Post on 28-Dec-2021
Chapter 5
Electronic communication in the banking sector
5.1 Introduction
Technology has had a profound impact on the service industry, and the
financial-services sector is no exception (Bitner, et al., 2000). Technology
shapes how services are delivered to customers. It plays an ever-increasing
role in the service industry, and has reduced costs for many organisations and
eliminated uncertainties for many customers. Dunkin (2004), however,
cautions that these technological changes raise important questions as to the
extent to which various customers may prefer face-to-face interactions and
communication to the new technology-enabled or electronic-communication
channels.
In this chapter, the focus will fall on the banking industry of South Africa and on
the various ways in which IT has changed the means of communication in
banks. Special emphasis will, in addition, fall on one bank in particular, namely
Standard Bank of South Africa, whose external communication with customers
and internal communication with personnel will be examined very closely.
External communication in the context of this study will include Standard
Bank’s self-service banking channels, or electronic communication such as
Internet banking, ATMs, telephone banking, cellphone banking and the Bank’s
official Website. It will also include a discussion on a new and innovative
channel entitled “the Messaging channel”, which serves to integrate various
messages such as SMSs, facsimiles and e-mail into one integrated channel.
Bank branches, however, are still deemed the main means of communication,
and are still considered the most important mode of distribution of services to
the banking customer.
Internal communications include communication through telephones,
broadcasting and the Internet. An investigation will focus on the intranet of
Standard Bank, as well as on the e-mail system used within the Bank for
personnel. This chapter will culminate in an overview of what e-mail could
ultimately mean to banks in general. Aspects identified in this section will
include e-mail marketing, customer service, security and fraud alerts, data
collection and secure online-chat services.
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Next, an overview of the state of communication in financial institutions
globally, as well as a closer look at how technology has influenced
communication within this industry.
5.2 Financial institutions in the global business environment
Rapid technological advances have wrought significant changes in the global
economic and business environment (Hway-Boon & Yu, 2003). Financial
institutions today are faced with even greater communication challenges than
in the past, as they are increasingly performing on the global stage (Bruno-
Britz, 2005), especially since good communication has always been the key to
transacting business of any kind. Banks should be extra vigilant in their
communications with their clients when compared to organisations in any other
industry, as they are, after all, dealing with their clients’ money and livelihood.
Communicating a bank’s brand and policies and serving customers across
borders in countless languages while operating within the bounds of a large
and ever-increasing number of regulations are vital functions to perform to
remain competitive and to retain the public’s trust. This is especially true when
dealing with something that could potentially be more valuable than money,
namely customer data.
Financial institutions are able to communicate better internally, thereby
creating networks that can span across a state, a nation or an international
border to facilitate all kinds of discussions externally. Discussions occur
through a collaboration space, teleconference calls, virtual meetings and/or e-
mails.
Banks should adopt new technology to meet the evolving communication
needs of both their employees and customers. Bruno-Britz (2005) indicates
that data security is a challenge that has to be factored into any discourse
about global banking and communications. Banks’ reputations are on the line
constantly, as they are required not only to perform every transaction correctly
but also to provide a safe-haven for information. Security issues need to be
addressed and dealt with on a round-the-clock basis, and banks need to be
proactive rather than reactive as far as security threats are concerned.
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In the banking industry, bank branches alone are no longer able to provide
banking services that could cater for today’s sophisticated and demanding
customer’s every need. The provision of banking services through electronic
channels, namely ATMs, Internet banking, telephone banking, cellphone
banking and banking kiosks, however, has provided an alternative means of
acquiring banking services more conveniently (Hway-Boon & Yu, 2003).
The next section will be used to look back on the history of the South African
banking industry, as well as at the key players influencing the current market.
5.2.1 The South African banking industry
Banking in South Africa has its roots in Britain and Germany. The primary
focus of banks in the 1900s was on the safekeeping of people’s money. As
the need for banks grew, a number of banks emerged, such as Allied (which
was a building society), Volkskas and Trust Bank. Building societies also
developed, providing long-term finance for housing and other luxuries. The
latter were represented in Saambou, United, SA Perm and NBS. In 1998, the
first amalgamated banking group was formed, which served to merge Allied,
Trust Bank, United Bank and Volkskas Bank together, to become ABSA.
Table 5.1 below is used to list some of the banks operating in South Africa at
present (IOB, 2003):
Table 5.1: Banks operating in South Africa
ABSA Mercantile Lisbon Bank
Africa Bank Limited MEEG Bank Limited
American Express Nedcor
Ansbacher (SA) Nedbank
Capitec Bank Limited Permanent Bank
First Rand Bank Rennies Bank Limited
First National Bank (FNB) South African Reserve Bank
Investec Stanbic
Imperial Bank Limited Standard Bank
The so-called “big four” banks, that is, Standard Bank, Nedcor, ABSA and First
National Bank (FNB), dominate the South African banking-industry scene.
Singh (2004) points out the market share of each in Chart 5.1 on the next page.
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Chart 5.1: Market share of the 'Big Four' South African banks (Singh, 2004)
Nedcor20%
First National Bank19%
Other11% ABSA
27%
Standard Bank23%
The big four offer, among others, products and services ranging from savings,
cheque accounts, transmission accounts and notice deposits to fixed deposits.
They also offer long-term finance, credit cards, short-term insurance, medium-
term investment, merchant banking and now, most importantly, Internet-banking
facilities.
Following, a discussion on one of the big four banks, Standard Bank, as to the
various means of communication it uses to reach its customers and staff
members.
5.3 Standard Bank of South Africa and communication
The table on the next page (Table 5.2) provides a summary of the two most
important layers of communication taking place within Standard Bank, namely
communication taking place externally between and among its customers and
business partners, and communication taking place internally between and
among its employees.
