly with the
•Acknowledgment of Complaints: customer during the process,
• Quickly acknowledge receipt of the providing updates on the status of
complaint, providing a timeline for their complaint.
resolution and the name of a
contact person.
3. Communication
Transparentz Communication:
Keep customers informed about the
progress of their complaint and the steps
being taken to address it.
Clearly explain the rationale behind any
decisions made in response to their 5. Feedback and Improvement
complaints. Post-Resolution Follow-Up:
Empathy and Understanding: After resolving a complaint, follow up with

Dr J Deepak Kumar
Train staff to handle complaints with the customer to ensure they are satisfied
empathy, showing understanding of the with the outcome and the process.
customer's feelings and concerns. Solicit feedback on their experience to
improve future complaint handling.
4. Documentation Analyzing Trends:
Record Keeping: Regularly analyze complaint data to
Maintain detailed records of all identify trends, recurring issues, and
complaints, investigations, and areas for improvement in products or
resolutions for accountability and future services.
reference.
Use this data to identify patterns and
common issues that may need
addressing.
6. Training and Empowerment
z Training:
Staff
Provide ongoing training for customer service representatives on
handling complaints effectively and empathetically.
Equip staff with the authority to resolve common issues without
needing managerial approval, expediting the process.

7. Escalation Procedures
Clear Escalation Path:

Dr J Deepak Kumar
Establish a defined escalation process for complaints that cannot be
resolved at the first point of contact.
Ensure customers know how to escalate their complaints if they feel
their issues are not adequately addressed.

8. Regulatory Compliance
Adherence to Regulations:
Ensure that the complaints management process complies with
relevant regulations and guidelines set by financial authorities.
Be aware of specific requirements for handling complaints, including
timelines for responses and resolutions.
METRICS FOR MANAGING PRODUCTIVITY IN BANKING
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Measuring productivity in banking is essential for assessing performance, improving efficiency,
and enhancing customer satisfaction. Here are key metrics to consider:

1. Customer Service Metrics

 Response Time: Average time taken to respond to customer inquiries or complaints.
Shorter response times indicate higher efficiency.
 First Contact Resolution Rate: Percentage of customer issues resolved on the first

Dr J Deepak Kumar
interaction. A higher rate suggests effective service.
 Customer Satisfaction Score (CSAT): Direct feedback from customers on their service
experience, typically measured through surveys.
 Net Promoter Score (NPS): Measures customer loyalty by asking how likely customers
are to recommend the bank to others.

2. Operational Efficiency Metrics

 Average Handling Time (AHT): Average duration taken to resolve a customer issue or
complete a transaction. Lower AHT can indicate higher productivity.
 Volume of Transactions: Total number of transactions processed (deposits,
withdrawals, loans) within a specific period. Tracking this can help gauge operational
workload.
 Cost per Transaction: Total operational costs divided by the number of transactions
processed. This metric helps assess efficiency and cost-effectiveness.
3. Employee Performance Metrics
 Employee Productivity Rate: Output per employee, often measured in terms
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of transactions handled or revenue generated.
 Training Completion Rate: Percentage of employees who have completed
required training programs, indicating investment in staff development.
 Staff Turnover Rate: The rate at which employees leave the organization.
High turnover can affect productivity and indicate workplace issues.

4. Financial Metrics

Dr J Deepak Kumar
 Return on Assets (ROA): Net income divided by total assets. This indicates
how efficiently a bank is using its assets to generate earnings.
 Return on Equity (ROE): Net income divided by shareholder equity. It
measures profitability and efficiency in generating returns for shareholders.
 Net Interest Margin (NIM): Difference between interest income generated
and interest paid out, divided by total assets. This metric helps assess a
bank’s profitability from its lending activities.

5. Risk Management Metrics

 Non-Performing Loan (NPL) Ratio: Percentage of loans that are in default
or close to being in default. A lower ratio indicates better credit risk
management.
 Capital Adequacy Ratio (CAR): Measure of a bank's capital relative to its
6. Digital Engagement Metrics
 Online
z Banking Adoption Rate: Percentage of customers using online
banking services. Higher adoption indicates successful digital initiatives.
 Mobile App Usage: Metrics such as monthly active users (MAU) or session
length can indicate the effectiveness and engagement of digital platforms.

