Consumer as Co-Creator of Value

Slide 1: 

1 National Seminar on "CREATING AND DELIVERING VALUE FOR CUSTOMERS" Organized by School of Management Studies Cochin University of Science and Technology Kochi – 682022, INDIA March 27 - 28, 2009 CONSUMER AS CO-CREATOR OF VALUE: CROSSING THE TECHNOLOGY HURDLE Prof. Chowdari Prasad Professor of Finance & Registrar, Alliance Business School Bangalore – 560 068, Email: Chowdari.p@absindia.org and Vamshi Krishna Arumbaka PGP (Marketing), Alliance Business School Bangalore – 560 068, Email: Vamshiavk@yahoo.com Consumer as co-creator of value: Crossing the technology hurdle

TECHNOLOGY IN INDIAN BANKING : 

2 TECHNOLOGY IN INDIAN BANKING Consumer as co-creator of value: Crossing the technology hurdle ALPMs and Back Office Computerisation Need to improve Customer Service Reconciliation / Union Problems Advent of PC in 1980s Competition and Reforms Introduction of computerization Clearing Houses, ATMs, Electronic Fund Transfers, BANKNET, SWIFT, e-Mail, Credit Cards, Online Banking, Tele- Banking…

COMMITTEES ON COMPUTERISATION OF BANKS IN INDIA - 1982-1995 : 

3 COMMITTEES ON COMPUTERISATION OF BANKS IN INDIA - 1982-1995 Working Group to consider feasibility of introducing MICR / OCR Technology for Cheque processing (1982), Convenor : Dr Y B Damle, Advisor, Management Services Department, RBI Committee on Mechanisation in the Banking Industry (1984), Chairman : Dr C Rangarajan, Deputy Governor, Reserve Bank of India Committees on Communication Network for Banks and SWIFT implementation (1987), Chairman : Shri TNA Iyer, Executive Director, RBI Consumer as co-creator of value: Crossing the technology hurdle

COMMITTEES ON COMPUTERISATION OF BANKS IN INDIA - 1982-1995 continued… : 

4 COMMITTEES ON COMPUTERISATION OF BANKS IN INDIA - 1982-1995 continued… Committee on Computerisation in Banks (1988), Chairman : Dr C Rangarajan, Deputy Governor, RBI Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities System in the Banking Industry, (1994), Chairman: Shri W S Saraf, Executive Director, Reserve Bank of India Committee on proposing Electronics Funds Transfer and Electronics Payments (1995), Chairperson: Smt K S Shere, Principal Legal Adviser, Reserve Bank of India Consumer as co-creator of value: Crossing the technology hurdle

LITERATURE REVIEW : 

5 LITERATURE REVIEW Ostlund (1974)extended Rogers’(1971) seminal work on diffusion in identifying risk as influential to the adoption process. Diffusion studies found that adopters are more innovative, less risk averse, perceive an innovation Parasuraman (2000) - optimism and innovativeness are drivers of technology readiness, while discomfort and insecurity are inhibitors. If consumers are not “ready” to be an internet banking user, they are likely to express discomfort and insecurity Mary Modahl(2001), Forrester Research, impact of the Internet on business, developed a concept called "Technographics," Ranked computer users by their comfort level with technology and how likely they are to use the Internet: Early Adopters, Mainstream Users and Laggards Financial services' researchers, such as Black et al(2002). and Gerrard and Cunningham(2003), Theory of diffusion and internet banking, Internet banking is perceived: More convenient and more compatible with the adopter's lifestyle or more complex and requiring a higher level of PC skills Consumer as co-creator of value: Crossing the technology hurdle

ADVANTAGES OF INTERNET BANKING : 

6 ADVANTAGES OF INTERNET BANKING Improve customer access, convenience Facilitate the offering of more services Increase customer satisfaction and loyalty Attract new customers easily Provide services offered by competitors Reduce customer attrition Reduces the time, cost and effort in the interaction Consumer as co-creator of value: Crossing the technology hurdle

ADVANTAGES OF INTERNET BANKING Conti… : 

