Doorstep Banking in the GCC
How the Pandemic has Boosted Doorstep Delivery for Banks
Doorstep delivery has been around for so long in most parts of the world it is now taken for granted that you can pick up a phone or go online to order anything from a pizza to a motor car and expect it to be delivered right to your doorstep.
The outbreak of the Coronavirus pandemic has propelled ecommerce into the mainstream and it is now seen by many as the normal way to shop.
Banking, too, has been swept along by the tide, and doorstep banking, which began as a service to deliver rupees to technology-deprived villagers in rural India, has now become an essential facility that big banks must offer customers if they want to stay in the game.
What Is Doorstep Banking?
Put very simply, doorstep banking (DSB) is a service banks offer to customers that allows them to complete routine banking activities such as cash deposits and withdrawals, check deposits, and the receipt of credit/debit cards at their homes or offices.
Of course, banks can’t possibly cope with all the demands of doorstep banking. After all, they are financial service and product providers, not logistics specialists—so they contract 3PL companies, such as Shipa Delivery, to scoot around town delivering credit cards, debit cards, and check books on their behalf.
A few, such as Boubyan Bank in Kuwait, go a step further and offer to send a bank representative to the home or office of a customer—usually an elite client—to carry out selected banking transactions.
Other doorstep banking services offered by certain banks include:
Pickups of documents such as Form 15, KYC, and life certificates Drop-offs of term deposit advice forms. ## How it all Began ## The ‘banking correspondent’ concept, or ‘doorstep banking’ as it is now known, was developed about 15 years ago in India as part of a drive to facilitate branchless banking in rural areas. It aimed to make sure that older, less tech-savvy members of communities would not be left behind by technological advances in banking such as ATMs, electronic bank cards, online banking, and mobile phone banking.
Rural people, many of whom were illiterate, did not trust electronic cards or mobile phone banking, and already had limited access to traditional bank branches.
There were fears that they would be eased out of banking systems as technology developed further so a financial inclusion program was launched with the help of payments technology company FINO.
A network of agents and collection points was created across the country to help bring banking to the people, using technological innovations and feet-on-the-ground local knowledge. In 2017, FINO became a licensed payments bank but technology-facilitated inclusion is still its core business.
Who uses DSB? ##
Doorstep banking customers vary greatly across the world, depending on the realities in the region or country where they live.
They include people who may find it difficult to get to formal bank branches. For example, the elderly or differently-abled, the not-so-tech-savvy, busy entrepreneurs, and 40-hours-a-week workers who somehow can never get to the bank before it closes.
The GCC Model
A handful of banks in GCC states began offering doorstep banking services to clients about a decade ago. Initially, this facility was open only to those holding gold or platinum credit cards. Nowadays, though, most banks offer this courtesy to all their customers.
Banks also make wide use of 3PL companies to handle same-day branch-to-branch package transfers.
Unlike in other parts of the world, GCC banks do not deliver hard cash to customers as this is considered too risky and would require hiring security personnel to ride shotgun with the driver. For its existence and growth, this banking sector relies on watertight security as well as mutual trust between the bank, the 3PL, and the customer. To stay one step ahead of the bad guys, 3PL companies implement some or all of the following security measures: In the warehouse, packages are kept in a cage that is under constant surveillance by a security camera.
At the point of delivery, customers’ identities are verified through the KYC (Know Your Customer) system. In the Emirates, this involves putting the ID of the person receiving the goods into a Tactivo device to verify the fingerprints. That’s to ensure that the details of the receiver match those of the card’s owner.
Branch-to-branch deliveries, known as RUNs, are secured and placed in bags that trigger a security alert if opened by an unauthorized party.
Some countries demand that aside from deploying KYC software, large transactions are obliged to be conducted via Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) software.
Perform multiple verifications/identifications and submit to the customer a list of delivery personnel to enable easy recognition. Drivers thoroughly check the identification of the receiver.
How Covid-19 Accelerated the Switch to Digital and Doorstep Banking
The trend towards digital banking was well underway before the outbreak of the Coronavirus pandemic.
Many young, tech-savvy people have never even joined a traditional bank the way their parents did—they love the freedom and ease of digital-only banking made possible via mobile phones.
However, they still need access to services such as debit and credit cards.
The more customers veer towards digital banking, the more the need for doorstep banking will increase.
Analysts have been amazed at how quickly the pandemic spurred the switch from traditional to digital banking.