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Table 5.2: External and internal communication of Standard Bank (Author, 2006)
Means of communication
External communication Internal communication
Official Standard Bank Website
Internet banking (SSB)
Internet banking Intranet (Blue Matter) Internet
(Self-service banking) E-mail via Microsoft Outlook
Bank transactions (SSB) AutoBank/ATM and Kiosks Marketing of products and
services to customers
Cellphone banking (SSB)
SMSs Statistics, monitoring of
problems, approvals and information to staff via SMSs
Facsimile Facsimile
Cellphone
PDA/Smartphone − e-mail PDA/Smartphone − e-mail
Telephone banking (SSB) Private branch exchange (PBX)
Telephone calls (local, national and international)
Telephone calls (local, national and international)
Telephone
Facsimile Facsimile Television
Broadcasting Television Videoconferencing Self-service banking via
Internet, telephone and ATM Branches Face-to-face with managers, enquiry staff and tellers
The following section will be used to highlight a discussion on external means of
communication with customers, as summarised in the table above.
5.4 External communication with customers
The phrase “electronic channels”, also known as “innovative distribution
channels”, “Internet banking” or “technology-intensive delivery systems”, is a
collective term used to refer to the various methods of delivering financial
products and information through employing electronic media such as personal
computers, telephones, mobile phones and the Internet (Hway-Boon & Yu,
2003). Despite this dizzying array of electronic media, however, some
customers still insist on doing their banking through a bank branch walk-in.
Banks are, therefore, faced with the constant challenge of providing customers
with as wide a choice as possible when it comes to using banking channels.
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Standard Bank has adopted retail banking via e-channels as its vehicle for self-
service banking. Its self-service banking comprises the electronic channels
through which the Bank acquires customers and interacts with them. The
electronic channels can be divided into two categories:
• Information-delivery and customer-acquisition channels (sales)
The Web Channel comprises the Website of Standard Bank
(www.standardbank.co.za). The Website contains comprehensive
information on all of the Bank’s products and services, and it provides a
number of interactive tools and calculators that allow customers to
determine product affordability. In addition, the Website contains
application forms through which customers can apply for the Bank’s
products from the comfort and safety of their offices or homes, or even from
their PDAs or Smartphones.
• Transactional channels
Internet banking, cellphone banking, telephone banking and
ATM/AutoBanks allow customers to transact on their accounts any time of
the day or night. Customers may use any channel, or any combination of
channels.
Chart 5.2 below is used to depict the self-service banking channels provided for
customers by Standard Bank, which channels will be discussed next.
Chart 5.2: Customer Self-service Banking channels (Author, 2006)
AutoBank/ATM
The WebTelelphone
banking
Messaging
Internet banking Cellphone banking
5.4.1 The Web
The Web Channel is Standard Bank’s customer electronic-acquisition or sales
channel. Customers can apply for products and services by completing relevant
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application forms when visiting the Bank’s Website. The Website is one of the
Bank’s primary communication tools. It provides visitors with comprehensive
information on its products, services, financial affairs, history, corporate profile,
and so forth. The site also offers a host of tools, including calculators and a
branch locator.
The Web Channel also assists at implementing the Bank’s business strategy
and the day-to-day management of Blue Matter, the Bank’s intranet. Blue
Matter provides staff with important information on the Bank’s policies and
procedures.
5.4.2 Automatic Teller Machine (“ATM”) or AutoBank
An ATM is defined by Wikipedia (2005) as “an electronic device that allows a
bank’s customers to make cash withdrawals and to check their account
balances without the need for a human teller, or going into a branch”. Many
ATMs allow customers to deposit cash or cheques, to transfer money between
bank accounts, to top up cellphone airtime and even to buy postage stamps.
Most modern ATMs allow customers to identify themselves by inserting a plastic
card with a magnetic stripe that contains their account number. The customer
then verifies his/her identity by entering a passcode or Personal Identification
Number (“PIN”, for short).
At Standard Bank, the ATM is called the “AutoBank”. The AutoBank or ATM
channel includes AutoPlus, AutoBank, AutoCash and AutoBank E machines,
which are easy-to-use, self-service money-management systems. For security
purposes, a personal-identification number (“PIN”) is always requested to
access accounts at an AutoBank. These services maximise customer banking
flexibility when using an AutoBank and can include the following
(Anon. E, 2003):
• Linking accounts to customer ATM cards for easy access.
• Customers can do banking 24 hours a day, seven days a week at any
AutoBank throughout South Africa.
• AutoBank is a Saswitch partner, which means that, for a small additional fee,
the Standard Bank customer can use his/her AutoBank card at other
financial institutions’ ATMs displaying the Saswitch sign.
• Customers can check the details of their accounts without visiting a branch.
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5.4.3 Cellphone banking
Standard Bank currently offers a SIM-toolkit (“WIG” and “WAP”) cellphone-
banking service. Wireless Internet Gateway (“WIG”) is an SMS-based method
of cellphone banking. To use WIG cellphone banking, customers require a 32K
SIM card. They will also need to download the Standard Bank Cellphone
Banking menu onto their SIM cards.
Using cellphone banking allows customers the luxury of doing their banking at
any time of the day, no matter where they are, and at a reduced cost. It is very
user-friendly, allowing the customer to perform various tasks using his/her
cellphone, which include
• making a balance enquiry
• getting a mini-statement with details of the last five transactions
• transferring money between accounts
• paying accounts
• applying for an overdraft limit
• increasing or decreasing an overdraft limit
• receiving financial information
• recharging Vodacom and MTN prepaid airtime.
5.4.4 Internet banking
“Internet banking” or “online banking” is a term used for performing transactions,
payments, and so forth, over the Internet through a bank’s secure Website.
