We are all well aware of the couplet defining the strengths of traditional money: Money has functions four, Medium, measure, Standard & Store.
Society moved from barter system to common medium of exchange the money and further to bank money. Now we are experiencing the introduction of debit cards, credit cards and smart cards as an extension of bank money, which is better known as plastic money.
Does plastic money have more empowering capabilities? Is plastic money more empowering? Who all benefit? How do they benefit? Is it endangering our sovereignty? Can it harm us? Is it in our interest to promote the plastic money? How it works? How we can optimize our empowerment as customer, as businessman, as banker and as Government? What caution we should take? Do we need to share the empowerment to younger generation?
In this presentation we are sharing our views which have been built up with experience and continuous interaction with different trainees. We are putting forward the answers to the posed questions to have a better understanding of why and how of upcoming trends.
2. Does plastic money have more empowering capabilities?
Plastic money has certain qualities, which make it more empowering over and above bank money through cheques. It ensures instant debit and credit to the bank accounts of purchaser of goods and its seller. It saves from botheration of carrying chequebook as well as preparing cheque by the purchaser. It also saves from botheration of sending it for collection by the seller besides the entire exercise of cheque collection & clearing system of banking industry. The cost of producing cheques and coding is saved. Plastic money system allows greater automation and is a step towards real time banking.
3. Is plastic money more empowering?
Non-handling of cash with the usage of plastic money empowers one and all to overcome the security risks. The card holder, acceptor of the card and the banker are free of security risks attached with cash handling.
4. Who all benefit?
Plastic money is beneficial to all:
a. Bankers benefit as the customer is happier and visits less for withdrawal and deposit purposes. It is important to mention that every visit of customer is a cost to the Bank. It is estimated that the cost of each withdrawal is Rs.70 to the Bank. There are lesser cheques for clearing meaning direct saving of precious time of bank officials.
b. The card holder is empowered with more time along with energy as he is saved of visiting bank and can concentrate on his work and enhance his productivity.
c. Banker is more competent to handle large number of customer with better service due to automation through plastic money. 24 hour banking and 7 days a week working facility to customer can be provided with little additional cost. The banker is confident to enhance customer loyalty and can attract young customers, who will sustain for the 50 years to come.
5. How do all benefit?
For a customer with the use of plastic money the monitoring of money spent becomes more systematic. The statement that customer gets from his bank, becomes an automatic record of his personal expenditure. It has the flexibility to meet the needs of customer, for example, banks issue cards for the either or survivor accounts to meet the individual needs of both the customers. The cost of having plastic money is gradually diminishing as the business is growing. Credit cards are preferred for big purchases as it facilitates repayment without getting into paper work of loans. Keynes had put forward the need for money to meet precautionary purposes. Plastic money helps in overcoming the need for money to meet its requirement during eventualities. If the cash is urgently needed it can also be had from ATM. These cards are acceptable internationally.
Bankers can issue debit card with greater ease with little follow up. Governments need follow up of transactions and business development to monitor the economy effectively. Usage of plastic money is a boon in this aspect. This has made the Governments to encourage plastic money. Government saves cost on printing and circulation of notes.
6. Is it endangering our sovereignty?
Yes we were late but we have not missed the bus. There is still scope for tripling the entire business. The earlier we understand the need to promote public sector banks businesses and the public sector banks understand to improve our services we have a good fortune. Certainly dominance of foreign banks is not desirable; therefore, there is a need to use them as catalyst of improving our services and giving them a feel of our strengths. Sovereignty of a nation grows with its companies holding greater share of its business. If we do not catch up then our dependency will increase and it shall not be good for our sovereignty. Therefore, domestic banks, both private and nationalized, must utilize their USP (unique selling point) of being Indian and more secured besides improving the services to match the best in the world. Of course We have the capability and shall never allow anyone to adversely influence our sovereignty.
7. Can it harm us?
Greater usage of plastic money is inevitable. If we do not serve the customer someone else will.
