The ‘manual’ digital banking: the pain of banking with fake banks

Many banks in Uganda are very ridiculous. They proudly announce the digital-first banking agenda but go-ahead to enforce manual processes.  To access most services, many bank staff will ask you to ‘visit their nearest bank branch’.

It is painful and very unfortunate.

This week I have been frustrated by three banks. In part 1, I share my experience with a local bank I will refer to as Bank A. First, some context.

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1. In 2014, I wanted a second visa card to help with my online payments and transactions. Being a cybersecurity professional and researcher, I knew the high risks of on-line transactions. I wanted to discontinue the use of the Visa card linked to my savings account for all my online transactions. Equally, I could not take the risk of a visa credit card. I love to spend within my means. Over the years, I had and continue to investigate, several cases where many people have been duped and lots of money spent off their visa cards. That was a time before the Chip and PIN cards had arrived. It was easy for someone to steal one’s identity including visa cards and make purchases from e-commerce sites especially the dark world sites like pornographic sites. The solution was to acquire a visa debit card which I could load only when I wanted to transact. It was brilliant. That way, you did not have a lot of money that a cybercriminal could steal.
2. So, I looked for a bank that would issue me a visa debit card. I learned about Bank A and became a customer. As a market penetration strategy, this bank A offered a Visa debit card. This strategy would later pay off for liquidity mobilization. It worked wonders. New banks fail to make money due to a lack of liquidity or cash mobilization. The visa debit card issuance helped. One did not need a bank account to get a visa debit card. All the bank asked for was basic know your customer (KYC) details – your national ID, passport photo, utility bill, a mobile number, and the visa card would be issued within a week. It was brilliant and convenient.
3. This bank told us of its African footprint, boasting as a pan-African financial services group with subsidiaries in over 15 countries and offices in top global commercial centers including New York, and London. More so, it boasted about its digital-first strategy –advanced internet, mobile banking, and automated customer support system, promising to customers that “we make life convenient for you anywhere.”
4. Despite a lofty digital-first agenda promise, Bank A cannot renew the visa debit card without having me to first going physically to the bank branch. And one wonders what kind of customer convenience the bank talks about.
5. The visa cards usually expire after 3 years. My first card expired in 2017. I returned and got a new one, with an expiry date in 2020. Since I use the card for my online payments and subscriptions like iTunes, and more, I must get the card renewed instantly since these service providers bill monthly. Two weeks ago, late June 2020, my visa card expired. As you know, during these covid19 times, it is tricky to move out to the bank. I tried to contact the bank to have my visa debit card renewed. However, no one would help. The customer helplines do not work. When someone picks it, they do not know what to respond to since they are trained like ‘robots’ not human beings. “You have to come to the bank physically” the lady on the phone kept telling me. I asked for what they needed which I should bring to the bank.
6. Since this is a card renewal, I decided to request a friend to gather all the information required – my national ID, old visa card that has expired, all KYC information. Upon submission, the bank refused to accept the documents insisting that I must be physically present in the bank. It is ridiculous.
7. I requested to speak to the branch manager and asked why to insist on my physical presence. What is the risk here? I said I have a PayPal account which I have been using since 2010. Imagine if PayPal insisted on all her customers first physically visiting the company offices to be approved? How would it scale let alone serve customers better? Being Mr. Strategy, I am so passionate about strategy execution. I am sure somewhere the leaders in the boardroom spend more time talking about keeping customers away from the banking hall. While the front-line staff, want so many customers in the banking hall. To the branch operations staff, no customers in the hall, no cash. And that means no opportunity to make money. I asked, if a company like Amazon, required all vendors on its platform to first visit their head offices physically to be approved, how would the company grow? The manager, just said, “this is the policy.” This is what I call the manual digital bank. The leverage from technology is not optimized because the front-line managers have manual thinking. And will not use common sense to do the right thing in the name of regulatory requirements. No Central Bank says that all customers must visit the bank!

1. And that is why Bank A deserves the title of Stupid Leadership. They are not telling people why they put certain controls in place. And are not adjusting such policies to meet the needs of the time. In this coronavirus times, investing in customer convenience is critical.

What I recommend

1. The bank must update her indemnity forms so that customers can opt to renew their cards without physically visiting the bank, if so necessary. This option should be given to the customer at the time of first receiving their visa debit card
2. The main risk here is the loss of customer money, where someone takes the card and pin which they could use to transact. But this risk can be managed very easily.
3. First, the customer is required to send their official National ID number, which works as a remote identifier. The bank must require the customer to use any available means to take a digital photo of their national ID, both sides, and send them to the bank via email, WhatsApp, or Telegraph apps. The customer must then be asked to specify the official mobile number to use for mobile banking. And the customer must then send money to load their card via mobile money or any other easy option like Agency banking. Once registered, the PIN can then be sent to the customer’s official phone and the physical card (without a PIN written on a paper packed with the card) picked by the person or their representative.
4. That way, everyone is happy. And that is what customer convenience is all about.
5. I am always surprised at how banks talk about the digital agenda but fail to invest in basic initiatives to solve basic customer challenges.

Few banks are indeed implementing a digital banking strategy. However, many banks are still struggling. Some have been forced on a digital strategy from their head offices but have failed flat when it comes to execution. Why? A digital strategy requires a cultural shift. Total overhaul of the team’s thinking to embrace a digital agenda. And this calls for ongoing staff training and awareness about the need to embrace digital and habits needed to make it happen.

Do you need a strategy talk or Mr. Strategy to facilitate your next strategy conversation? Please contact us.

It is good to have a change. I have helped so many financial institutions in Africa, Middle East, and Asia with strategy facilitation, senior management, and board-level discussions to not only craft an organic strategy but to create the right environment for effective execution. The measure of a great strategy is in the results it delivers and not on how it looks nice on paper.

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Copyright Mustapha B Mugisa, 2020. All rights reserved.