This can be very useful, especially for banking outside bank hours, and banking
from anywhere where Internet access is available (Wikipedia, 2005).
Internet banking became available in South Africa in 1996. Although the new
technology started out fairly slowly, customers were soon attracted to the
convenience, safety and low cost of this mode of banking. More and more
people are now using Internet banking as their preferred channel for banking
matters. Internet banking usually offers electronic account payments and the
downloading of bank statements for importation into a personal-finance
program. A growing number of banks even operate online to the exclusion of
every other type of service. The year 2001 saw the launch of a bank called
TwentyTwenty, a most successful online-operating bank in South Africa.
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Singh (2004) concluded from his survey that Standard Bank customers’
preferred mode of banking is Internet-banking, as illustrated in Chart 5.3 below:
60%
27%
10%3%
0%
20%
40%
60%
80%
100%
StandardBank
ABSA Nedbank FNB
Chart 5.3: Internet facilities of banks most used by customers (Singh, 2004)
Chart 5.4 below is used to track the rise in Standard Bank’s monthly Internet-
transaction volumes from 2004 to 2005 (Edkins, 2006):
Chart 5.4: Standard Bank's Internet Banking volumes for 2004 and 2005 (Edkins, 2006)
0
5000000
10000000
15000000
20000000
25000000
JAN
FEBMAR
APRMAY
JUN
JUL
AUGSEP
OCTNOV
DEC
Volume 2004Volume 2005
Edkins (2006) found that, by the end of January 2006, Standard Bank had
accumulated the following Internet-banking statistics:
• 30 million transactions are being performed every month.
• R15 billion is transacted per month on average.
• 454 000 customers are using Internet banking.
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Most customers are hesitant to bank online unless they can rely on their bank’s
Website technology, and although banks are constantly improving their online
security, it is not enough; banks also have to publicise these improvements in
the media in order to instil greater customer trust (Singh, 2001).
5.4.5 Messaging
The Messaging Channel of Standard Bank is the brainchild of an innovative
idea that enables secure electronic communication (via fax, e-mail and SMS)
with customers through their preferred medium and which relays information to
various business units. Blom (2005) explains its workings in Figure 5.1 below:
Figure 5.1: The Messaging Channel of Standard Bank (Blom, 2005)
Blom (2005) also indicates that the Messaging Channel has improved
communication with customers externally and with business units internally.
Table 5.3 on the next page is used to mirror customer perspective before and
after the introduction of the Messaging Channel. Table 5.4, in its turn, is
indicative of the implications of the Messaging Channel before and after its
implementation, as from the Bank’s perspective:
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Table 5.3: Before and after the implementation of the Messaging Channel from a
customer perspective (Blom, 2005)
Before Messaging Channel After Messaging Channel The customer received fragmented
messages form different business units at a time dictated by the business units.
The customer now receives consolidated messages (when appropriate) at a time dictated
by the Messaging Channel. The customer was required to go
through multiple registrations for each product and service.
The customer now manages one profile from one place for all products and services.
Customer message preferences on media and products were not recorded.
Customer message preferences on media and products are recorded at the point of
central registration. The customer was serviced from many fragmented databases, as the view was
not consolidated.
Customer enquiries are attended to from one central database.
The customer needed to phone or visit more than one business unit, resulting in
some requests getting lost.
The Messaging Channel ensures end-to-end, integrated fulfilment of outbound and inbound
communication through the Customer Call Centre (CCC), branches and other fulfilment areas. The customer now has more ways to
communicate with the Bank.
Table 5.4: Before and after the implementation of the Messaging Channel from the
Bank’s perspective (Blom, 2005)
Before Messaging Channel After Messaging Channel
Insufficient control from IT security, Group Marketing, Communication and Legal on
business units sending messages.
The Messaging Channel has a governance structure representation from Security and Group Marketing. Communications and
Legal are engaged in the messaging sign-off procedure.
Fragmented messaging was done across all business units, with the result that the Bank
did not have a single view of what it was sending to its customers. The Bank was also paying elevated prices owing to fragmented
rather than aggregated volumes.
There is a centralised query system for the CCC, branch and other support areas. Messaging standards are applied to
achieve economies of scale. Networks are integrated, and optimal infrastructure is in
place and licensed.
No Customer Messaging Profile and Registration (CMPR) process was available
with ongoing updates.
Messaging Channel records all messages sent to customers, as well as their delivery
status. This information can be passed onto business units for the continuous
updating of customer information.
The Messaging Channel is a unified and integrated communication strategy.
This strategy will save time and costs and will increase security. The next self-
service banking channel that will be discussed is that of telephone banking.
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5.4.6 Telephone banking
Ahmad and Buttle (2002) indicate that telephone banking is a channel for
delivering banking services. Banks use it to supplement their traditional way of
delivering services through branch networks. The main benefit to banks is a
lower cost profile compared to the cost of providing services via branches.
The benefits to customers for using telephone banking are the convenience and
control. Customers are able to do their banking 24 hours a day, seven days a
week, at places convenient and private to them, and at reduced costs. It is no
surprise, then, that the telephone-banking service is growing at such
exponential rates (Ahmad & Buttle, 2002).
In the case of Standard Bank customers, they stand to derive the following
benefits from using telephone-banking services (Moody, 2005):
• Should the customer have access to a fixed line or cellphone, he/she could
call Standard Bank from anywhere in the world, at any time.
• The customer has access to an automated service that can be personalised
to suit his/her needs.
• There are no subscription fees or sign-up costs.
• Bank accounts are only a phonecall away.
The Customer Contact Centre (“CCC”, for short) assists many customers on
registering for telephone banking. It also supports a number of products and
services offered by the Bank, which will be discussed next.
