The BFSI sector has always been the leader in IT spending in
the Indian domestic scenario. According to Nasscom, while the sector spent
around Rs 6,000 crore ($1.2 billion) in 2002-03, the figure would cross $2
billion in 2003-04. The main demands for increasing IT usage came from growing
CRM focus by banks to deliver better customer satisfaction, use of knowledge
management and business intelligence to analyze customer profiles and behavior,
besides the expansion of ATM networks and Internet and mobile banking. Even
regulatory requirements were significantly responsible for creating the need for
more IT adoption. RBI’s guidelines on the implementations of Real Time Gross
Settlement (RTGS) systems, SEBI’s introduction of Straight Through Processing
(STP) for financial messaging and legal recognition of electronic contract
notes, Basel Capital Accord or Basel II guidelines on risk management and the
Money Laundering Act, 2003 are some of the catalysts for growing IT usage.
Where
the Money Will
Go
CRM/BPM
ATM
deployment
Real
time gross settlement solution
Enterprise
integration and straight through processing solution
Anti-money
laundering solutions
A recent IMRB survey says 24% of BFSI firms in India list BI
and KM as top priority for the coming year. While RBI, ICICI Bank, HDFC Bank,
IDBI Bank, LIC and Standard Chartered Bank have already gone for BI
implementation in 2003, many more like Punjab National Bank and Bank of Baroda
are slated to follow suit this year. In fact, Global Trust Bank is currently in
the process of selecting and implementing a Customer Contact Management (CCM)
module to integrate its delivery channels. This would enable it to provide a
complete CRM platform—track customer behavior, lead generations, call center
management, focused response according to customer profile.
Says V Chandrasekhar, chief technology officer, Bank of
Baroda, "With retail banking through multiple channels expected to become a
norm for the larger banks and insurance companies, BI would be absolutely
crucial for them to retain and acquire customers to survive."
The installed base of ATMs has also grown dramatically last
year—from 7,500 to 11,000. A number of other non-banking functionalities like
utility payments and routine transfers would be included under the purview of
ATMs. Explains T K Srivastava, assistant general manager—Department of
Information Technology, Central Office, Union Bank Of India, "The ATM
machine would become a self-service banking unit, replacing the teller in the
bank."
RTGS, which is expected to bring India’s bond and money
markets on par with international practices, is to be operational by June 2004.
Once operational, RTGS would provide a new generation of high value payment
systems that would enable the core of the banking system across the country to
make secure payments across the country. "This would enable around 205
Indian BFSI institutions to interface directly," feels G M Shenoy, senior
vice president—IT, National Stock Exchange. A host of banks like ABN Amro
Bank, ING Vysya Bank, IndusInd Bank, State Bank of India, ICICI Bank, HDFC Bank,
Punjab National Bank, UTI Bank and Allahabad Bank have already walked into the
RTGS fold. The Hyderabad-based Institute for Development and Research in Banking
Technology (IDRBT) is developing the structured financial messaging system (SFMS),
which is a web-enabled software for inter-bank messaging in RTGS. The enterprise
integration and straight through processing (EISTP) is an emerging technology,
an end-to-end automation of financial transaction processing—from pre-trade
through to post-settlement.
Explains T P Ganapathy, assistant vice president—IT,
Central Depository Services (India), "The scope ranges from processing of
the original customer order through to post-settlement position management and
reconciliation."
Because of regulatory reasons, a few private banks and big
PSUs like State Bank of India would look at risk evaluation tools in 2004.
Another heavy IT usage area could be anti-money laundering systems, and with
only 8 banks currently having one in place, this could be the IT hotspot in
2004.
Finally, Business Process Management (BPM) which along with
document management are likely to be the technologies offering highest RoIs to
banks in 2004-05.
However, CN Ram, the high-profile CIO of HDFC Bank voices a
growing concern in the BFSI sector. "Banks have been the first to automate
their business, but they have gone overboard in embracing technology. While we
evangelized IT, we have, along the way, also de-personalized customer
services." Notwithstanding Ram’s reservations, a reversal or withdrawal
of technology adoption is unlikely.
