Academic literature on the topic 'Telephone banking'

<p>This study is conducted to identify customers view regarding cost effectiveness, time savings and security of different types of e-banking products like online banking, ATM banking, internet banking, mobile banking and telephone banking. E-banking is the alternative delivery channels that banks adopted for providing efficient banking services through the help of internet, computers, mobile phone etc. Banks’ customers were considered as population and primary data were collected through questionnaire. Descriptive statistics and Chi-square test were used for analyzing the data. The results indicated that customers prefer ATM banking services most, next to follow mobile banking and online banking. The customers believed that all types of e-banking products save time and except telephone banking others types of e-banking products were secured. Online banking and ATM banking services were not considered as cost effective. Analysis indicated no relationship between online banking and different demographic variables. ATM banking services was highly influenced by most of the demographic variables whereas internet banking, mobile banking and telephone banking influenced by few demographic variables i.e. age groups, education level, and monthly income. The results help banks to develop varieties of e-banking products and formulate strategies by considering the demographic characteristics of the customers. Customers expect more users friendly e-banking products along with diversify features and suggested to develop latest e-banking products like mobile apps based banking for ensuring long term customers relationship, attracting potential customers and keeping existing customers that may ensure consistent growth and profit as well.</p>

The article considers the key problems associated with the development of remote banking services, analyzes its existing forms. The characteristics of telephone, mobile and terminal banking, the "Client – Bank" system and Internet banking are given. The main problems of operation of these systems in Russia are highlighted.

The article is focuses on the research of internet-banking from the standpoint of legal regulation and scientific-theoretical understanding. The growing role of innovative technologies in banking is justified. It is noted that the system of ways of providing banking services is dynamic and important both for the whole banking system and for the individual bank. Various scientific approaches to the definition of «Internet-banking» are considered. It is proposed to consider Internet-banking as a form of banking and as a form of remote customer service to the bank. In the first approach, internet banking is a form of banking activity in which banking operations are carried out through the exchange of electronic signals, rather than by exchanging cash, checks or other types of documents. The second approach involves treating Internet banking as a system of remote servicing of bank customers used by them and banks to conduct banking transactions and provide banking services exclusively through the Internet. The regulation of Internet-banking by legal acts is investigated and its extremely low level is emphasized. The necessity of establishing clear boundaries of use of Internet banking and a clearly defined range of banking services, which may or may not be provided via the Internet. Attention is focused on the following systems of remote customer service of the bank: «telephone banking», «client — bank», «client — Internet bank» and «instant contactless payment». Each of these systems is characterized. The significant difference between telephone banking and mobile banking is substantiated. In the first case, the person receives the service by phone through a call to the support service of the bank, and in this case, the availability of Internet access is currently irrelevant. And using mobile banking to perform any operations requires an Internet connection and the ability to use the mobile application installed on the phone, or go to the appropriate site using a personal computer.

In this paper, the authors compare the usability of SMS mobile banking and automated IVR telephone banking. Participants (N = 116) used SMS banking and IVR banking to find their account balance in a repeated-measures experiment. IVR banking scored higher for usability metrics: effectiveness, attitude, and quality. There was no clear difference in rank order of preference between the two channels. Participants gave positive comments regarding speed and efficiency with SMS banking, but had serious doubts over the security of the SMS channel, impacting consumer trust in SMS banking. The authors argue that usability problems and security concerns are a major factor in the low adoption of SMS mobile banking. Older users were less positive in general to SMS banking compared with the more established IVR banking. Older users had lower first time completion rates for SMS banking and gave IVR banking higher attitude and quality scores.

This paper describes an empirical investigation of the usability of different dialogue designs for voiceprint authentication in automated telephone banking. Three strategies for voice authentication were evaluated in an experiment with 120 telephone banking end-users: 1-Factor (voiceprint authentication based on customers' utterances of their account number and sort code); 1-Factor with Challenge (1-Factor plus a randomly generated digit string); and 2-Factor (1-Factor plus secret information known only to the caller). The research suggests the 2-Factor approach is the most effective strategy in this context: results from a Likert questionnaire show it to be highly usable and it is rated highest in terms of both security and overall quality. Participants welcome the option to use voiceprint technology but the majority would prefer it to augment rather than replace existing security methods.