5.4.6.1 The Customer Contact Centre (“CCC”)
The CCC is the primary contact point for Standard Bank customers. Call
centres are defined as “a focus point of contact with the customer when
communicating via electronic media”. In- and outbound call centres are also
included in this definition. Various services at the CCC offer support to most
products offered by the group, and technical experts are available at the
helpdesk area to assist customers at accessing the Internet-banking site.
The ever-expanding media through which customers interacted with the Bank
(e-mail, voice mail, facsimile and telephone calls), in turn, gave rise to expanded
CCCs, which evolved from mere “hotlines” offering a handful of services via the
telephone to fully-fledged one-stop call centres. Some of the vast array of
services and functionalities offered by the CCCs are highlighted in Table 5.5.
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Table 5.5: Customer Contact Centre services and functionalities (Anon. K, 2005)
Area Functionality
Service fulfilments
• Merging of customer records.
• Answering of voicemail queries.
• Faxing of statements.
• Dealing with electronic account-payment queries.
• Dealing with cellphone-banking queries.
• Internet-banking escalation, PIN resetting and
refunds.
• BlueBean queries and transactions.
E-mail unit
• Support related, which are specific queries to
Internet, Home loans and BlueBean.
• General information is any information related to
general queries and information.
Internet banking
• General Internet-banking information.
• Assistance with Internet-banking site navigation.
• Switching customers onto Internet banking.
• Technical assistance.
• Guiding customers as to effecting transactions and
account payments.
Telephone
banking
• Providing general banking information.
• Assisting clients at using the automated telephone-
banking system.
• Assisting clients at effecting various transactions,
such as balances, statements, ordering of cheque
books, making inter-account transfers, paying
accounts, loading off MTN and Vodacom prepaid
systems, voicemail queries, registration to Voyager
programme, cross and up sell of various banking
products.
The sections above were used to investigate different electronic means of doing
business via various electronic channels. The following section will be used to
focus on branches, which still serve as the hub of business for many banks.
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5.4.7 Branches Today, banks may still have branches, but thanks to wonderful advances in
technology, they may also be represented by a telephone or cellphone in the
customer’s home, a plastic magnetic stripe on a debit card or a self-service
cash-dispensing machine on the street (Prendergast & Marr, 1994). Bank
branches, therefore, serve two main functions in the modern-day scenario:
• They broaden the service level for customers by providing access points in a
number of different locations.
• They act as places of money (that is, cash and cheques) transfer, facilitating
the physical movement of cash and cheques from sender to receiver.
The future of bank branches, however, has long been a topic of debate, but
Prendergast and Marr (1994) foresee that this time round, we may indeed see a
drastic reduction in their numbers. They hasten to add, however, that self-
service technology will always remain a complement to, rather than a
replacement of, the real thing. It is already evident that cross selling of bank
products through different channels complements the bank branch and justifies
the existence of both human tellers and the bank branch. Jones (1996)
concludes that branch location is still seen as the single most important
influence on a customer’s choice of a bank.
Standard Bank has the following statistics on the number of Standard Bank
branches, service centres and AutoBank E Centres currently operating in South
Africa, as indicated in Table 5.6 below:
Table 5.6: Standard Bank of South Africa’s current branches, service centres and
AutoBank E Centres (Lopes, 2006)
Province Branches Service Centres AutoBank E Centres
Eastern Cape 12 57 16 Free State &
Northern Cape 9 77 7
Western Cape 28 85 9 KwaZulu-Natal 31 64 21
Limpopo 7 19 13 Mpumalanga 9 38 12 North West 7 26 8
Gauteng (Jhb) 53 70 29 Gauteng (Pta) 16 18 5
Total 172 454 120
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In addition, Lopes (2006) indicates that there are, on average, approximately 25
staff members working in a branch. Standard Bank has 11 000 permanent staff
members presently working in branches all over South Africa, and
approximately 800 flexi-staff members deployed in the branch network.
It would be safe to say, then, that even though branches are still deemed pivotal
to business (Lopes, 2006), it should be noted that customers are increasingly
making use of multiple mediums and channels of communication. He goes on
to point out that branches are very important for the cross selling of products
and the acquisition of walk-in new business. During the technology boom,
banks around the world believed that electronic service and delivery would
eventually replace the traditional branch, but over the past five years, more and
more evidence has surfaced to support the need for a strong presence in the
form of a branch network.
Lopes (2006) goes on to say that customers generally feel more at ease when
discussing money matters with someone they can see and relate to. Electronic
delivery and services are often used as a supplementary channel to the branch
network, with trends reflecting customers using multiple delivery channels.
The next section will be devoted to a closer look at communication internally
between and among employees.
5.5 Internal communication between and among employees
Workplace or internal communications have improved in leaps and bounds in
the course of the 21st century. Today’s employees have more ways than ever
to stay in touch − from their desk phones, mobile phones and PDAs to pagers,
e-mail, instant messaging, facsimiles and tele- and videoconferencing. For
many employees, “work” has, in fact, become synonymous with a series of
activities, rather than with a physical location. And, given the capabilities of our
modern-day real-time communication systems, “work” has also taken on an
immediacy hitherto unknown. In this way, turn-around times for problem-solving
and dealing with requests have shrunk to a mere fraction of those of yesteryear.
The next section will be devoted to a closer look at the internal communications
of Standard Bank and at the way in which employees interact with each other
via the messaging systems and real-time communications, such as
broadcasting, telephones, the Internet, the intranet and e-mail systems.
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5.5.1 Broadcasting
Frazer (2005) indicates that Standard Bank has a videoconferencing
infrastructure in terms of which 30 units have been installed by the Bank at the
turn of 2005. The average cost per unit was R65 000. He also states that the
operational cost of these 30 units was R156 000 per annum for maintenance
and R98 000 per annum for dial up. Executives and directors use these units
locally, nationally and internationally.
