Technological Challenges in Banking Operations

1. Technological Challenges in Banking Operations A presentation By V.G.Subramanian

2. Historical Perspective • The IT saga in Indian Banking commenced from the mid eighties of the twentieth century when the Reserve Bank took upon itself the task of promoting automation in banking to improve customer service, book keeping, MIS and productivity.

3. Historical Perspective • During the earlier years, use of Technology in banking operations arose more as a necessity to manage house-keeping and to strengthen internal control systems – Prime movers being Regulatory Agencies such as RBI, CVC…..

4. Historical Perspective….. • Over the years, Banks themselves have embarked upon major technology driven programs, in the face of competition and being driven by need to service customers more effectively and efficiently. • Especially with the arrival of new generation private sector banks, technology has become an integral part of Banks’ business strategy and a tool for creating value and customer satisfaction, resulting in redefining of Banking and rediscovering of Customer.

5. Historical Perspective…. • Computerisation of branches of banks began in the late eighties with the introduction of ledger posting machines (LPMs), advanced ledger posting machines (ALPMs), followed by Stand alone computer systems (LANs) which metamorphosed into network based systems (WANs), with the latest development being the installation of Core Banking solutions

6. Evolution of Technology….. ? ALPMs TBMs CBS LANs

7. Current Scenario • Distributed Data Base – A tool for acquiring, servicing and enhancing customer base – offering wide range of product options and delivery channels, Internet Banking, Phone/Mobile Banking, Any where – Any time Banking. • Vanilla Solutions vs End to End Single Platform Solutions across the Globe – Integration with other applications.

9. Technology – A great Enabler • Large volume and variety of business, accuracy and timeliness. • Large number of Products, Delivery Channels and Customer-centric Processes. • CRM – For cross selling and meeting the customer life cycle needs. • Redefining of Customer Convenience. • Decision support System, Supervisory Monitoring and Control.

10. Challenges before Banking Industry • Ever rising customer expectations • Security and integrity of data-base – Risk management. • Disparate Systems • Customer retention and life cycle management. • Diseconomies of Scale • Employee Training & Retention

11. Challenges before Banking Industry • Colossal costs – Technology is a monster – Guzzler of Money. • Issues of branch structure, lay out and redeployment of staff. • Redefining of work-flows – front office, back office jobs… • Change in employee role profile and management/supervisory practices

12. Issues to be addressed….. • How to pay for Technology? • How to get / create best value out of use of Technology ? • How to put spare capacity to use ? Can we collaborate, co-brand or outsource…..? • How to leverage Technology – A great Disciplinarian ? • How to meet aspirations of Stakeholders, Customers, Employees ….optimally ? • How can Technology facilitate consolidation/ convergence ?

13. These are strategic issues we must deliberate and cogitate....... Nt + Oo = Eo ?

14. Thank you