7. Innovation and Development Metrics

 Time to Market for New Products: Average time taken to develop and

Dr J Deepak Kumar
launch new banking products or services. Shorter times can enhance
competitive advantage.
 Customer Feedback Implementation Rate: Percentage of customer
suggestions that lead to actionable changes in products or services.

Utilizing these metrics can help banks assess productivity,

identify areas for improvement, and enhance overall
performance. By monitoring and analyzing these indicators
regularly, banks can make data-driven decisions to
optimize operations and improve customer satisfaction.
QUALITY SLA TRACKING AND MONITORING IN BANKING
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Service Level Agreements (SLAs) are crucial for ensuring that banks meet
predefined standards for service delivery. Effective tracking and monitoring of SLAs
help maintain high-quality service and improve customer satisfaction. Here’s an
overview of how to implement quality SLA tracking and monitoring:

Monitoring Tools and Technologies:

Defining SLAs:

Dr J Deepak Kumar
 Dashboard Systems: Implement
 Clear Metrics: Establish specific, dashboards that provide real-time
visibility into SLA performance metrics,
measurable criteria for service
allowing quick identification of issues.
performance, such as response
times, resolution times, and
 Automated Tracking: Use software
availability.
solutions that automatically track SLA
 Service Categories: Differentiate compliance, reducing manual effort
and potential errors.
SLAs for various services (e.g.,
customer support, transaction
 Alert Systems: Set up automated
processing, loan approvals) to
alerts for SLA breaches, enabling
ensure relevant metrics.
proactive management and timely
responses.
Data
z Collection and Analysis
 Regular Data Capture: Collect data on SLA metrics continuously to
ensure accurate tracking.
 Root Cause Analysis: Analyze data to identify patterns in SLA
breaches and determine root causes to inform corrective actions.

Performance Review Meetings

Dr J Deepak Kumar
 Regular Review: Schedule periodic meetings to review SLA
performance, involving relevant stakeholders (e.g., customer service
teams, IT, management).
 Action Plans: Develop action plans to address any identified issues or
areas for improvement.

Customer Feedback Integration

 Feedback Mechanisms: Incorporate customer feedback on service
quality and responsiveness into SLA performance assessments.
 Adjustments Based on Feedback: Use feedback to adjust SLAs as
needed to better align with customer expectations.
Continuous Improvement
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 Benchmarking: Compare SLA performance against industry standards and
best practices to identify areas for improvement.
 Training and Development: Provide training for staff based on SLA
performance metrics to enhance service delivery.

Reporting and Transparency

 Regular Reporting: Create reports summarizing SLA performance for

Dr J Deepak Kumar
internal stakeholders and, where appropriate, share them with customers to
enhance transparency.
 Adjustments and Updates: Review SLAs regularly and update them to
reflect changes in services, customer expectations, or regulatory
requirements.

Compliance and Risk Management

 Regulatory Compliance: Ensure that SLAs comply with relevant regulations
and industry standards to avoid legal issues.
 Risk Assessment: Regularly assess risks related to SLA performance and
develop mitigation strategies.
PRICING METHODOLOGIES IN BANKING

In banking,z pricing methodologies are essential for determining the rates and fees
associated with various financial products and services. Here are the key pricing
methodologies commonly used:
1. Cost-Plus Pricing
Definition: This method involves calculating the total cost of providing a product or
service and adding a markup for profit.
Application: Used for loan products, account fees, and service charges.

Dr J Deepak Kumar
Advantages: Simple to implement; ensures all costs are covered.
2. Market-Based Pricing
Definition: Prices are set based on the rates and fees charged by competitors for
similar products.
Application: Common for retail banking products like savings accounts and
mortgages.
Advantages: Keeps pricing competitive and aligned with market expectations.
3. Value-Based Pricing
Definition: Prices are determined based on the perceived value of a product or
service to the customer, rather than the cost to the bank.
Application: Often used for premium services or specialized financial products (e.g.,
wealth management).
Advantages: Can lead to higher margins if customers perceive high value.
4. Dynamic Pricing
Definition: Prices fluctuate based on real-time demand and supply conditions.
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Application: Used in trading services, foreign exchange, and sometimes loan pricing.
Advantages: Maximizes revenue opportunities during high-demand periods.
5. Risk-Based Pricing
Definition: Loan rates and fees are adjusted based on the credit risk profile of the borrower.
Application: Commonly used for mortgages, personal loans, and credit cards.
Advantages: Aligns pricing with the level of risk, potentially improving profitability.
6. Tiered Pricing
Definition: Different pricing tiers are set based on the volume or value of transactions, or

