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Chapter 13 - The potential of electronic banking
13.1
Advances in technology were expected to bring
great benefits to consumers in meeting their banking needs. Indeed, many
consumers have enthusiastically adopted the new ways of conducting banking and
welcomed the ease, convenience and safety it offers them. A recent guide to
e-commerce for Australians living in rural and regional Australia announced:
Rural and
regional Australians in particular stand to reap significant social and
economic benefits from e-commerce as it helps to overcome ‘the tyranny of
distance’ which so often isolates rural and regional communities from larger
domestic and international markets.[1]
Overcoming the ‘tyranny of distance’[2]
13.2
Ironically, although advances in technology have
enabled people to transact basic banking business at any hour of the day and
from the comfort of their own home or office, it has also effectively erected
barriers between the bank and some of its customers. As noted in chapter 3, one
of the major concerns expressed by witnesses was the loss of personal service.
In many ways, this sense of distance between the bank and the customer has been
exacerbated by new technology.
13.3 The challenge for the banks is to meet the
growing consumer demand for new service channels while ensuring that the
growing reliance on electronic banking does not effectively sever important
links between customers and their bank. The following section touches on the
potential for new technology to enhance and strengthen ties by using technology
to extend the reach of financial services providers to those living in remote
districts. It also goes beyond exploring the provision of basic banking
transactions to consider the broader issue of using new technology to provide financial
assistance and advice to people in regional, rural and remote Australia.
Using technology to bridge the divide
13.4
Some Councils are taking on the dual
responsibility not only of making available the necessary equipment but also providing
a friendly reassuring environment in which people can experiment with and
finally use the internet for banking purposes. A simple example of this
practical and sensitive approach came from the Rosalie Shire Council whose
mobile library provides Internet and email services to all areas of the shire. Mr Weber explained:
I come back to our flagship, our mobile library. We have
recently established Internet connections in all of these towns—Acland,
Bowenville, Cooyar, those kinds of places. Again, the populations in those
areas are older. We found in the beginning that people came to use the library
and take the books as they always had done; it has taken them a while to
realise that the computer that is sitting in the corner is something that they
can use to talk to their sons and daughters who are wherever in the world.
Usage has been slow to take off, but we have pushed it over the last 12 to 18
months and acceptance is increasing.
...
Our librarian provides them with training and shows them how to
use it. It is not formalised, and we did not intend to formalise it, from the
beginning, but certainly he does provide training. Acceptance has been
excellent.[3]
13.5
The council is considering ways to ‘piggyback on
that service’ to deliver banking services to its community.[4]
13.6
Along similar lines, the Upper Murray Regional
Library is taking advantage of a service already in place to improve banking
services to regional communities. The library operates two mobile libraries to
service the remote localities in the district. It noted that many of the areas
covered by the mobile library service do not have the telecommunications
infrastructure to provide online access to services. In September 2001, the
Library launched a pilot program using two-way mobile satellite telecommunications
that provide the rural and remote communities with online access to the same
services as delivered in their 12 static branches. It found that the pilot
project indicates that:
...online services can be delivered to communities that do not
have online access via standard telecommunications infrastructure. This offers
the possibility of introducing innovative delivery of other services than
online information and library services.[5]
13.7
It has been pursuing the idea of a Mobile Rural
Transaction Centre that would include banking services among the other services
it would deliver. It concluded:
It is possible for these services to be delivered via a vehicle
similar to (but not as large as) that delivering Library and Information
Services from Upper Murray Regional Library. This is one option for the expansion
of banking facilities through non-traditional channels including the new
technology being piloted by Upper Murray Regional Library. The benefit being
that for one financial outlay a number of communities can have the same
services as provided by static Rural Transaction Centres.[6]
13.8
The idea of the mobile rural transaction centre
is an innovative approach to addressing the problem of enabling people to
conduct basic banking transactions. The ground-breaking work in this area in
South Africa with their mobile ATM scheme provides a practical example of how
technology can be used to provide people in outlying areas with an effective
combination of over-the-counter and self-service banking services (see Chapter
7, para 7.37) The Committee is of the view that such schemes warrant government
support and further consideration should be given to the wider implementation
of such schemes. Moreover, the Committee believes that the banking industry
should be spearheading innovation in this area.
