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The BFSI sector contributed 22% of the total IT spending in 2003-04. Some of the areas where push came during FY04 were analytics, risk management, business process management (BPM), real-time gross settlement (RTGS), risk management, shared ATM network services and outsourcing in the form of remote infrastructure management.

Whatever new technologies were in the offing one thing became certain: postulated clearly by Dr. Bimal Jalan, ex-Governor of RBI, "All IT adoption would henceforth happen in the banking sector only with enhancing the profitability factor." All the events of the year broadly concurred with Jalan's remarks-for IT adoption, the larger section of the industry was motivated more by RoI rather than a brand building exercise.

Implementation of core banking solutions followed an interesting pattern-most private sector and MNC banks and even the large PSU banks have already adopted it. Therefore, it was turn of the remaining smaller PSU banks as well as the co-operative banks who were still in the TBA (Total Branch Automation) phase, who went for core banking with a vengeance.

The larger section of the industry was motivated  more by RoI rather than a brand building exercise

Developments on the regulatory side also created a compelling case for automation of Indian banks. During the year, RBI goaded the Indian banks to improve their risk management system by building an investment fluctuation reserve (IFR), provisioning for problem assets and putting in place systems that monitor unhedged external liabilities. RBI insisted that along with risk-based internal audit, banks must also put in place proper risk management architecture, strengthen IT, address human resources and set up compliance units.

RTGS, expected to bring India's bond and money markets on par with international practices, finally became operational. The system went 'live' on March 26, 2004 with State Bank of India, HDFC Bank, Standard Chartered Bank and Saraswat Co-operative bank. Later 19 more banks joined the RTGS fray.

SEBI extended Straight Through Processing to the entire market to smoothen the transaction process. The market regulator came up with a roadmap that focused on areas such as disclosure norms, accounting standards and corporate governance. The STP initiatives were part of the SEBI efforts to reduce the settlement cycle to T+1.

With proliferation of plastic money, Indian banks went for increasing ATM installation as banking through ATM significantly reduced the costs. More than 7500 ATMs were added during the year taking the total base of ATMs in the country to about 11,000. However, considering China has 65,000 ATMs, UK 100,000 and US 300,000, India still needs to do a lot of catching up. A number of other functionalities like utility payments and routine transfers were included under the purview of ATMs.

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