Monday, December 31, 2001		Article

Banks need to develop IT more
S.C. Dhall and Sachin

DESPITE the country being number one in IT, very little progress has been made in technology in the banking system. The infusion of banking technology is one of the biggest challenges that will be faced by the public sector banks (PSBs). Public sector banks have been doing branch automation for over 12 years. The first blueprint for computerisation in the banking industry was drawn up in 1983, but it has only been in the last three years that public sector banks have seriously taken it up.

Private and foreign banks, with the help of sophisticated technology, have achieved slightly high level of automation in customer services, besides offering a wide range of products. Some banks have even succeeded in offering online stock trading, mutual funds products to their clients apart from offering whole range of banking and non banking services such as utility bills payment. In contrast, PSBs are yet to overcome the initial hurdles in implementing technology and get themselves aligned to the rapid changes in the banking sector globally. The level of technology absorption has been quite low and only a few PSBs have taken initiative by entering into strategic alliances with the technology serviced providers. Hence, banks need to develop a successful strategic technology plan.

The 27 PBs in the country will have to shell out anywhere between Rs 15,000 to 20,000 crore to achieve a reasonable level of computerisation and networking over the next one year. The banks are woefully lagging behind in embracing new technology. Out of the 4,700 odd branches of these banks, only little over 11,000 have total computerisation.

While embarking on an IT implementation drive, emphasis should be laid on the technology models based on open platforms so that they are scalable.

Banks are using computers mainly for the day-to-day level operations. But the banks are also using them for decision-making process for customer value creation, effective supervision and control for survival.

Right now, the banks main concern revolves around how many branches are to be computerised, how many system analysts/EDP officers are to be posed, how much is to spend on computerisation, which vendor’s hardware and software to purchase etc.

Banking technology should be such to take care of the business challenges. It is to be noted that the issues to be tackled by the managements are changing with changes in environment and technology. The bankers’ mindset towards various aspect of banking technology is also required to be changed radically for their survival in the coming months.

For success in the competitive market, modern bankers have to known how to blend both arts and science of banking. For survival of any financial institution in the 21st century, it constant upgradation in its technology and innovate various financial products/services, which can give competitive advantages over the other competitors, is needed.

The RBI has set up a working group to prioritise major areas of emphasis in the sphere of banking technology. The working groups have been given the task of identifying technology areas that impact customer service in the banking and financial sector and generally improve payment flow.

The working group comprises of experts from banking and IT sector as well as the financers. The group will also identify the research areas that could be of relevance to the banking and financial sector with the ultimate objective of achieving improved housekeeping decision-making and customer service.

Training of staff is equally important which is generally lacking in most of the branches. While every bank has its own training centre yet because of the lack of professional approach, the staff does not get proper training.

The next important aspect is to have cyber laws because unless these laws are in place computerisation of bank will not be able to become operational.

Despite computerisation banks have failed to introduce single window concept. Rural branches are far behind under this programme. Rural sector are likely to cover in the last phase. Each and every bank is emphasising on metros, and urban and semi-urban branches.

On the other side, a number of bankers and feel that expert’s over-dependence on computerisation would make banks lose their human face. Most Asian bank customers still prefer the warmth of human tact despite the increasing range of services being offered through the Internet and telebanking. As per one of the surveys three out of four respondent polled in the region continue to have face-to-face interactions with their banks representatives. Despite the influx of modern technology, it is interesting to note that consumers still prefer interactions.