Recommendation 16
The Committee recommends that the review as suggested in
recommendation 10 include consideration of the more innovative ways that RTCs
may be involved in delivering banking services to the remote areas of Australia
including the concept of a mobile RTC.
Electronic banking and customer relationships
13.9
The possibility of disenfranchisement from the
banking and finance world highlights the importance of providing all
Australians with access to new ways of banking. The innovative use of
technology such as mobile rural transaction centres are designed to assist
consumers better manage basic banking services. A number of submissions noted
that physical access to a facility or equipment is not the only matter of
concern when considering the adequacy of banking services. The Gunning Shire
Council submitted that personal contact should not be underestimated and that
electronic options fail to recognise the importance of the social interaction
that is associated with banking transactions.[7]
13.10
For example, the Uniting Church Synod of South
Australia which often intercedes on the part of people who feel they have been
treated unfairly or inappropriately by banks highlighted some of the
difficulties experienced by people without access to over-the-counter services.
It noted:
The removal of face-to-face banking services in rural
areas has meant that advocacy work is relegated to phone communication.
Ministers have found their ability to confront bank staff with a problem and to
resolve it over the phone is more difficult than previously.[8]
13.11
The Shire of Dandaragan maintained that, ‘people
want to be able to communicate with their local bank branch and its officers,
not to go through metropolitan areas.’ It maintained that ‘local decision
making is required as queries/decisions are directed to a centralised location
which cannot necessarily have the local knowledge to deal with a specific
request’.[9]
It highlighted a few simple improvements that would help to compensate for the
lack of personalised customer service. It suggested the need ‘to have direct
phone contact to individual bank branches and not to have to go through major
capital cities’.[10]
13.12
Dr David Morgan highlighted the difficulties that electronic banking can generate
for bank customers. He stated:
And the real problem is not just because the ATMs are sometimes
down, or the branch computers have a hiccup or the lines are busy on telephone
banking. Yes, these are the points of considerable irritation, but more
importantly they highlight the deficit of understanding the technology creates.
Technology might empower people but it also adds to the feeling of
powerlessness. It has dehumanised what has been a very human business. And it
adds up, I’ve little doubt, to a perceived lack of recognition and respect.[11]
13.13
The business sector in particular finds that the
centralisation of banking facilities by some major financial institutions makes
it difficult for them to discuss their banking and business needs with
professional staff or the bank manager. The Gosford City Council noted that
while ‘reliance on technology may assist some businesses with the efficiency of
transactions, the issue of access to professional banking staff also needs to
be considered’. [12]
13.14
The Committee believes that the increasing trend
toward the centralisation of services and the reliance on electronic banking
has not been accompanied by appropriate measures by banks to ensure that they
retain and foster personal relationships with their customers. The Australian
Bankers’ Association Industry Standards for both Automated Telephone Banking
and Internet Banking offer valuable guidance for banks on how to make these
services more accessible to their customers. For example a standard set down in
the industry standard for automated telephone banking requires:
Users who are having difficulty in navigating or comprehending
the automated service shall, during the hours operators are normally available,
be given the option to speak with an operator in order to carry out their
transactions.[13]
13.15
Although such standards are definitely a step in
the right direction they do not adequately address this issue of the quality of
communication between the customer and their bank. Evidence to the Committee
shows that people, especially business people, want to be able to converse with
an officer who has an understanding of their affairs and an appreciation of the
local economy. Measures including dedicated phone lines and designated account
managers are going some way to restoring better personal relationship between
customers in regional, rural and remote Australia and their banks. The Committee believes, however, that the people
fulfilling these roles must have more local community knowledge then currently
appears to be the case.