Standard Bank also broadcasts recorded programmes over televisions in some
head offices, such as the head offices in Johannesburg, Durban and Cape
Town. It also broadcasts live cricket over these televisions, since Standard
Bank is the main sponsor of the national teams and the Proteas.
5.5.2 Telephones
Standard Bank has a variety of phone-call usages. Frazer (2005) has gathered
a few statistics on the use of telephones in Standard Bank.
5.5.2.1 Internal-call volumes
The phrase “internal-call volumes” refers to calls that do not travel through the
Telkom network. The volume of extension-to-extension calls for 2005
throughout the Standard Bank Group was 49 million calls.
5.5.2.2 External-call volumes
The volume of calls made via the Telkom network originating from extensions within
the SBIC Group during 2005 amounted to 101 million and includes all calls (local,
national, international, mobile and other), as indicated in Table 5.7 below: Table 5.7: The volume and cost of telephone calls made by Standard Bank via the
Telkom network in 2005 (Frazer, 2005) Call type Volume Cost
Local 41,0 million R 38,0 million
National 22,0 million R 46,2 million
International 0,5 million R 2,2 million
Fixed to mobile 32,0 million R 97,3 million
Other (Telex &
Smart Access) 5,5 million R 13,0 million
Total 101,0 million R196,7 million
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5.5.2.3 Private Branch Exchange (“PBX”)
The original switchboard has been replaced with automated electromechanical and
electronic switching systems. Using a PBX saves connecting all of a business's
telephone sets separately to the public-telephone network. Apart from telephone
sets, fax machines and modems, many other communication devices can be
connected to a PBX.
There are 700 banks that owned and rented PBXs within the Standard Bank Group
as at the end of 2005. The annual cost for 2005 was R12,9 million for the Telkom-
rented PBXs, and R3,5 million for the maintenance of Bank-owned PBXs.
5.5.2.4 Cellular phones
The use of cellular phones accounts for the Bank’s biggest expense as far as
phonecalls are concerned, because it includes both phone calls and SMSs.
• Cost for Standard Bank’s cellphone usage
The total cost paid to Vodacom, MTN and Cell C during 2005 for cellphone
usage was R8,9 million. This cost includes refunds to staff for business use of
their private cellphones, as well as for Bank-owned phones, as it is not possible
to separate these amounts.
• Cost of cellphone calls
Total cost of fixed-to-mobile calls for 2005 was R97,3 million for the SBIC Group
(this constitutes the cost for calls from our PBX systems to cell numbers,
payable to Telkom).
• Number of SMSs Standard Bank sent to internal staff and customers
A total of 18 million SMSs were sent internally and to customers during 2005, at
a total cost of R3,78 million (18 million x 21 cents).
• Cost of these SMSs
The cost per SMS is 21 cents.
5.5.3 The Internet, intranet and e-mail systems
This section will be devoted to a closer look at the network systems within
Standard Bank, starting with its Internet facility.
5.5.3.1 The Internet
Standard Bank Internet Information Protection Policy states that access to an
Internet session is restricted to business purposes explicitly authorised by
Management. Non-Bank uses, such as downloading of games, viruses,
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inappropriate graphics, picture files, illegal software and other files for personal
use, are strictly prohibited. The IT Division also has the right to monitor any
activity and/or outgoing Internet traffic.
In addition, no sensitive data such as customer banking details (account
numbers and balances) may, in terms of the Policy, be transmitted across the
Internet in clear text. All the banking applications have to be encrypted end-to-
end, using industry-standard mechanisms.
As a further precaution, the number of staff members who enjoy access to the
Internet are limited, thereby further restricting its use for business purposes
only. These members may include market researchers, the Internet Website-
channel staff and the Intranet-channel staff.
5.5.3.2 The intranet
The Standard Bank intranet has been dubbed the “Blue Matter”, a name derived
from the fact that our brains are largely made up of grey matter. The name,
therefore, is representative not only of human intelligence, knowledge and
information but also of our empowerment and individuality. The Blue Matter has
been developed with Standard Bank staff members as its main focus.
The principal aim with the design of the Blue Matter was to create an intuitive,
interesting and valuable tool, the implementation of which would allow staff
members to connect to all the information they may need effectively to execute
their work functions. And it has since proven itself to be an invaluable, single-
access, consolidated online-information solution. Other benefits to be derived
from the intranet are as follows (Baines, 1996):
• It delivers information on demand through effective information portals.
• It guarantees that the information is the latest and most accurate available.
• It allows information to be “owned”, contributed and maintained by
individuals who would as a rule prepare and maintain the original
information.
• It allows staff members to gain access to the latest versions of regulations,
policies and product and service catalogues.
• It acts as a central document-delivery system through which to distribute
training and learning programmes.
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It is evident from the foregoing that the intranet offers Standard Bank staff the
possibility of increased productivity, lower cost, with faster delivery of
information to their desks. It also allows staff to become familiar with the
network culture and it electronically enables the organisation to conduct
activities such as procurement online. In addition, the Blue Matter enables
employees to do their banking online through the Internet-banking portal.
5.5.3.3 E-mail systems within Standard Bank
Standard Bank uses Microsoft Exchange Server as its e-mail system. This
software program runs on servers that enable users to send and receive e-mail
and other forms of interactive communication through computer networks. It
collaborates with software client applications such as Microsoft Outlook,
Exchange Server and other e-mail client applications.