Dr J Deepak Kumar
customer segments.
Application: Common for account maintenance fees, transaction fees, and loan interest
rates.
Advantages: Encourages higher usage and rewards loyal customers.
7. Bundled Pricing
Definition: Offering multiple products or services together at a reduced price compared to
purchasing each separately.
Application: Often seen in checking accounts that include free overdraft protection, or
mortgage products with additional insurance.
Advantages: Increases customer retention and cross-selling opportunities.
8. Promotional Pricing
Definition: Temporary price reductions or offers to attract new customers or increase usage.
Application: Common during product launches or to incentivize account openings.
Advantages: Can quickly boost market share and customer acquisition.
COMMONLY AVAILABLE CERTIFICATIONS IN THE AREAS OF QUALITY MANAGEMENT,
PROCESS IMPROVEMENT, AND COMPLIANCE, INCLUDING ISO, COPC, CMMI, AND PCI
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1. ISO Certifications 2. COPC Certifications

•ISO 9001: Quality Management Systems •COPC Registered Coordinator (CRC)
• Focus: Establishes criteria for a quality • Focus: Certification for
management system, emphasizing professionals who implement and
customer satisfaction and continuous manage COPC standards in
improvement. customer service environments.

Dr J Deepak Kumar
• Ideal for: Organizations seeking to • Ideal for: Customer service and
improve overall quality and operational operations managers looking to
efficiency. improve service performance.
•ISO 27001: Information Security Management •COPC Customer Experience (CX)
• Focus: Framework for managing Standard
sensitive company information to keep it • Focus: A framework for managing
secure. customer interactions to improve
• Ideal for: Organizations aiming to customer satisfaction and business
manage information security risks. performance.
•ISO 20000: IT Service Management • Ideal for: Organizations seeking to
• Focus: Standards for IT service enhance their customer service
management to enhance service delivery strategies.
and align IT with business needs.
• Ideal for: IT service providers.
COMMONLY AVAILABLE CERTIFICATIONS IN THE AREAS OF QUALITY MANAGEMENT,
PROCESS IMPROVEMENT, AND COMPLIANCE, INCLUDING ISO, COPC, CMMI, AND PCI
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3. CMMI (Capability Maturity Model 4. PCI (Payment Card Industry)

Integration) PCI DSS (Payment Card Industry Data
CMMI for Development (CMMI-DEV) Security Standard)
Focus: Process improvement framework Focus: Standards for organizations
for product and service development that handle credit card information to
organizations. ensure secure transactions and

Dr J Deepak Kumar
Ideal for: Software and systems protect cardholder data.
development organizations seeking to Ideal for: All entities that accept,
improve their processes. process, store, or transmit cardholder
CMMI for Services (CMMI-SVC) data.
Focus: Framework to improve service PCI PIN Transaction Security
delivery processes. Focus: Security standards for
Ideal for: Service providers looking to protecting PIN transactions,
enhance service quality and efficiency. particularly in ATM and POS
CMMI for Acquisition (CMMI-ACQ) environments.
Focus: Best practices for organizations that Ideal for: Organizations involved in
acquire products and services. the handling of PINs and related
Ideal for: Organizations focused on transactions.
procurement and acquisition processes.
ANTI-MONEY LAUNDERING (AML)
AML refers
z to a set of policies and procedures designed to prevent the financial system from
being used for money laundering activities. Banks and financial institutions must adhere to
AML regulations to identify and report suspicious activities.

Key Components of AML

1.Customer Due Diligence (CDD):
1. Conducting thorough background checks on customers to assess the risk of money
laundering.

Dr J Deepak Kumar
2. Collecting and verifying customer identification and understanding the nature of their
business activities.
2.Transaction Monitoring:
1. Implementing systems to monitor transactions for unusual patterns or suspicious
behavior that may indicate money laundering.
3.Reporting Obligations:
1. Filing Suspicious Activity Reports (SARs) with regulatory authorities when suspicious
transactions are identified.
4.Training and Awareness:
1. Providing regular training for employees on AML policies, red flags, and reporting
procedures.
5.Compliance Programs:
1. Developing and maintaining robust compliance programs to adhere to local and
international AML regulations.
KNOW YOUR CUSTOMER (KYC)
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KYC is a critical component of AML, focusing on the process of verifying the identity of clients
and understanding their financial dealings to prevent fraud and money laundering.