Recommendation 17
The Committee recommends that banks have trained officers
available in their regional centres to look after the banking needs of
customers in country Australia who do not have face-to-face access to trained
bank staff. These designated officers would have responsibility for customers
from a particular geographic area and have direct knowledge of the local
community and businesses in the district.
The broader issue of access to financial advice and assistance
13.16
The focus on the delivery of the more elementary
aspects of banking should not eclipse the much broader issue of the provision
of advice and assistance across a range of financial services. According to
many witnesses, modern technology has not compensated for the loss of
face-to-face banking. They argued that while communities in rural, regional and
remote Australia may generally
have access to transaction services, many do not have access to comprehensive
financial services.[14]
The Committee has discussed the importance of the personal relationship between
the customer and the bank. The following section broadens the scope of this
examination to include a wider range of financial services.
13.17
The Finance Sector Union of Australia made the
point that there is a clear distinction between transaction banking and
comprehensive financial services and suggested that all initiatives ‘must aim
to provide comprehensive financial services to rural, regional and remote
communities, not just transaction services’.[15]
13.18
A recent survey highlighted the importance of
addressing all aspects of banking and financial services not just basic banking
transactions when considering the adequacy of banking and financial services in
country Australia. It found
that generally, there was a strong demand for further education in banking and
financial matters, with only 14 per cent of respondents considering that they
did not need further education in relation to finance.[16] On presenting the survey, Mr John MacFarlane, CEO of
ANZ, stated:
While this survey indicates Australia has a good foundation of
basic skills it is very clear there are challenges. These include increasing
understanding in the areas of investment, superannuation and retirement
planning and in assisting the most vulnerable sections of the community many of
whom are struggling with financial skills.
By empowering people with the appropriate financial skills,
knowledge and information they are better placed to make informed decisions
about their money and avoid being mislead on financial matters.[17]
13.19
Of particular relevance to this inquiry was the
survey’s finding that people living in country areas are slightly
overrepresented in the lowest financial literacy quintile and under-represented
in the highest financial literacy quintile.[18]
This lower level of financial literacy coupled with more difficult access to
banking and financial services, particularly face-to-face service, makes the
task of ‘empowering people with the appropriate financial skills, knowledge and
information’ more of a challenge.
13.20
The findings of this financial literacy survey
underscored the importance of ensuring that people in regional, rural and
remote Australia have access to
the full range of banking services. Where over-the-counter service is not a
commercially viable option, the innovative use of technology can assist people
with their banking needs and put them in closer contact with their bank. The
Committee believes that the potential of technology to enhance communication
between banks and their customers has not been adequately tapped.
13.21
A number of the problems could be solved partly
by service providers informing themselves of their customers needs, taking
account of their requirements and using technology to engage their customers
not disconnect them. Rather than alienate the customer, the Committee believes
that the clever use of technology and sensible communication initiatives could
be used to bridge the divide.
Use of video conferencing
13.22
The Community Teleservices Australia (Inc) (CTSA) is a national
association representing rural and regional Telecentres, RTCs, Online Access
Centres and any other community-based Teleservice Centres. These centres are
community owned and operate service facilities based mainly in small rural
towns throughout Australia.
