What are the Big Boys Doing? Some case studies:>>>>>>>

State Bank of India
IT Investment: Rs 800 Crore. IT spend in 2001-02: Rs 100 Crore +

SBI is in the process of networking 1500 branches spread across 52 cities. The bank aims to take 80% of its business online by 2004.

SBI has more than 1000 ATMs. It plans to introduce non-cash services like utility payments and reservation of railway tickets and also devise a fully automated system for inter-branch transactions. The system called STEPS (State Bank Electronic Payment System) is aimed at providing ‘same day’ credits/debits for telegraphic transfers and collections.

Life Insurance Corporation
IT investments: Rs 300 crore in total, at around Rs 60 crore annually

This insurance major has come a long way from its days of mainframes and tedious processing systems. Today it is connected to 2000 locations across the country. With total assets valuing $ 48 billion and managing over 115 million policies, Life Insurance Corporation (LIC) of India has one of the largest number of customer records in the world with over a million transactions per day.

LIC completed the setting up of local area networks (LANs) in all 2048 branches in a record of three years. This was the first major move towards automation of services to customers, agents and employees. Standard computer packages were developed and implemented for ordinary and pay savings scheme policies. The entire application software has been developed in-house.

IDBI Bank
Total IT investment: Rs 75 Crore

IDBI Bank deployed Finacle, an e-age banking solution developed by Infosys. The rollout across all branches was completed in five months. The bank also implemented Kondor+, treasury front office software from Reuters and ITMS, and treasury back office software from Synergy Login.

Investments in IT were made in order to create an efficient organizational infrastructure so as to enable IDBI deliver their products seamlessly, create convenient access channels and provide efficient services to retail and corporate customers. Of the total investments of Rs 75 crore, large investment has been made in back-end technologies to strengthen processes, systems and controls.

Bank of Baroda
Total IT Investment planned : Rs 250 Crore ( from 2001-03)

The Bank of Baroda (BoB) has 58% of its branches (including all metro branches) and 77% of its business computerized. BoB was the first PSU bank to have state of the art integrated treasury and risk management tools in its treasury branch. The bank has an intra-city connectivity of 290 branches and 24 VSATs nodes that connect to RBI’s INFINET network. BoB offers Internet based service for utility bill payments at www.billdesk.com. It has engaged the Gartner group for formulating and implementing its business and IT strategies.

PSU banks
Following their private and MNC counterparts closely, public sector and co-operative banks alike like the Punjab National Bank (PNB), Bank of Punjab and Cosmos implemented core-banking solutions. Another insurance major, New India Assurance, automated over 600 branches in 2001-02, straight demand for over 600 Intel servers. The RBI directive for quick computerization by Indian banks and increasing readiness of banks to oblige, saw the demand for servers swell up.

NCR concluded automated teller machine (ATM) and maintenance services deals, a combined value of over $10 million, with two banking majors, the State Bank of India (SBI) and ICICI. SBI and ICICI Bank are both expanding rapidly in the financial self-services market. Each of these banks now have an installed base of over 1,000 ATMs and have announced plans to double the figure by March 2003. NCR has had long-standing relationships with both SBI and ICICI and is their leading supplier of ATMs. In addition to setting up over 600 ATMs, NCR is also providing maintenance support for these units

HCL Comnet is offering ATM inter-connectivity for SBI. Chennai-based Financial Software and Systems has been appointed to provide SBI with a Base 24 switch. With the switch and ATM interconnectivity in place, the bank will enhance its product portfolio by offering debit cards, smart cards, e-commerce and Internet banking.

ICICI, HDFC, and UTI intend to bring together their ATMs under a single network, and shared with SBI. All four banks’ connectivity is based on Base 24 switches.

The Indian market watchdog, Securities and Exchange Board of India (SEBI), in association with the National Informatics Centre (NIC) has set up an electronic data information filing and retrieval [EDIFAR] system, so as to enable the filing of certain documents by listed companies on its website. This system is being introduced in phases and will be applicable to 200 companies across all sectors, including ICICI, BoB, HDFC and the State Bank of India.

Internet banking: Picking up steam
Internet banking in the retail segment is a recent phenomenon that is generating keen interest among banks. Private and foreign banks have been prime movers in the area while public sector banks are latching on to the bandwagon. The total number of Internet banking registrations in India crossed 2 million, an IDC estimate, while the number of active users are around a million. This represents 15% of the total Internet user population, a clear indication that the concept of Internet banking is catching on.

Triggers
24 x 7 availability, increase in customer convenience, retention and cost reduction triggered the concept of online banking. The cost of an online transaction is estimated to be nearly one eighth of that done through branch banking.

Private and multinational banks are taking a lead on in Internet channel, which is gaining in importance. Banks such as ICICI, HDFC, IDBI, Bank of Punjab and MNC’s like HSBC, Citibank and ABN Amro are among those offering online banking services. These include checking account details, ordering for cheques/drafts, mobile banking and share trading. The real trigger that seems to be driving online banking is the facility of making utility payments. However, the future of banking will be one in which customers can address most of their needs through self-directed means and the key differentiator will be how effective a bank is in getting customers online and deriving measurable value from this presence.

The challenge for banks would lie in expanding their subscriber base of online consumers and enhance their service portfolio. How the banks fare in designing, improving, marketing and rolling out services will greatly impact the adoption trends.

While Internet banking in India is still in nascent stage, it can become a significant channel for servicing customers. Countries like Singapore have nearly 10% of their population banking online. Though India may have a very small online banking population, the untapped market represents a huge potential.

Outlook
It is clear, then, that IT deployment in the banking, financial services and insurance segment is all set to grow. Public sector banks and financial institutions have started connecting their locations and are devising more means to bringing convenience to customers. From implementing customer relationship management applications to managing and integrating of back-end processes including ensuring network connectivity and quality of services, the gamut of solutions range to this extent. So IT will be used for repositioning the bank in an integrated financial services market. Ultimately the key differentiator would be quality of services that companies offer, which would all be enabled by IT.