Plastic money has played an important role in enhancing the efficiency of different economies in the world. We need to understand the strengths, weaknesses, the opportunities and the threats of the business to minimize the possibility of any harm to our interests. We need to strengthen our strengths and allow the weaknesses to weaken. We need to build on the opportunities and guard ourselves against the threats. There is a need for greater collaboration among public sector banks to promote the business. An average Indian feels secured to keep his money with public sector banks. We need to encash the faith to the optimum. Identification of competent young staff and exposing them to training with time bound targets can prove optimisation of booming the business in the fertile environment.
8. Is it in our interest to promote the plastic money?
Studies have revealed that 20% of top customers account for 80% of our business. The private and foreign banks are targeting on this creamy layer that forms the base of our existence. We enjoy customer loyalty and we must be alert of the growing needs of these customers. Plastic money is one of their needs and we have no choice but to strengthen our services with it. It is the most important need for our existence. In the competitive scenario the customer compares what he is getting and at what cost. With the innovative service providing systems our competitors are increasing their geographical area coverage per branch with the help of plastic money. We need to strengthen ourselves with our innovative services further.
9. How it works?
The Bank issues plastic money in the form of a plastic card to its customer. The plastic is of certain specifications. If it is a Credit card the customer has an overdraft limit and interest is charged for overdrawn amount. In Debit Card the customer can withdraw and make purchases against the money in his account. The Smart Card is of prepaid amount and keeps on reducing as the money is utilized.
10. How we can optimize our empowerment as customer, as businessman, as banker and as Government?
We often hear others and observe ourselves that we are pressed hard with time. Here we have a tool in terms of plastic money that saves the precious resource of time of each human being. To empower ourselves we must optimally utilize the tool.
As a customer we must plan utilisation of our plastic money optimally to derive maximum benefit out of it. Maximize its utilisation in purchases. At times the sellers tend to charge 2% extra. It is illegal and complaint against them can be held seriously. We need to know the privileges we enjoy with the card. We can save our time to go to bank to do transactions. Similarly we can save our time in charging our mobile cards, railway ticket booking and so on. Each privilege attached with the card should be utilized optimally and we should march with the modern banking in order to enhance our productivity and generation of value for the economy.
As business man we should utilize receipt of payments through plastic money to bring home all the advantages with it. It has been observed that facilitation of customer helps him to take decision quickly. The spending through cards is growing at a pace of 40% per annum. We need to utilize the boom to empower ourselves as good business community.
As banker we should improve our services to issue plastic money and encourage customer not to come to branch for day to day transactions. Every time the customer uses or flashes his credit card it will promote the bank’s brand.
The Governments have always encouraged accounting of money and plastic money provides a unique opportunity to make it happen automatically. Government efforts to encourage banks and public to make the use of plastic money would empower it optimally. It will also reduce the menace of fake currency.
11. What caution we should take?
It is important to understand that to do transaction with plastic money one needs the card and mobile registered with SMS alert facility. These two should be kept carefully. Ensure that loss of the two should be informed to the Bank immediately on its helpline. To do e-commerce online the card should be registered for 3D security on the Bank’s website. The password chosen by the customer should be kept safely and not shared. The CVV number should be remembered and removed to prevent misuse of the card.
12. Do we need to share the empowerment with younger generation?
The younger generation has to be encouraged to have their accounts in Public Sector banks. The younger generation has yet to establish their loyalty to their banker and is the targets of Foreign Banks. We have to introduce the onset of new technology in the form of plastic money and empowering situation in nationalized banks to meet their modern expectations. Strategies in the form of incentives to those young Indians whose parents had accounts with Nationalized Banks can drive home an additional advantage. The younger may not form 100 per cent of today’s nation but they do form 100% of tomorrows. We need to cash the opportunity.
Plastic money has inherent strength and so do the Public Sector Banks. The need of the hour is to make best of the opportunity.