Technological Challenges in Banking Operations

A presentation By V.G.Subramanian

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.

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

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.

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

Evolution of Technology..
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ALPMs

CBS

TBMs

LANs

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.

Solution overview across 5 pillars

X BANK Business Solutions Requirements
Support Applications

Regulatory

Core Processing

Employee Access

Customer Access

HP Superdome XP 1024 Datacenter Build RPC Build Network

Oracle GL Oracle Performance Management CRISIL & Reuters Credit & Risk Management Data Warehouse

RTGS Basel II through Oracle OFSA Anti Money Laundering

Finacle CBS for domestic & int. Document Mgmt & Workflow Hire Purch. & Leasing Depository Credit Card Asset Mgmt Chq Clearing

Oracle HR & Self Service Payroll KM Mail & Msg

Finacle Internet & SMS Banking Phone Banking Oracle CRM Internet Payment Gateway Online Trading ATM Switch

SOA - Technology Offerings

HP OpenBank Architecture Single Sign On BizTalk EAI HP OV EMS

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.

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

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

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 ?

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Nt + Oo = Eo

Thank you