Charteris

The Demise of Cheques?

When did you last write a cheque? The average person in the UK now receives less than seven cheques per year. In 1990, 11 million cheques were issued per day, in 2008 the daily volume is approximately 4million cheques and APACS estimates that in eight years time there will be only 2.5 million cheques per day.

Non-paper based payments like direct debits, direct credits and cards have reduced the need for cheques. Insurance claims are now settled via direct bank transfers or pre-paid cards for the smaller amounts. You can now draw larger amounts over the counter at your bank branch using your chip and pin card as your proof of ID. So, why are there still 4 million or so cheques issued a day?

The main culprits include person to person and person to small business payments. This is because as yet there is no infrastructure in place in the UK to provide an electronic payments system for these payment types.

Now with the new UK Faster Payment Service – you can get the latest updates here – ramping up, the industry has taken the first step towards the eventual elimination of cheques. All that is required next is for your banks to enable you to download from their mobile banking site a mobile payment application that becomes a function of your mobile banking service.
OK, there is more to the technology jigsaw puzzle than my “all you need” but it is not rocket science either. A main component will be a bank and mobile operator agnostic database that securely stores you m- credentials and keeps these up to date. There are also a few governance, security, privacy and exception management considerations to iron out.

But m-payments will be a compelling win-win proposition for payers, for beneficiaries and great for the banks’ relationship with their customers. It has the potential for the banks to innovate new customer centric experiences for all of their customers.

Who needs cheques now? Imagine…. you can pay “Joe the plumber” for fixing your pipes by pressing a few buttons on your mobile and by the time he finishes saying thank you he gets confirmation of settlement from his bank on his mobile..same mobile also tells him that he should now transfer some money to his personal account to avoid going into the red.

The British a nation of shopkeepers? More like a nation of bankers.

Cost reduction through improving operational efficiency has been a consistent goal of financial services organisations. Techniques such as Lean have been adopted with significant success in many organisations.

However, recent research indicates that the pure application of such techniques, which were originally designed for the manufacturing sector, can be detrimental to customer experience when applied to service organisations.

In essence, process optimisation motivated primarily by a desire for cost reduction can lead to decisions which are detrimental to customer service.

Meanwhile , the behaviour of the financial services consumer continues to evolve; more sophisticated, more demanding and more likely to complain or transfer their business if their expectations are not met. Simultaneously, financial services organisations are recognising the true lifetime value of customer retention; looking to cross-sell and up-sell to their existing customer base.

In this context, what financial services organisations need is the confidence that their business critical process change programmes will enhance customer experience not acting to its detriment.

The key to drive business change successfully is direct and continuous engagement of the customer within the change process. Customers are the ultimate arbiters of the success of change initiatives