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Saturday, August 04, 2007

Alternate Delivery Channel Vendors in Pakistan

Banking started with the concept of "branches" and a "head office." In a centralized database setting, all accounts and related information is stored in the head office. With good infrastructure in place, it's possible to provide some cool services like "online banking" where you can deposit a cheque in any branch to be credited to your account in a different branch. But there is a big restriction on this model, no matter how much you automate it: traditional banking closes at 4pm and a holiday is also observed.

Alternate delivery channels like Internet Banking and ATM (Automated Teller Machines---a term which should be obsolete by now) allow further touch points to the banks' customers, where banking services are available 24x7. These delivery channels are similar to "branches" in some sense, yet different because of non-human interaction and differences in authentication of the customer.

The first alternate delivery channel for a bank is usually ATM. Banks who are careful with their investment in IT commission the ATM channel in two phases:
  1. Issuer
  2. Acquirer
Being only an issuer means that the bank issues ATM cards (also called debit cards) to its customers which they have to use at other banks' ATMs. This requires the following products to be purchased by a bank:
  • Card Printer
  • Card Production Software (which not only produces cards but builds up a mapping of cards with accounts as well)
  • A dot matrix printer to act as a PIN Mailer alongwith specialized stationary for the job
  • A piece of software that is used to build connectivity between a country switch (such as 1Link or MNET) and the core banking system
The second phase for the bank is to buy ATMs and an ATM Controller and re-certify with the country switch as an acquirer (that is, allowing other banks' customer to use its ATMs).

Two (and perhaps the only two) vendors in this domain in Pakistan are Avanza Solutions and TPS, with their flagship products named Phoenix and Nimbus.

The next most common delivery channels are Internet Banking and IVR + Call Center. Again, both the companies mentioned above, provide indigenous products ("Prism" and "Ambit" for Internet Banking) as well as provide integration capabilities for third party solutions. However, there is an important difference: Avanza Solutions has two different products for "ATM controlling" and "integration" while TPS markets its ATM controller as a middleware as well. There are very few sites, if any, where TPS' Phoenix is running as an integration provider without acquiring any transactions.

There is good competition in IVR (Interactive Voice Response) market where 2B Technologies, ZRG (though not strictly a local vendor) and NCR compete with each other. Same goes for call center or a mobile banking solutions.

With the growing automation happening in the local banking industry, I find it impending that IT courses related to alternate delivery channels will soon be offered at the graduation level.

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