E-mail messages are sent and received through client devices such as a
personal computer, a workstation or a mobile device such as a Smartphone/
PDA or a Pocket PC. Staff members are connected to a network of a
centralised computer system compromising servers or a mainframe computer,
where e-mail Inboxes are stored. The centralised e-mail servers connect to the
intranet and private networks, where e-mail messages are sent to and received
from other e-mail users.
5.5.3.4 The functionality of Outlook Express
Outlook offers staff members integrated collaborative messaging features such
as scheduling, contact and task-management capabilities. Outlook also
supports staff members using mobile devices such as Smartphones/PDAs to
synchronise their Inbox, Calendar, Contact and Tasks list, so that the users can
check appointments and other important information. Mobile-device browsers
are also supported through Outlook Mobile Access, which enables HTML,
compressed HTML and Wireless Application Protocol (“WAP”, for short).
The collaboration features of Outlook help users share information quickly and
efficiently. Typical collaborative scenarios include maintaining a shared or
global address list that all members of staff can view and edit, scheduling
meetings that include people and conference rooms (Anon. G, 2004). Standard
Bank has administrators who develop rules and policies that users must follow.
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The next section will be devoted to a closer look at how an office worker in
Standard Bank has to manage information with the different information
systems at his/her disposal, and at how he/she would use these systems in
his/her communication.
5.5.4 Information management of the information worker in Standard Bank
The ability of information workers or an organisation such as Standard Bank to
accomplish any given task or to realise an objective is directly related to the
ability to find the right information at the right time (Nortje, et al., 2004). The
said authors go on to point out that the functions of the information worker can
loosely be divided into four main categories, namely managing documents,
communication, managing information and decision-making, and that different
information systems are used to perform each of these functions (as discussed
in Chapter 2). The factors that influence the information environment of
information workers in Standard Bank are listed in Table 5.8 below:
Table 5.8: Factors that influence the information environment of the information
worker in Standard Bank (Nortje, et al., 2004) Function Information system
Managing documents
− creation, storage, retrieval and
dissemination
Word processing
Desktop publishing
Document-imaging systems
Communication
− individual, group and team
Networks such as Internet and intranet.
Communication tools such as
facsimile, modems, voice mail, e-mail,
videoconferencing, cellular phones,
PDAs/Smartphones, groupware, etc.
Managing information
− formal and informal information
Spreadsheets
Database-management systems
Decision-making
− strategic, managerial, office and
operational
Decision-support system
The next section will be used to investigate how banks can use e-mail
communication themes in their retail business, with special reference to the way
in which Standard Bank uses these e-mail communication themes.
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5.6 Banks and e-mailing with customers
In 2005, the Council of Financial Competition (“CFC”, for short) conducted an
investigation into e-mail communications within banks. The Council concluded
as follows:
• E-mail is the most cost-effective channel for marketing products and
services, yet one of the least developed among financial institutions. For
marketing purposes, banks conducted e-mail campaigns as a cost-effective
addition to traditional marketing efforts.
• Since 2002, two key developments have occurred:
1. The rise in popularity of e-mail as a means of communication
E-mail communication has become the primary mode of business
communication world-wide. Electronic-messaging channels are now
considered viable media for taking orders, sending approvals and
contracts, and for discussing sensitive financial issues. In addition, most
financial institutions want to increase their e-mail interaction with their
customers.
2. The growth in e-mail and online fraud
The incidence of online fraud, such as phishing attacks, has raised
dramatically. Webopedia (2006) defines “phishing” as “The act of sending
an e-mail in an attempt to scam the user falsely claiming to be an
established legitimate enterprise in an attempt to scam the user into
surrendering private information hat will be used for identity theft. The e-
mail directs the user to visit a website where they are asked to update
personal information, such as passwords, credit card and bank account
numbers. The website however is counterfeit and set up only to steal the
user’s information”. Light (2005) goes on to point out that any personal or
financial information entered at such a site is routed directly to the
scammer instead.
The CFC also identified five different themes in the e-mail communication
channel used by financial institutions. Chart 5.5 on the next page is used to
indicate these themes, which will be taken under discussion in the next section.
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Chart 5.5: E-mail communication themes in financial institutions
Online interactive chat services
Data collection
Customer service
Security and fraud alerts
E-mail marketing
5.6.1 E-mail marketing
Financial institutions use the e-mail channel to market a mix of products,
services and online functionalities. They predominantly target existing retail
banking customers. Policies should be in place to restrict marketing to only
bank-related matters. E-mail structures in financial institutions may include one
or more of the following varieties:
• In-house operation
• External vendor
• Combination structure.
Banks generally use their Internet-banking customer database to target their
customers. The e-mail volume may vary in terms of the marketing campaign,
for example:
• Marketing campaign, for example, competitions such as car give-aways.
• Product marketing, for example, investment products, deposits, loans and
Internet-banking products.
• Online services and new online functionality marketing, for example, bill-
payment alerts.
Banks stand to derive the following benefits from e-mail marketing (CFC, 2005):
• Cost benefit as key advantage.
• Customer feedback, such as improving effectiveness and response times.
• Increased Internet-banking usage.
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• Improving marketing effectiveness, for example, to test e-mails on a small
population first before launching a big campaign.
• E-mail marketing also enables the bank proactively to communicate with
existing prospects and customers instead of passively waiting for them to
return to the Website, to visit a branch or to call on the phone.
The benefits derived from most traditional types of marketing and advertising
are very difficult to measure. With e-mail marketing, on the other hand, one can
easily measure the number of e-mails sent and the rates at which e-mails are
opened or sent back as bounce-backs, “Unsubscribe” and click-throughs
(Goodman, 2005).