Key Components of KYC

1.Customer Identification Program (CIP):
1. Establishing a process for verifying the identity of customers, which includes collecting
personal information and official identification documents.
2.Risk Profiling:

Dr J Deepak Kumar
1. Assessing the risk associated with each customer based on their background,
occupation, geographical location, and transaction behavior.
3.Ongoing Due Diligence:
1. Continuously monitoring customer activities and updating customer information to reflect
any changes in risk profiles.
4.Enhanced Due Diligence (EDD):
1. Applying stricter scrutiny for high-risk customers or transactions, such as politically
exposed persons (PEPs) or customers from high-risk jurisdictions.
5.Record Keeping:
1. Maintaining accurate records of KYC information and documentation to comply with
regulatory requirements.
KEY COMPONENTS OF INFORMATION SECURITY

z Data Encryption:
Confidentiality, Integrity, and Availability  Protecting sensitive data both at rest and
(CIA Triad): in transit using encryption techniques to
 Confidentiality: Ensuring that sensitive prevent unauthorized access.
information is only accessible to
authorized users. Incident Response:
 Integrity: Maintaining the accuracy and  Establishing an incident response plan to
quickly address and mitigate the impact of

Dr J Deepak Kumar
reliability of data, preventing unauthorized
alterations. security breaches or data loss incidents.
 Availability: Ensuring that information  Conducting regular drills and updates to
and systems are accessible when ensure readiness.
needed by authorized users.
Monitoring and Auditing:
 Continuously monitoring systems for
suspicious activities and conducting
Network Security:
 Implementing regular audits to assess security controls
firewalls, intrusion
and compliance.
detection systems (IDS), and intrusion
prevention systems (IPS) to protect Third-Party Risk Management:
networks from unauthorized access and  Evaluating and managing risks associated
attacks. with third-party vendors who have access
to sensitive data or systems.
ACCOUNT ORIGINATION
Account origination refers to the process of opening new accounts, which can include checking, savings,
z accounts. This process involves several key steps:
loans, and credit

Key Components of Account Origination

1.Customer Identification:
1. Collecting necessary personal information (name, address, date of birth) and verifying identity
through KYC (Know Your Customer) protocols.
2. Utilizing technology for identity verification, such as biometric data or digital IDs.
2.Application Process:

Dr J Deepak Kumar
1. Offering various channels for customers to apply (online, in-branch, mobile apps).
2. Streamlining the application process to minimize friction and enhance user experience.
3.Credit Assessment:
1. Conducting credit checks to assess the applicant’s creditworthiness, especially for loan or credit
accounts.
2. Evaluating the risk associated with opening the account.
4.Account Approval and Setup:
1. Reviewing the application and approving or rejecting it based on predetermined criteria.
2. Setting up the account in the banking system, including account number generation and initial
funding procedures.
5.Customer Communication:
1. Informing the customer about the application status, including approval or rejection, and next steps.
2. Providing welcome materials, such as account terms, conditions, and access instructions.
6.Onboarding:
1. Guiding new customers through the onboarding process, which may include setting up online
banking, mobile app registration, and linking accounts.
Key Components of ACCOUNT SERVICING
1.Customer Support:
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1. Providing assistance through various channels (phone, chat, email, in-branch) to address inquiries
and resolve issues.
2. Offering self-service options through online platforms and mobile apps.
2.Transaction Management:
1. Monitoring and processing transactions, including deposits, withdrawals, transfers, and payments.
2. Providing real-time updates on account balances and transaction history.
3.Account Maintenance:
1. Managing changes to accounts, such as updating personal information, adding or removing account

Dr J Deepak Kumar
features, and handling account closures.
2. Regularly reviewing account activity to ensure compliance and detect any unusual behavior.
4.Statement Management:
1. Generating and providing regular account statements to customers, including details of transactions,
fees, and interest accrued.
2. Offering electronic statements as an eco-friendly and efficient alternative.
5.Risk Management and Compliance:
1. Monitoring accounts for compliance with regulations and internal policies, including anti-money
laundering (AML) and fraud detection.
2. Conducting periodic reviews of customer accounts to ensure continued compliance with KYC
regulations.
6.Customer Relationship Management (CRM):
1. Using CRM tools to track customer interactions, preferences, and feedback to personalize service
offerings and improve engagement.
2. Implementing targeted communication strategies to inform customers about new products, services,
or promotions.