Mobile banking penetration has been relatively low even though smartphones are the most dominant forms of mobile computing in the United States. This quantitative correlational study is focused on how consumers ‘perceptions affect their intention to use mobile banking in the United States. Among U.S. consumers with smartphones, Internet access, and a bank account; 68% used Internet, 33% used telephone-based banking, and only 21% engaged in some type of mobile banking activities in 2011. The web-based survey used in this study was derived from the technology acceptance model extended by the innovation diffusion theory. Data were collected by e-mail from a random sample of 398 people in the United States. The structural equation modeling (SEM) technique was used to analyze data. The results indicated that, perceived compatibility, credibility, and costs were the significant predictors of mobile banking adoption in the United States.

The telephone-banking channel, delivered through call centres, has become an integral part of the distribution mix of retail financial institutions. To get the greatest competitive advantage from this channel, the strategic orientation, structural and behavioural aspects of the call centre must be aligned with its operational-service and sales-performance objectives. Unfortunately, while considerable managerial effort is expended developing call centres, often their performance results remain uncertain or uncommunicated. There are indications also that financial institutions should not underestimate active market orientation benefits; innovative, strategic-thinking and progressive structures; flexible, empathic leadership, and, valuing supportive human resource strategies. Our survey of Australian deposit-taking institutions investigates the extent to which strategic and behavioural aspects are aligned with its operational-service and sales-performance objectives. Specifically, managerial approaches to IT development, competitive positioning, leadership delegation, market research attitudes and product orientation were considered. Approaches to trust, conflict, morale and reward, and, key performance indicator (KPI) choices were sought also. Results show sales performance is positively related to more externally focussed strategic orientations. Reinforcing the importance of innovative human resource practices, performance is also related positively to psychosocial climate in general and employee reward and morale, in particular. This extension of management theory urges financial service leaders to actively contemplate one of its most important resources, people. Further, the survey itself indicated that while the majority of institutions continue to use operationally based key performance indicators, such as minimum call duration, the ability of the call centre to generate sales revenue is also being recognised. In summary, given the size and potential of the telephone-banking channel, this research encourages further, urgent exploration of strategic relationships among the channel, its market, performance measures and comprehensive people-centred HR strategies aimed at developing high employee trust, and satisfaction.

PURPOSEThe main purpose of this research is to determine the consumer level approach of brand equity in Citibank N.A using empirical information based on its brand awareness. The awareness of a brand would show the level of the brand recognition. A telephone interview was conducted to explain the different aspects that constitute the recognition of brand equity and brand awareness of Citibank N.A-Cameroon in addition to its ads.

RESEARCH QUESTIONHow can Citibank N.A, Cameroon subsidiary, measure the level of its brand equity from its brand awareness?

RESEARCH APPROACH/METHODOLOGYIn order to answer the research question and achieve the research objective established for this research, a structured research method was required. In this research a qualitative research approach was applied to suit the content of the research. A telephone interview was conducted to give a qualitative view of this research.

FINDINGS AND CONCLUSIONSAwareness (aided, unaided), contributes to the recognition of brand equity. In the empirical part of the thesis brand recognition and awareness can be facilitated by Citibank-Cameroon subsidiary being participative in its social corporate responsibility plan to develop the community by planting trees and organizing football competition every summer holidays. This brand strategy has been used for several years to keep a positive brand image of the bank.

