“Worst bank ever”, “Horrible bank!”, “Why did I even open my bank account in this bank in the first place”, well these are some of the most common customer complaints against banks one comes across frequently. Now, disgruntled customers will soon be able to do something about their dissatisfaction with their current bank accounts—opt for bank account portability. It is similar to telecom sector where unhappy customers can change their service operator without the need to change their mobile numbers.
Reserve Bank of India (RBI) in its recent meet with bankers to discuss the issue of mounting stressed assets highlighted the possibility of bank account portability among many other things. The deputy governor of the RBI asked banks across the country to gear up for bank account portability. On 30th May, RBI said, “With increase in Aadhaar enrolment and technology advancements, banks and stakeholders must start thinking and prepare for bank account number portability to be made into reality”.
What is bank account portability?
Bank account portability means a customer can move away from one bank to the other by just transferring his bank account number and not having to open a new account altogether in another bank. This can be possible because of unique Aadhaar card number and National Payments Corporation of India (NPCI). Currently, every bank has its own specific method of allocating account numbers. If a customer shifts cities or even within the city, they have to open new accounts or transfer their accounts. This entails a fair amount of paperwork and a new bank account number that needs to be updated. With account number portability, the bank account number will remain the same when you move your account to a different branch of the same bank or an altogether different bank. The process would be much more streamlined as everything would be digital, online, and paperless. This can lead to better services.
For doing so banks need to setup the shared payment system and need to change the clearing system as well, which would cost a huge amount to banks. Also banks need to be technologically advanced to sustain clients because of growing competition with the digital banks. If implemented, the bank account number portability will also create competition among the banks as this feature enables dissatisfied customers to shift their bank accounts from one bank to another. Given that, now banks will have to focus more on services and client satisfaction.
Do customers really need bank account portability? Says Kaushlendra Singh Sengar, Founder & CEO, Advisorymandi.com, “Customer need the banks account portability in terms of better service and hassle free bank account transfer, as digital banks like Airtel, Paytm etc., have changed the banking system of India and are focused more into client service through technology and mobile app. This competition will be beneficial for the users as in future minimum balance condition and banking transaction charges will be waived off by the banks because of competition.”
Implementation of the policy will not be easy. In the first place, all accounts will be needed to be linked to the Aadhaar database. Says Adhil Shetty, CEO & Co-founder Bankbazaar.com, “While the number of people with an Aadhaar card is very high, not all of them have linked their bank accounts with their Aadhaar. Unless this happens, Aadhaar-based authentication will not be possible. Secondly, Banks will also have to adapt a uniform core banking solution (CBS) for implementing the kind of interconnectivity that this savings bank account number portability policy demands.”
Also, a standardised form for KYC and centralised agency to maintain all KYC documents would be required so that banks can ascertain KYC details while making the switch. Says Shetty, “While the regulator and the government is mulling over C-KYC, in its current shape, the central KYC has a long way to go before it can be a truly versatile replacement for all the KYC systems currently in place.”
Surely, India will be the first country in the world to do so; however implementing portability alone shouldn’t be the solution for dealing with unsatisfied customers. While non-performing assets (NPAs) of banks is still a challenging task for most of the banks, several other problems like difficulties in deposit mobilisation, slow progress in lending activity, lack of co-ordination in inter-branch banking, hidden charges amongst other, still continue to dominate among the difficulties banks need to work towards for providing customers a better banking experience.