Business Priorities That Will Drive Upcoming Banking Tech Initiatives

Considering a significant number of Indian banks are settled with their Core Banking System (CBS), its time for the Indian banking sector to use this as a launching pad to rollout other IT initiatives mapped against their business priorities.

Speaking at the CII Banking Tech summit 2011, N. Chandrasekaran, CEO & MD- Tata Consultancy Services, identifies adequate liquidity, operational excellence, compliance adherence and transformation in payment systems as the top priority areas that Indian banks should adopt to continue to grow and keep competitors at bay. And, as it turns out, IT will be a key enabler in putting in place these priorities. Hence, investments in the IT systems in the banks will need to be closely aligned to these priorities.

Tech Investment Focus: FY 2011-12

Liquidity will top the priority list for most of the banks. They need to assure that they are constantly sitting on comfortable amount of cash. Gaining ‘Operational Excellence’ would be the next priority, although various companies would like to term it differently. The idea is to keep the cost lower than the income. Banks can attain this through exercises like system consolidation, Business Process Re-engineering, cloud computing, etc.

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The third area of focus is compliance. According to Chandrasekaran, banks should spend significant amount on compliance initiatives in the wake of various regulatory norms being announced.

Lastly, and something that will supposedly drive and sustain banking institutions’ competitiveness in the future, is the transformation in payment systems. Chandrasekaran suggests leveraging upcoming channels of delivery like mobile banking, social networking, and also tapping the potential of advanced technologies like predictive analytics.

Among the major technology investment areas that banks will be eyeing in FY 2011-2012, one can see initiatives that drive financial inclusion and help to target the customer better to be at the receiving end of the investments. A combination of multiple technologies and platforms, like mobile, apps, analytics and cloud will be leveraged to further the much pursued financial inclusion drive of the banks. On the other hand, more investments will also go into initiatives targeted to ‘understand the customer better’. “We will also see areas like payments and compliance getting a pie of IT investments by Banks,” believes Chandrasekaran.

Banking On Cloud

On the potential for cloud adoption by the banks in India, Chandrasekaran sounds quite upbeat, believing that India is ahead of rest of the world in the adoption of cloud computing. “We have a ‘Bank in the box model’ adopted by about 4000 branches of very small rural banks. The solution is packaged such that it can host all the banking applications and can then be provided as a service. As a result, the cost of the transaction for all the banks is significantly low which wouldn’t have been possible if the banks had used separate IT platforms,” he explains.

Chandrasekaran fails to be dampened by the scepticism around security like many of the CIOs and experts, and doesn’t consider security as the reason for banks to not adopt the cloud model. “It’s about reaching out and enabling banks to assess the current IT environment of the bank and then accordingly conducting a cost and benefit analysis of making a transition to the cloud. Further, it’s all about helping them to port their current technology platform onto the cloud based on the existing IT infrastructure and providing training to the concerned staff,” he adds.

As the Indian banks get set to align their tech priorities to their business priorities, the evolution will further drive the banking CIOs to drive IT investments to deliver maximised business impact.