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core banking is by and large achieved. What is next?
A majority of the
banks have adopted core banking and
some are still in the process of implementing core banking platform for
their operations. In addition, with the RBI mandate for regional rural
banks to adopt core banking solutions, a large percentage of the banks
in the category have also made moves to adopt core banking solutions.
In addition, banks in India are looking to streamline their channel
management and risk strategies. Rural banking and financial inclusion
has also been a key focus since banks realized the size of the
opportunity. While public, private and rural banking needs are getting
addressed, there is still a segment of banks that need to undergo
technology led transformation. This segment included co-operative
societies, Non-Banking Finance companies (NBFC). While core banking
transformation is complete, banks have to now invest on enterprise wide
risk management, analytics and fraud preventive tools and solutions.
From a banking perspective,
themselves are evolving. Retail
banks are becoming universal banks, single channel to multi-channel,
restricted branch timings to 24*7, limited product offering to bundled
products, local presence to global presence-all these will necessitate
technology also support their ambition and aspiration.
Beyond
enabling basic transactions, have banks leveraged web and mobile for
customer relationships and new products?
There has been some success in adopting new age technology to enable
alternate channels for managing relationships and transactions. For
instance one of the largest banks in India has been able to shift
transactions from the branch to alternate channels. In March 2000, it
carried 94% of its transactions through branches while ATMs
accounted for 3% of transactions and Internet & mobile channels
accounted for a mere 2% of total transactions. By the end of March
2006, that equation had decisively changed. Branches accounted for just
13% of the transactions; ATMs 43%, while Internet and mobile account
for 29% of the transactions. So, some banks have leveraged the new
channels like web and mobile really well.
Banking
is far more than what it used to be. Are the IT solutions ready for
that? How?
A large number of innovations in banking have
possible because of technology.
The deposits and advances in Indian banks in the last nine years grew
343% and 524% respectively while the total employees strength for banks
grew by only 5%. That is testimony to this fact.
What
is the potential of branchless banking/alternative channels in India?
And how is your solution tapping the opportunity?
Alternate channels can not only serve to create cutting edge customer
experience in the future but also help the cause of
inclusion by reaching remote and
rural areas at a fraction of the cost of opening new branches. We have
launched Finacle Direct Banking, Advizor, and Financial Inclusion
solution in the recent past to cater to these requirements apart from
our flagship existing solutions such as Internet banking, Mobile
Banking, Finanz Tools that cater to branchless banking.
In
India,
RRBs and Coop banks are looking
at automating. But the cost is prohibitive. Is there a solution?
The solution is to cater to the requirements of these entities rather
than repackaging existing solution. We have launched Finacle core
banking solution for regional rural banks which caters to the unique
requirements of RRBs. A number of cooperative banks have also benefited
from the solution provided to them from the Finacle stable (Cosmos
Cooperative Bank, Ernakulum District Co-operative Bank, Mauritius Post
and Cooperative Bank)
A
few RRB guys say that the parent branch forces things on them,
including technology. What is your assessment, especially as some of
them have gone for your solution?
Adopting the core banking technology, approach and best practices of
the parent bank is an advantage for regional rural banks however, it is
not mandatory for them to follow the approach prescribed.
Regulation
is still heavy in banking. Are breakthrough innovations/disruptive
changes possible?
Regulation and compliance ensure safety and security of capital and
savings to enterprises as well as individuals. A large number of Indian
banks have flourished with the help of disruptive innovation despite
the firm hand of the regulators. Look at ICICI Bank in India, for
example.
What
would be the next priority areas for bank CIOs?
Finacle unveiled three significant research reports on Innovation in
Banking from surveys among senior bankers in US, Europe and India. The
BAI and Finacle Research Series “Navigating in Turbulent
Times: Competing for Deposits and Relationships”, surveyed
116 senior bankers from over 100 financial institutions across the
United States of America. Finacle joined hands with European Financial
Management & Marketing Association (EFMA) for a survey on
Innovation in Retail Banking among banks across Europe. Senior
management from 89 banks in 26 countries across Europe contributed to
the research. Finacle also jointly unveiled a survey research report
along with The Economic Times showcasing innovation perspectives from
75 C-level executives across 35 leading banks in India. 78% of the
banks across the three regions believed that the importance of
innovation was high or very high for future growth as well as
operational efficiency. Over 85% of the banks consider technology to be
important or extremely important for enabling innovation.”
Is
the bank CIO a separate breed? Would you have a banker or CIO from
another industry take control of IT of a bank?
CIO is not a separate breed, for any successful technology
transformation, the CIO position and role requires him/her to
understand and appreciate the business challenges and expectations of
the business. It is always a collaborative effort that has see success
in transformation initiatives. Cross industry relativism will bring in
expertise and experience for a CIO however, appreciation for the
financial and banking specific challenges and relevant background is
very important for any person who would like to take control of the IT
of a Bank.