Thesis (MBA (Business Management))--University of Stellenbosch, 2010.
ENGLISH ABSTRACT: The mobile phone has not only changed the way the world works today, but also changed the direction the world is moving toward. The mobile phone changed the face of communication and enabled more people to reach more other people than ever before. The big four banks in South Africa represent 83.5 per cent of the total asset value of all banks in South Africa. Traditionally, banking customers (or potential customers) could be reached through the current 2 786 branches, 19 451 ATMs and potentially 4.59 million internet users. There are 47.9 million mobile phone subscribers in South Africa – increasing the number of potential contact points by order of magnitude. The possibilities for banks utilising the mobile phone are endless, however online banking and offering banking services through a mobile phone is increasingly more subject to fraud attacks. Online banking and credit card fraud is still on the increase. Today, SMS is used to alert customer of movements on their bank account. This keeps the customer informed and enables them to notify their banks and prevent subsequent fraudulent transactions. SMS can be sent from one mobile phone to another (P2P) or from a computer system to a mobile phone (A2P). In 2007, 2 trillion SMS's were sent worldwide and was responsible for 75 to 80 per cent of all mobile phone revenues. South Africa sent 34 billion A2P SMS in 2009 of which 29 per cent were sent as transactional SMS by the top three banks in South Africa. SMS-based transactional alerts are SMS sent each time a change occurs in a bank account, for example, when your credit card is used then you will get an SMS on your mobile phone. Each bank makes different functionalities available. Absa reported 2 million customers receiving SMS alerts in 2008. FNB reported 67 million transactional SMS per month in 2009. The core advantages for using transactional SMS are the cost, reliability and ubiquity. Research was conducted among five of the six largest banks. Data revealed that banks send between 16 million and 69.4 million SMS per month and have approximately between 4.5 and 5.1 million customers using this service. The impact was tested through personal interviews. The two common factors were fraud reduction and customer retention. The two key challenges the banks identified are: i) Capacity/throughput with the mobile network operators; and ii) Getting internal systems and processes defined and working together for the alerts. The advantages identified are competitive positioning, customer interaction, empowerment of people and revenue. Key findings of the research were: SMS-based transactional alerts offer strategic importance; Any system is as good as it is being utilised; Security controls are extremely complex; SMS capacity is a common challenge and big risk; Internal processes cause the most complexity; Return on investment is not adequately measured; Transactional alerts is a potential revenue stream; There is no interaction between the bank and the customer; SMS in South Africa create high dependencies; SMS-based transactional alerts are successful.

Thesis (MTech (Information Technology))--Cape Peninsula University of Technology, 2009
The objective of this research project was to provide an answer to the question: 'Which access channel is the most appropriate for mobile applications?' This question is posed by providers of mobile banking services and providers of mobile banking applications alike.

This master‘s thesis deals with the alternative chanels of distribution use in a retail banking at large and in Česká spořitelna in the concrete. The self-solution consists in the planning and the implementation of the pilot project by the alternative chanels of distribution use in the getting undergraduates as the bank clients.

This essay reflects a particular method and way of working that I employ when undertaking artistic research. My artworks are rooted and develop from the situation I find myself in as an artist, the very context I exhibit the work within. I do this by trying to understand this position, both on the micro and macro scale. As an artist currently studying at—and subsequently exhibiting in relation to— Konstfack, I base my research with the physical manifestation of the school. An imposing building that was part of a huge headquarters and factory site for the telecommunication company, Ericsson, in south Stockholm. The title of my essay is from the translation of a unique German cipher machine, the Geheimschreiber, made known to me through enquiry into this site. Throughout the Second World War the German army used this machine to send highly encrypted military messages across Swedish telephone cables. Following one of the greatest accomplishments in the history of cryptography, a Swedish mathematician broke this German code and subsequently assisted in designing a deciphering machine on behalf of the Swedish Intelligence branch. This device, known as the App, was secretly developed and manufactured by Ericsson, possibly where I now study. In exploring the theme of secrets, this essay originates from an underpinning desire and subject of my work to reveal what is concealed or overlooked. Through researching and writing this essay I attempt to have a better understanding on the notion of secrets, in both the private and public realms. Introducing the artistic process and situation I am working from, I explore the central role that secrets play within society. In order to understand secrecy today I introduce the intertwined and associated contemporary debates of privacy, (both private and public) and transparency through such subjects as Google’s new privacy policy, mobile phone hacking, WikiLeaks and offshore banking.