5.6.2 Customer services
A large number of financial institutions use the e-mail channel to deal with
customer-service issues. Banks should be very conscious of the security issues
surrounding this channel, however. Generally, banks do not send confidential
information such as account numbers via external e-mails, unless such
information is masked or encrypted. External mail consists of e-mail sent to a
customer's personal e-mail account over the Internet. External e-mails are
insecure and can be interrupted by a third party. Alternative channels are used
to reply, such as telephone banking or a secure-messaging system on the
bank’s Internet-banking Website. Standard Bank’s Messaging Channel is an
example of the latter system.
Banks should provide additional secure-messaging services for customers on
their Internet-banking account facilities. The messaging service can only be
accessed by the customer when he/she has logged onto his/her account using
his/her personal password and PIN. The secure-messaging service enables the
bank and the customer to pass confidential information back and forth.
Standard Bank enables Internet-banking customers to send messages to its
branches. As was explained previously, this can be done once customers have
registered for Internet banking or for a self-service banking profile. Customers
log onto their Internet-banking account by indicating their ATM card number,
customer-selected PIN or CSP and a password. Customers then proceed to
the account-management portal, which will enable the Secure Message page,
as in Figure 5.2 on the next page. The grey areas indicate instances where
customers have to select and fill in details in order to send a message:
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Internet banking (demo) My Accounts > Account Management > Secure Message
Secure Message Monday, 6 February 2006
Please select the account you want to transact from:
00-000-00 current acc ^ Send a message to your branch by typing up to 200 characters in the message field below.
One of our branch consultants will contact you within 24 hours to confirm you request. The branch operating hours are Monday to Friday, 9am to 3:30pm and Saturdays from 9am to 11pm.
Account number 00-000-00
Account name Demo current acc
Branch name Krugersdorp
Account type Current account
Home telephone number 011 123-4567
Business telephone number 011 123 4568
Message reads (maximum length is 200 characters)
^ >
Figure 5.2: Layout of Standard Bank’s secure-messaging service demo Webpage
(Anon. F, 2003)
5.6.3 Security and fraud alerts
Most banks use their online platforms to notify customers of security and fraud
alerts on a global and national level. This, however, does not filter to the
individual level. A large number of banks prefer to make courtesy calls to
customers when they notice suspicious activity on their accounts. They are
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extremely aware of fraud fears and take significant measures to protect their
customers via data security and compliance policies.
In addition, a bank can also install a security solution to deal with security issues
such as spam and viruses. It is of the utmost importance to protect the
organisation against liability, risk and loss of productivity, and to retain its
customers.
5.6.3.1 Phishing
Butler (2005) states that a phishing attack consists of three distinct parts: the
e-mail message; a fraudulent Website and a hyperlink that leads to the
fraudulent Website. This is explained by Butler (2005) as follows:
1. The e-mail message, appearing to come from a legitimate source, is
carefully designed to trick the recipient into providing sensitive personal
information, which the phisher uses in a fraudulent manner. The message
usually contains a section (the 'bait') that requests the user's assistance in
solving a problem.
2. The fraudulent Website that the phishers set up mimics the graphics and
formatting of a legitimate Website as closely as possible, in order to mislead
the victim deliberately. Well-known online brands are often targeted in this
way. On the Website, the user is prompted to provide confidential personal
information, which the phisher harvests for nefarious ends.
3. The name of the fraudulent Website is hidden in an embedded hyperlink in
an HTML-formatted e-mail in order to disguise the address of the actual
Website the user will be taken to when clicking on the hyperlink.
In November 2005, fraudsters have launched two separate phishing attacks
against Standard Bank Internet-banking and credit-card users.
Panagiotopoulos (2005) indicates that the fraudsters used unsolicited e-mails to
entice unwitting customers to disclose their personal details in order to obtain
access to their bank accounts. He adds that Standard Bank’s IT Security
Division contained the threat in the first hour and a half of each attack, and that
Standard Bank’s Internet service still boasts a 100% safety record.
Panagiotopoulos (2005) has also gathered statistics on just one day in
November 2005 of attacks launched against Standard Bank in Chart 5.6 on the
next page.
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Chart 5.6: Standard Bank's phishing attack statistics in November 2005
40%
56%
4%
Legitimate Mails Undeliverable/Return External MailsBlocked for Phishing Mails Internal
5.6.3.2 The Mail Marshal program
Standard Bank uses a security program called “Mail Marshal” to monitor,
evaluate and regulate all incoming external e-mails. “Mail Marshal” is an e-mail
security solution specifically designed to deal with e-mail viruses, Trojans, spam
and other malicious attacks and related issues. “Mail Marshal” allows the Bank
to apply its policies and security rules to e-mail at its corporate gateway, thus
defending the Bank against the risks and disadvantages of e-mail use. This
e-mail solution enables the Bank to use e-mail safely, securely and productively.
“Mail Marshal” provides many powerful features to scan and filter all external
incoming messages. Panagiotopoulos (2005) indicates that this software can
scan the content of e-mail messages and attachments as they enter or leave
the Bank. Benefits to be derived from using this solution include the following:
• Blocks spam with a detection rate of 95%.
• Scans for viruses using third-party virus scanners.
• Scans message text, header and attached documents for the presence of
particular phrases.
• Recognises the type and size of attached items.
• Performs many other checks of message content, as specified by the Bank's
e-communication policies and rules.
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5.6.3.3 Legislation and the bank
Hudson (2005) points out that as e-mail becomes more and more popular as a
means of communication between the bank and its customers, it has become
essential for banks to maintain and control the medium to ensure that it is not
prejudiced in any way. She goes on to say that the increased legal
requirements and responsibilities with respect to the retention, destruction and
restoration of electronic records in line with the requirements for paper-based
records require banks to act proactively to avert a whole host of legal problems.
In addition, should the bank be unable to comply with such legislation, the
directors would be responsible for risk management and for ensuring that
effective internal controls be put into place, as they could be held personally
liable, should the bank be found lacking in this respect (Hudson, 2005).