7 ADVANTAGES OF INTERNET BANKING Conti… Furst, Lang & Nolle Report Consumer as co-creator of value: Crossing the technology hurdle

INDIAN SCENARIO – Banks & IT : 

8 Price Water Coopers report on Indian Banks: use of IT Far behind the global scenario Only 46% being spent on IT for business continuity Huge investments needed 55% - 27% - 18% Managing & retaining good clients, optimize costs, beat competition Banks should take up automation: centralized networks, 24*7 services, reduce manpower, CBS, CRM The Financial Express - – 24th March, 2009 INDIAN SCENARIO – Banks & IT Consumer as co-creator of value: Crossing the technology hurdle

INDIAN SCENARIO – IDRBT, Hyderabad-1996 : 

9 V-SAT based Financial Network for banks Data warehousing & Datamining Publishes a Journal on IT in Banking Web based training for executives INdian FInancial NETwork(INFINET) Financial Networks and Applications Electronic Payments and Settlement Systems Security Technologies for the Financial Sector Technology Based Education, Training and Development Financial Information Systems and Business Intelligence INDIAN SCENARIO – IDRBT, Hyderabad-1996 Institute for Development and Research in Banking Technology Consumer as co-creator of value: Crossing the technology hurdle

INDIAN SCENARIO: STATISTICS - 2009 : 

10 INDIAN SCENARIO: STATISTICS - 2009 http://www.bulletin.rbi.org.in Consumer as co-creator of value: Crossing the technology hurdle

INDIAN SCENARIO: STATISTICS - 2009 : 

11 INDIAN SCENARIO: STATISTICS - 2009 http://www.bulletin.rbi.org.in Consumer as co-creator of value: Crossing the technology hurdle

INDIAN SCENARIO – IT Penetration : 

12 INDIAN SCENARIO – IT Penetration http://www.internetworldstats.com Consumer as co-creator of value: Crossing the technology hurdle

HURDLES FOR ADOPTION : 

13 The Technology Readiness Index (TRI) of Parasuraman: Optimism: the degree to which people with a positive view of technology believe it offers increased control, flexibility and efficiency in their lives Innovativeness: the degree to which people are technological pioneers and thought leaders Discomfort: the degree to which people perceive a lack of control over technology and feel overwhelmed by it, and Insecurity: the degree to which people distrust technology and are skeptical of its ability to work properly HURDLES FOR ADOPTION Consumer as co-creator of value: Crossing the technology hurdle

HURDLES FOR ADOPTION : 

14 Key components of security concerns: Authentication: The assurance of identity of the person in a deal Authorization: A party doing a transaction is authorized to do so Privacy: The confidentiality of data and information relating to any deal Data integrity: Assurance that the data has not been altered Non-repudiation: A party to the deal cannot deny that it originated the communication or data HURDLES FOR ADOPTION Consumer as co-creator of value: Crossing the technology hurdle

CROSSING HURDLES FOR ADOPTION : 

15 SUGGESTIONS: Remove lack of human interaction Address pricing concerns – Hole-in-the-wall(Sugata Mitra) Need to shift or perish Cost reduction: almost 100 times cheaper Increased customer participation Self service 24*7, Anytime Anywhere Banking Divide and Rule CROSSING HURDLES FOR ADOPTION Consumer as co-creator of value: Crossing the technology hurdle

Slide 16: 

16 “Much will depend on the capability to leap frog to the state-of-the-art payment and settlement systems. Given the high rate of technology absorption witnessed in the recent past in our region, there is reason to be optimistic that the challenges will be met successful” YV Reddy, Governor RBI Speaking at Institute for Development and Research in Banking Technology Consumer as co-creator of value: Crossing the technology hurdle

CONCLUSION : 

17 CONCLUSION Choice is made Huge effort & cost New business model Take this to public Need for push Change willingly or forcible Many hurdles but not difficult Include customer for progress Cost reduction + Better service + Co-creation of value = Increased Loyalty Consumer as co-creator of value: Crossing the technology hurdle

Slide 18: 

18 Thank You “Reduced costs for bank, better user experience and freedom for consumer make it feasible” Modhal in Now or Never Consumer as co-creator of value: Crossing the technology hurdle