by Chan Kit Ping, Wendy.
Includes questionnaire in Chinese.
Thesis (M.B.A.)--Chinese University of Hong Kong, 1994.
Includes bibliographical references (leaves 50-52).
ABSTRACT --- p.ii
TABLE OF CONTENTS --- p.iv
LIST OF FIGURES --- p.vi
LIST OF TABLES --- p.vii
ACKNOWLEDGEMENT --- p.viii
Chapter
Chapter I. --- INTRODUCTION --- p.1
Chapter II. --- FACTORS THAT CONTRIBUTE TO THE DEVELOPMENT OF TELEPHONE BANKING SERVICE IN HONG KONG --- p.7
High Telephone Usage in Hong Kong --- p.7
Telephone Banking Service as Differentiation Weapon --- p.8
Hectic Life Style of Hong Kong People --- p.8
High Property Prices in Hong Kong --- p.8
Labor Shortage in Hong Kong --- p.9
Chapter III. --- INDUSTRY REVIEW --- p.10
Development of Telephone Banking Service in Hong Kong --- p.10
Procedure of Using Telephone Banking Service --- p.12
Variants of Telephone Banking Services --- p.16
Chapter IV. --- LITERATURE REVIEW --- p.20
Adoption of a Service Innovation --- p.21
Adoption of New Banking Technology --- p.21
Hypotheses Setting --- p.25
Chapter V. --- RESEARCH METHOD --- p.27
Research Information Needed --- p.27
Research Design --- p.29
Demographic Characteristics of the Sample --- p.33
Chapter VI. --- RESEARCH ANALYSIS --- p.34
Awareness of Telephone Banking Service in Hong Kong --- p.34
Way of Learning about Telephone Banking Service --- p.34
Adoption of the Service --- p.35
Reasons for Using the Service --- p.35
Frequency of Using Telephone Banking Services --- p.36
Most Frequently Used Services --- p.36
Satisfaction Level of Users --- p.37
Reasons for Not Using the Service --- p.37
Attitude Towards Telephone Banking Service --- p.37
Psychographic Characteristics of Users vs Non-users --- p.38
Chapter VII. --- RECOMMENDATIONS --- p.40
Ways to Recruit New Users --- p.40
Ways to Encourage More Usage from Existing Users --- p.43
Operational Recommendations --- p.44
Chapter VIII. --- LIMITATIONS AND SUGGESTIONS --- p.46
Questionnaire Setting --- p.45
Sample Size --- p.47
The Use of Personal Questions --- p.48
Suggestions for Future Researches --- p.48
BIBLIOGRAPHY --- p.50
APPENDIX --- p.53
Questionnaire --- p.53
Figures 1-13 --- p.63-80
Tables 1-13 --- p.81-93

The subject of this thesis is to evaluate the current state of the direct banking on the Czech market and an analysis of individual types of direct banking. Partial objective is to create a formal procedure for selecting optimal type of the direct banking for bank clients.