“What we are seeing is the greatest acceleration of digital banking in history,” Wells Fargo Securities analyst Mike Mayo told American Banker last June. “What has been taking place over the last few months may have taken place over two to 10 years if the pandemic had not come along.”
Mayo’s views are echoed by Boston Consulting Group analyst, Harold Haddad. “COVID-19 and subsequent events have increased consumers’ already ravenous appetite for digital financial services,” he says.
A survey carried out in the UAE last October by the BCG found that 87 percent of respondents would be willing to open an account with a purely digital bank.
This transformation is being driven by the following factors:
For more than a year, communities have had to live through periods of lockdown, isolation, and restricted movement, which has made it difficult, sometimes impossible, to get to their local bank.
Many banks have consolidated their operations to reduce the number of branches they are obliged to maintain free of the virus.
Banking hours and access have also often been curtailed.
Many banking services cannot be accessed via the ATM, leaving customers lining up two meters apart wearing masks while they await their turn at the teller.
Many customers are afraid of contracting the virus and are therefore reluctant to visit their bank.
Banks themselves have encouraged customers to conduct transactions online to reduce footfall in branches and limit the risk of their staff contracting the virus.
The Impact of Covid-19 on DSB Deliveries
Like all deliveries during the Covid-19 pandemic, special protocols must be observed by the delivery team and the customer when it comes to doorstep banking.
This is how it works:
Driver arrives at the delivery point wearing masks and gloves.
- Driver rings the doorbell and takes a few steps back to respect social distancing protocols.
- Driver disinfects the Tactivo device in front of the customer.
- Customer inserts ID card or credit card into the device.
- Once customer identity is confirmed, the driver hands over the package and heads off.
Business Transactions in the Past
To get a better picture of just how advanced the concept of doorstep banking is, we need to look at the evolution of business transactions.
Historians generally agree that up until about 770 BC when the Chinese introduced the forerunner of coins—small objects cast in bronze depicting tiny farming tools such as spades and hoes—trade among humans was carried out under the cumbersome barter system.
The Chinese objects were later refined to a standardized round object, similar to modern-day coins. In 600 BC the first official mint was established in the Lydia region of Europe (now western Turkey) and gold and silver coins became the standard means of exchange.
Around 700 AD, paper money in the form of promissory notes were accepted by Chinese merchants and wholesalers, an innovation that significantly sped up business proceedings. Instead of having to lug around heavy sacks of coins, traders would simply exchange promissory notes.
The Future of Business Transactions
Fast-forward to 2021, and modern-day currency bears little resemblance to the gold coin stamped with an owl and the silver coin stamped with a snake that characterized Lydian coinage, or the leather promissory notes of the Chinese.
While the Chinese from the Tang dynasty onwards may have compared cheques to their promissory notes, what would merchants of old have made of modern forms of currency and exchanges, such as Bitcoin, contactless credit and debit cards, digital accounts, biometric authentication, money transfer, QR cards, and cashless shopping?
And what are we, modern-day consumers, to make of the latest payment technology by Amazon that allows shoppers to pay for their goods by scanning the palms of their hands?
Will such innovations spell the beginning of the end of doorstep banking?
In our view, the trend will go in the opposite direction—doorstep banking will become more and more popular, especially with the rise of digital banking and the slow demise of traditional brick-and-mortar banks.
Digital banks, such as Hala Bank in Saudi Arabia, offer customers a digital wallet that they can use for online purchases and to send money to friends. Other banks, such as ZAND Bank and Al Maryah Community Bank in the UAE are in the process of introducing similar services.
Under these digital banking systems, should customers want a card that they can use to draw cash from ATMs and pay at supermarket checkout points, they would need to order a physical card from the digital bank—which of course will need to be delivered to the doorstep in a secure manner.
Drone Deliveries Are Not Yet Secure Enough
The future of deliveries in general around the world is in robotics--and drones in particular. But would you trust a drone to deliver your credit card yet? It risks being shot down by sophisticated thieves or being intercepted at the point of delivery.
At Shipa Delivery, we specialize in the secure last-mile delivery of banking facilities to customers at their doorsteps. We also do secure mailroom deliveries, on-demand, same-day, and next-day deliveries across the GCC.
Contact us today to discuss how we could ensure that your last-mile deliveries are safe, secure, and placed directly into the hands of the authorized recipient.