'CIO should be the chief insight officer'

B Sambamurthy took over as the new chairman and MD of
the Corporation Bank on April 1, 2006, after having served the bank for over 25
years in various capacities. He also headed the bank's London branch and the
prestigious Mumbai Zone. In 2004, he was appointed the executive director of
Indian Bank. In an interview with Rajneesh De of Dataquest, during the
CIOL C-Change Summit IN Goa, Sambamurthy elaborated on the role of today's
CIO, how technology can help banks in customer segmentation and in collaborating
with other verticals like telecom and logistics. Excerpts:

Amongst PSUs, Corporation Bank is regarded as traditionally
strong on technology. Can you elaborate on the status of the IT initiatives that
the bank has taken?

We have finished computerizing all branches and extension counters of
Corporation Bank by the end of 2006. At present, 568 of our branches are under
the core banking network, covering 88% of the bank's business. We have
networked and made operational about 100 ATMs during 2006, taking our total ATM
network to 950, with as many as 600 of them offsites. In fact, we are the only
PSU bank with more ATMs than branches.

All the functional units of the bank are linked through email
network and this email setup has been migrated to our own WAN. Internet banking
facility, which is being increasingly used by the corporate clients and retail
customers, is being offered across 714 branches. As part of a strategic business
alliance, we share a common network infrastructure with Oriental Bank of
Commerce and Indian Bank for payment systems; the three banks are even offering
a common credit card. The next important phase of automation would focus on CRM
as customer segmentation is becoming crucial to sustain the bank's
profitability.

What role can technology or IT play in customer segmentation
that can help the bank in marketing innovative products targeted at different
profiles?

If you want IT to help customer segmentation, you need to focus more on the
'I' of IT and then eventually even the 'I' needs to graduate from
information to insight. In fact, the sobriquet of a CIO should change from chief
information officer to chief insight officer, in case the enterprise of today
wants to achieve successful customer segmentation. It has become imperative for
companies today to segment the market to conduct business in a profitable way.
Unless you are a Microsoft, you need to do segmentation. The market has changed
in a way we had hardly imagined and the needs and ways to interact with them
needs to be changed as well. After all, we were the MRP generation and the
current generation is an EMI one, and our reaction needs to be tweaked
accordingly.

Once the segmentation has been done, IT can also help in
mitigating the challenge to migrate customers accordingly. Banks like us could
learn a lesson or two from the telecom sector. There is much to learn from
telecom companies, especially with the kind of market share they have achieved
in four years that banks took four decades to achieve. Indeed telecom
penetration is an important lesson of how IT can help both in customer
segmentation and then successfully leveraging individual segments to market the
products. What IT helps fundamentally is in making segmentation a component of
the company's business model instead of the operating model.

You are talking about banks taking a lesson from the telecom
sector. How can IT help in different verticals collaborating with each other in
achieving successful customer segmentation?

Banking, telecom and logistics can successfully collaborate to achieve just
not customer segmentation but also effective penetration of technology into
newer areas. An example could be the e-wallet project using state-of-the-art
smart card readers, a pilot of which is being carried out in a remote village in
Goa. Interestingly, much of the demonstration of this pilot project are done by
the rural women; what I mean to say there is a huge business opportunity lying
at the bottom of the pyramid and IT can be an effective tool in leveraging this
business. Segmentation could however be more focused rather than being complex
and blurred. Businesses are losing consumers and not even realizing it.
Segmentation for businesses can be a pain area but all that can change by using
the right technology.

It must be remembered, however, that not just penetration of
technology is important; demographics too plays an important role, making it
absolutely imperative that you go for a more focused customer segmentation. An
example would be microfinance schemes: led by women self-help groups, these
projects have been immensely successful in Andhra Pradesh, Karnataka and Tamil
Nadu but failed totally in Kerala and the North East. In such cases, you need
adequate business intelligence data and the mechanism to effectively analyze
this info. A collaborative approach between banks, telecom and logistics could
go a long way in doing this.

In one of your earlier stints you have also acted as the CIO,
and now you are on the other side of the fence. What would be your advice to
today's CIOs, especially in how they handle top management?

As you mention, I have been on both sides of the fence, and the most
important thing I feel is that with a change in your role there is also a change
in perspective. If my CIO feels that I being a former member of his brethren, it
would be easier to get my approval on his budget after showing me a Powerpoint
presentation, he would be sadly mistaken. Today, the role of the CIO has
changed; he now needs to be not only IT savvy but also business savvy. As I
mentioned, it is high time he becomes a chief insight officer, as only that
would help him in segmenting customers so that his business becomes profitably
sustainable. All businesses at the end of the day are fundamentally running on
the same principle of profits, and sooner the CIO realizes this and moulds
himself accordingly, it is better for him.