Thesis (Ph.D.)--University of the Witwatersrand, Faculty of Commerce, Law and Management, Graduate School of Business Administration, 2013.
In recent years, emerging markets have become the main “engine of global (economic) growth” (Spence, 2011, p. 8) . Whilst the rapid diffusion of its banking and mobile telephony industries has been unprecedented and well documented in the literature (Bankole, Bankole, & Brown, 2011; Bick, Brown, & Abratt, 2004; Brahima, 2012; Kalba, 2008), the dearth of empirically based evidence on CRM implementation in emerging markets in general, and Nigeria and South Africa (SA) in particular, remains undisputed (Kumar, Sunder, & Ramaseshan, 2011; Sheth, 2011). Consequently, the problem this research addresses is the lack of adaptation of CRM strategies to the emerging market context and the lack of understanding of contingency factors that may inhibit or enable the effectiveness of CRM implementation in companies. To provide further insights into this issue, sixty six (66), one-on-one, semi-structured interviews were conducted with CRM strategy developers, implementers and those fulfilling both roles in four companies across the banking and mobile telephony sectors of Nigeria and South Africa. Secondary data were also collected and triangulated with the findings derived from the primary research to enhance the rigour of this research process; and most importantly, to strengthen the reliability and validity of the research findings. The collected data was recorded, transcribed and analysed using a contact summary form and MAXQDA analysis, a qualitative data analysis software package. The research findings illustrate that whilst some of the factors for CRM effectiveness in Nigeria and South Africa may be consistent with those in high income, industrialized markets, the peculiarities of Nigeria and South Africa require that companies adapt their CRM strategies to the local context. The contingency factors that can either impede on or enhance effective CRM implementation in these countries include (a) multichannel integration (particularly informal channel and social media), (b) operating structure, (c) training and staff recruitment v practices, (d) customer data storage and mining capabilities as well as (e) normative motives linked with the socio-cultural context of the country. The similarities and differences between Nigeria and South Africa are also highlighted in this study. The originality of this study lies in it clearly defining the peculiarities of CRM in emerging markets, thereby establishing that these markets are different from high income, industrialized markets. In addition, this study identifies the contingency factors that can enhance or impede on CRM success in these markets and puts forward a set of research propositions as well as a conceptual model for CRM implementation in emerging markets as a contribution to the body of knowledge. This CRM conceptual model can be tested in future research. Building on these findings, the study makes suggestions on how the strategy of CRM can be adapted to the emerging market context. It proposes that companies assess their CRM readiness through the application of a newly developed heat map that takes into consideration the company lifestage and its industry saturation level. This heat map is a useful tool for organisations to ascertain whether or not they are ready to embark upon the CRM programme, to better understand the required efforts needed to deliver on a successful CRM programme as well as the expected timelines for true benefits realisation. Moreover, another contribution of this research is the development of a CRM index, a composite index of 16 indicators that measures CRM success across three dimensions; namely organisational, institutional and customer data. Furthermore, the novelty of this research can also be found in the triangulation of theories such as the contingency, institutional, and Hofstede’s fifth national value dimensions of culture that focuses on a short vs. long-term orientation of cultures and companies, are integrated into a single study. vi This study has theoretical, managerial, conceptual, methodological and societal implications. Future research could include other geographies, industries, a longitudinal study and quantitative studies based on the testing of the proposed CRM conceptual model and index.

In this paper, the authors compare the usability of SMS mobile banking and automated IVR telephone banking. Participants (N = 116) used SMS banking and IVR banking to find their account balance in a repeated-measures experiment. IVR banking scored higher for usability metrics: effectiveness, attitude, and quality. There was no clear difference in rank order of preference between the two channels. Participants gave positive comments regarding speed and efficiency with SMS banking, but had serious doubts over the security of the SMS channel, impacting consumer trust in SMS banking. The authors argue that usability problems and security concerns are a major factor in the low adoption of SMS mobile banking. Older users were less positive in general to SMS banking compared with the more established IVR banking. Older users had lower first time completion rates for SMS banking and gave IVR banking higher attitude and quality scores.

Nigerians have always had their own cooperative banking systems known as Esusu and Ajo. This chapter draws on Gibson-Graham’s community economy theory, while working in Nigerian literature, to contextualize an ancient money cooperative called Ajo, which is a locally used term to explain the system that informally mobilizes savings and lends monies to help everyday Nigerians meet their livelihood needs. The author carried out 120 interviews by telephone and focus groups with Nigerian women in Ondo and Lagos states who use Ajo as an alternative bank to mitigate against the exclusion they encounter in commercial banks. The findings show that Ajo is rooted in trust and community, so that women can develop social supports and banking access to buy foodstuff and clothes, and to invest in their businesses and houses. In urban and rural areas, Nigerian women are adopting Ajo because joining the collective provides a sense of ownership, as well as a comradery with other women.

Since the late 1990s, Kenya has undergone a real technological revolution, especially in the domain of mobile telephony and Internet connectivity. From a negligible number of handsets in the hands of the political elites, today almost every adult Kenyan has a mobile phone, or access to one. This is thanks to reduced costs following expansion and diversification of the market niche. Despite this remarkable progress, research has shown that cell phones are used mainly for financial transactions, social communication, and entertainment, but hardly for learning purposes. This means that despite the impressive number of smartphone owners in the university, for example, the devices are not used for enhancing student learning or teaching. In Kenya, more than 60% of the population employs mobile banking, thus underscoring the immense potential that the cell phones have for education. This chapter explores the benefits and challenges in employing mobile telephony to improve the quality of teaching and learning.

