Technology help to track your money

The advance of technology is relentless and like every other sector in any economy, banks can rely on technology to offer better, faster and safer services. There is no end to the potential. We take a look at the next level of technology usage by banks that will become widespread in the next one to three years.

Transaction alerts. For about a year now, banks have been sending SMS and e-mail messages to customers every time their account (savings or current) sees a debit or credit. ICICI Bank, HDFC Bank and ABN Amro Bank started offering these text and e-mail alerts to customers a year or so ago.

So, you receive an alert every time there is a debit in your account. This could be a cash withdrawal from an ATM or bank branch, clearance of a cheque issued by you to someone else, Internet-based transfer of money from your account to any other account, purchase on your debit card, or an automatic transfer of funds from your account to your mobile phone company, utility company, broker, depository participant or credit card-issuing bank as payment of your dues.

The bank will also send you an alert when there is a credit in your account, for instance, when a cheque you have deposited gets cleared, you deposit cash through a branch or ATM, your salary is directly credited in your account, or there is a direct electronic transfer of funds into your account from your broker, dividend-issuing company, or interest-issuing small savings government body.

Why alerts matter. Today, to find out what is happening in your account, you have to log on to your bank's website's netbanking module, call up the bank's call centre or make a trip to the branch or ATM. Knowledge of any activity - more so in the case of debits - can only be beneficial to you if you know about the debit or credit activity in your bank account as soon as it happens.

That's because there may be times when delayed information can put you through insufferable inconvenience or even a monetary loss. Milind Pendharkar, a finance professional in Vashi (Navi Mumbai), faced this predicament recently when his debit card was erroneously swiped twice at a restaurant. His bank, like a majority of banks, has not yet started offering transaction alerts. Says Pendharkar: "Had an SMS-based alert come on my mobile phone I would have been able to rectify the problem immediately."

As things turned out he discovered this mistake much later (after seeing a double entry in his card statement) and despite his attempts to get the bank or the restaurant to reverse the entry, he was not successful. He is still trying. His food bill was Rs 2,500 but he has ended up paying Rs 5,000.

It is to offer a handy tool to take quick action in such situations that banks can offer the alerts. Says C N Ram, head-information technology, HDFC Bank: "The basic use of a savings account is for transactions, but very often you don't know how much debit or credit is happening, particularly in the case of joint accounts. Through our transaction alerts, you can catch any misuse before it is too late."

Bank customers, of course, are aware of how useful these alerts can be. Says Ajit Mhatre, an architect with a construction company in Mumbai, who banks with Bank of Baroda, another bank that does not offer such alerts: "Mobile phone alerts are a good system for feedback on the transactions in my account. Today, I come to know my account details only when I update the passbook when I visit the bank, which is at the bottom of my priority list of things to do!"

Types of alerts. The three banks that offer text and e-mail alerts today have proven software development capabilities, which have enabled them to be first in offering these services. This is similar to the scenario some five or six years back when these banks were the first to offer netbanking; others followed suit only one to four years later.

While it's all very well to hail these banks as innovators and path breakers, it is also important to know what they offer, and how these offerings differ (See table: Get Alerted). While all of them provide transaction alerts, the ability to set amounts vary. Further, some provide alerts even on deposit maturity.

What is most important is how soon you get these alerts. ICICI Bank's alerts on transactions are instantaneous whereas HDFC Bank's alerts take some 12 hours to reach your mobile phone or e-mail inbox.

The technology. These differences do not take away the usefulness of the service. So, why have more banks not started taking advantage of the fact that they can send such alerts? It cannot be cost.

Read more