Each Centre serves the unique needs of its community. Overall, however, they share
many common objectives and capabilities, including community development,
information provision, technology-based training, distance education, email and
internet access, secretarial, financial and desktop publishing services.[19]
13.23
Teleservice Centres are found throughout rural
and remote Australia in places
that have a population ranging from 200 to 5000 people. CTSA believes that
these Teleservice Centres already provide a structure that may be used ‘to
develop banking services to rural areas with minimal establishment costs,
providing that ongoing issues of funding for personnel and communications
access (cost and speed) can be addressed’.[20]
13.24
A number of other submissions also saw the
potential for new technology to be used to deliver banking and financial
services. The Guyra Shire Council suggested the use of video technology to
assist in providing face-to-face contact with an appropriate person of
authority in the bank who may be located in another town. It submitted:
A separate booth or room could be set up for video
conferencing in each branch. A similar facility may be able to be shared
between the various banks in the same town. Relevant documents could also be
faxed between the locations and if done professionally, every thing that could
be carried out at a face to face meeting could be carried out via interactive
video conferencing.[21]
13.25
The Shire of Victoria Plains suggested that if
services such as online banking, advice access and technological advantages
could be provided through agencies then the services offered could be the same
as those offered by the actual bank branch to a major extent. It acknowledged,
however, that the cost of the installation would be a significant barrier to
any organisation contemplating installing such facilities in regional Australia.[22]
13.26
Mr Brittain, CEO, Nanango Shire Council, who
has experience with the technology, agreed with the view that videoconferencing
could restore the personal interaction between the bank and customers in towns
without a bank branch. He observed, however, that ‘as an operator of an RTC, I
do not want to be wearing the cost of operating a videoconferencing centre in
Blackbutt’.[23]
13.27
Although the use of technology such as
videoconferencing hinges on costs which at the moment are a major obstacle, the
Committee believes that there is scope for improvement and increasing use.
Again it would like to see the ADIs take a leading role in experimenting with
this type of technology as a means to enhance their relationship with their
customers.
Conclusion
13.28
This report has shown that e-commerce has the
potential to break down the geographical barriers and allow people living in
the more remote areas of Australia easy access to a range of banking and financial services. For all
the advantages that modern technology brings to consumers, however, it also
creates difficulties for some people. This is particularly so in the case where
a consumer lives or works in an area that does not provide full banking
services and who, therefore, must rely on new service channels as a substitute.
13.29
Although some submissions argued that new
technologies would not provide sufficient services to meet residents’ needs,[24] the Committee believes that the
banking sector has not done enough to facilitate access to new technology and
most importantly has failed to ensure that their clients have the opportunities
and are encouraged to use new technology. It would like to see the banking
sector work more closely with community organisations especially with funding
for projects such as computers in libraries and the mobile library concept.
13.30
The Committee also urges the banking industry to
consider how best they can use new technology to cultivate a far more positive
environment in which country people could conduct their banking business. It
has already mentioned adopting communication methods that are easier to use and
less intimidating and establishing travelling or mobile banking units to make
personal contact with customers. Better training of staff in agencies and more
constructive use of the Post Offices would also assist ADIs build stronger
links with their customers.
13.31
It clearly sees a role for government in
partnership with the banking industry and community groups to ensure that the opportunities
offered by new technology are fully exploited. The RTC program and Australia
Post present scope for testing a range of projects designed to explore the
potential of new technology.
13.32
The practical difficulties of gaining access to
a reliable and affordable telecommunications service are not the only barriers
to the use of electronic banking. Attitudes towards the technology and the
ability to use it effectively can influence the use of modern technology. The
following chapter looks at matters such as competency and confidence in using
electronic banking and examines them in the context of the needs and
experiences of older Australians.
Part III - Groups in rural, regional and remote Australia facing particular
difficulties in accessing banking and financial services
The report so far has discussed the difficulties experienced
by some sectors of the community with the changing dynamics of banking. It
notes that the withdrawal of over-the-counter services and the growing
expectation that customers will use modern technology as a substitute for
face-to-face banking places some groups in the community at a distinct
disadvantage.
Part III looks at two groups that have particular problems
gaining access to banking and financial services and in adjusting to the rapid
changes taking place in the banking industry—older Australians and Indigenous
Australians. By concentrating on just these two groups, the report hopes to
identify problems likely to be experienced by other groups in the community,
such as the unemployed, those on fixed low incomes, welfare recipients, and the
disabled.
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