The leapfrogging theory claims that instead of following the conventional digital trajectory set by the west, emerging regions can straightaway use cutting-edge technology to “leapfrog” the digital-divide. To explore the possibility of digital leapfrogging by an emerging region, this study looks at the three domains of hardware, software and connectivity. In each domain the default technology and its potential is evaluated as a digital inclusion tool while being juxtaposed with the latest “cutting-edge” alternative that could be used instead for “leapfrogging”. Three specific scenarios are developed in telephony, banking and the World Wide Web, which illustrate how a combination of these different technologies help emerging regions ‘leapfrog the digital divide.’ Finally, the paper suggests certain leapfrogging trajectories that ICT4D projects should explore.

The Telecoms market is demanding more services which involve an increased mobile accessibility to the Internet, real time video transmission, real time games, Voice over IP (VOIP), and business critical transactions such as billing transactions and banking services. Meeting these challenges requires the mobile operators to change the way they design their telephony and messaging systems. As the mobile market moves to become more service centric, rather than technology centric, Quality of Service (QoS) has grown to become imperative, since in the Telecoms innovative services are very often short lived, where the quality aspects of a system and the provided services contribute as key differentiators. Thus, the main focus of this chapter is based around the QoS issues which have led to the consideration of a distributed messaging model to address the challenges faced in the Telecoms industry.

The authors of this chapter provide an inter-disciplinary review of studies on economic impacts of mobile telephony in developing countries, giving particular attention to the disruptive potential of the technology and its associated social practices. Four major areas of impact are identified: the emergence of a mobile phone economy around retail and service provision, including mobile banking; a significant reduction in search costs with profound impacts on market efficiency and, possibly, welfare distribution; changes in the formation and maintenance of trusting relationships between market actors as face-to-face contact is replaced with remote communication; and facilitated organisation and cooperation within and among firms, as well as changing credit procurement practices. While the mobile phone has been hailed for its transformative power, the authors tentatively conclude that its impact in most areas is not primarily disrupting, but rather amplifying existing structures.

This article studies social networks on the Internet created by popular applications such as e-mails, Web, chat, file sharing via peer-to-peer interaction, and online gaming. The Internet has its roots in military and academia. Connections are available around the world at academic institutions, military installations, government agencies, commercial enterprises, commercial information providers (AOL, CompuServe, and MSN), and Internet service providers. The Internet offers the following services: sending and receiving e-mail (electronic mail), transferring files between computers, participating in discussion groups through newsgroups and mailing lists, searching and retrieving information, chat, Internet relay chat, instant messaging, Internet telephony (voice chat), and on-line shopping. Newsgroups contain databases of messages on topics. They are similar to mailing lists, except that e-mail messages are posted to newsgroup sites. Bulletin boards and discussion groups offer similar services. People “surf the net” to find information and download files and connect directly to other computers. Web pages are used to communicate with customers and suppliers, describe organizations and products, tender documents, and provide services (banking, stocks, and software).

ICT technologies like the Internet, mobile telephony, and other enabled handheld gadgets have penetrated our lives in an unprecedentedly disruptive fashion. Explosive computing and communicating power with ever-decreasing price of service over the passage of time have been the hallmark of this success. The success of these technologies has been effectively appropriated in many business processes and systems including the banking sector and the social media applications. However, in spite of having stupendous potential in the healthcare sector, especially in providing access to service for patients in rural and difficult-to-reach areas, very limited ICT appropriation has been witnessed. The authors explain the current extent of ICT penetration and seek reasons for such lackluster inclusion of ICT and mobile technology in the healthcare sector. They use the TAM model to identify the critical factors of technology adoption, and use such understandings to help readers understand the barriers of adoption of ICT and mobile technologies in the healthcare sector. The authors also provide indicative guidelines about how such barriers may be overcome, and widespread adoption and deployment of these technologies can be made possible in the healthcare sector, yielding benefits to large sections of population in the US.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.