Following, some of the applicable legislation, laws and guidelines governing
electronic-records management:
• The Electronic Communications and Transactions Act − makes it clear that
electronic communications are to be treated in the same way as other more
traditional means of communication. Specific rules govern the way in which
electronic communications should be managed in order to maintain them
and keep their integrity.
• The Promotion of Access to Information Act − indicates that once a request
to access has been received, steps must be taken to preserve and ensure
the integrity and the originality of the records requested.
• Companies Act (Regulations for the Retention and Preservation of Company
Records)/Close Corporations Act (Administrative Regulations) − sets out the
rules for the retention of company documents for a prescribed period of time.
• The Income Tax Act/Value Added Tax Act − includes specific requirements
for transactions in terms of which documentation is exchanged electronically.
• Supreme Court Act − the rules with regard to the discovery, inspection and
production of documents require that a discovery request be complied with
within a certain period of time, failing which the party could be compelled to
do so under the threat of a fine, or the directors of the company could be
jailed.
• FICA − regulates consumer protection and communication records retention.
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• FAIS − only licensed providers are allowed to give financial advice to clients,
which should be explicitly stated in all communications, including e-mail.
• The Interception and Monitor Prohibit Act − legislates how and when
communication may be monitored and intercepted.
Hudson (2005) adds to this that the banks use e-mail extensively as a business
tool, as well as a private-message repository for their staff, and that, as such,
they need to protect themselves in terms of legislation requirements that apply
to them, as well as in terms of the costs that may arise out of non-compliance.
5.6.4 Data collection
The main method of data collection across banks is through the registration
process for Internet banking. Despite this, the percentage of customers for
which banks have valid e-mail addresses is low. Data collection, therefore, is
not the only challenge banks are faced with, as maintaining valid and active
e-mail addresses also poses a major problem.
Methods of data collection can include Internet banking and account opening,
as well as opt-in (CFC, 2005). Standard Bank uses Internet-banking and
account-opening application forms as a way of collecting e-mail addresses from
its customers.
Challenges of data collection include the following (CFC, 2005):
• Voluntary participation, which customers could refuse.
• Overcoming customers’ spamming fears.
• Maintaining an active and valid e-mail address.
• Databases need to synchronise accounts, for example, online accounts and
credit-card accounts.
5.6.5 Online interactive chat service
Online interactive chat services are not yet very successful in the financial
industry. It is considered a major security risk and an expensive operation.
Employees will also have to be on duty 24 hours a day and will have to gain
extensive knowledge about banking products and services, as well as the chat
service being used. Alternatively, banks could specialise in having a rapid
response rate to e-mails of approximately two hours or less. Response times
can be monitored to ensure rapidity.
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A certain bank in the USA has successfully implemented an interactive chat
channel and has been communicating with its customers in this way for more
than 18 months now, with this means of communication proving very popular
with its customers. The bank does not market this service, however, as it does
not continuously staff the channel. When a staff member happens to be
available to discuss with a customer over online chat, that staff member goes
online and engages with the customer. By adopting this approach, the bank
finds that customers are not disappointed, should the opportunity to talk to a
member of staff online not present itself. Instead, customers are pleasantly
surprised when it does happen. Lerche (2005) states that Standard Bank does
not have the security capabilities to implement such a service, however, and
goes on to point out that staff in this service would have endless working hours,
and that it would be too costly and risky to maintain.
5.7 Conclusion
In the world of banking, the developments in information and communication
technology have had an enormous effect on the development of more flexible
payment methods and more user-friendly banking services. Online-banking and
other electronic-payment systems are new, and the development and diffusion
of these technologies by financial institutions is expected to result in a much
more efficient banking system (Akinci, et al., 2004).
New technologies offer banks alternative or non-traditional service-delivery
channels through which to deliver banking products and services to customers.
This is done conveniently and economically, without diminishing the existing
banking level. This chapter was devoted to taking a closer look at the
electronic-communication system of Standard Bank in South Africa.
Standard Bank’s external communications with customers were discussed
under the topics of self-service banking and branches. Self-service banking
comprises electronic means of banking and includes the Website,
ATM/AutoBank, cellphone banking, Internet banking, the Messaging Channel
and telephone banking.
Blom (2005) has created an innovative strategy to integrate all messages from
customers, including faxes, SMSs and e-mails, into one channel, called the
“Messaging Channel”. This is based on a second-generation enterprise
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communication solution (“ECS”, for short) that includes unified-messaging
applications and unified-communication capabilities as part of its features.
In the section on internal communication, topics such as broadcasting,
telephones and Internet usage were taken under discussion. Standard Bank
has an intranet that constitutes a single, integrated, collaborative information
solution for its staff members. The intranet also has all the most recent news,
developments, policies and information available to personnel. In addition, the
Bank tries to meet challenges regarding e-mail, such as compliance concerns,
information theft, viruses, spam, message volumes, effective management and
corporate responsibility to its employees.
Blom (2005) indicates that, with all the messaging and real-time technologies
that allow greater access to mobility and the expectation of an immediate
response, Bank employees and Bank customers could easily fall prey to feeling
overwhelmed and pressured. Office workers, it would seem, need to acquire
certain management skills when called upon to use these information systems.
This chapter was also used to identify and discuss certain e-mail themes in
banks, with special reference to those in Standard Bank. These themes
included
• e-mail marketing of products and services
• customer services, such as e-mail response times and query management
• security and fraud alerts, such as phishing and legislation
• data collection of e-mail addresses and the maintenance thereof
• secure online chat services.
The next chapter will be devoted to the empirical part of the thesis, where the
survey and its results will be made known and discussed.
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