technology in banking and foresight for bta_2012

8/10/2019 Technology in Banking and Foresight for BTA_2012

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Foreword

Banks and financial services are

them totally transform their bumultiple areas apart from core

which is no longer thought as r

With the emergence and con

developments in the banking s

increasing the reach and last

executed through a mobile h

reduced.

IT will continue to play an

management and data securitytools and strategies such as linki

This will give banks access to

transactions and behavior data

banks IT systems will become

website cloning and identity th

ahead on security issues. The r

information security officer will

Significant initiatives are being

management, business intelligemanage business risks, consoli

about cloud computing. Autom

Banks have initiated the proces

showing keen interest in facilita

and organizational structures.

We expect significant developm

developments in banking techn

B. Sambam

Director

Institute for

in Banking

the biggest adopters and spenders on technolo

siness models. Banks have leveraged informati banking. There is also a marked difference in

eplacement for human capital but as a critical

ergence of mobile technology with informat

pace has become much more exciting and d

ile connectivity for banks. Most banking trans

ndset and the need to visit a bank branch

increasingly important role in banks of to

ill become critical. Some banks are already invng to customers' Facebook profiles and building

ustomers' social profiles. This could be combi

ill allow banks to personalize service and prod

ital to prevent hacking attacks and informatio

eft are also on the rise and banks will have to

oles and responsibilities of chief information of

become vital in the near future.

taken by banks in areas like analytics for c

nce, enterprise data warehouse, security anddation. Banks are getting into virtualization a

ted data flow is another area where there is c

s of adopting IT Governance framework. Indep

ting IT governance process by putting in place a

ents in these areas in the immediate future. Thi

logy and their impact in various functional area

urthy

Development & Research

echnology

A

P

G

E

gy which has helped

n technology (IT) in the approach to IT

nabler for business.

ion technology, the

namic, especially in

ctions today can be

has been drastically

orrow. Information

sting in social media online communities.

ned with customers'

ct offers. Security of

n theft. Instances of

be constantly a step

ficer (CIO) and chief

stomer relationship

real-time systems to d are quite curious

nsiderable progress.

endent directors are

propriate strategies

s report captures the

.

shvin Parekh

artner and National Leader

lobal Financial Services

rnst & Young Pvt. Ltd


3/19

Institute f or Develop

in Banking Technolo

Executive Summary....................

1. IDRBT Awards for Excellenc

2. Introduction .......................

3. Use of Technology for Fina

4. Mobile Banking and Electro

5. Customer Relationship Ma

6. IT Implementation and Ma

7. IT for Operational Effective

8. Managing IT Risk................

9. Conclusion..........................

ment & Research

y

Technology in Banking: Towards Optimization and Effectiv

Contents

..............................................................................

e in Banking Technology 2011 .............................

..............................................................................

cial Inclusion (FI) .................................................

nic Payments........................................................

agement (CRM) & Business Intelligence (BI) initi

agement..............................................................

ness.......................................................................

..............................................................................

..............................................................................

e Utilization of IT Resources 2

...............................3

...............................4

...............................4

...............................6

...............................9

atives...................12

.............................14

.............................16

.............................17

.............................18


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in Banking Technolo

1. IDRBT Awards for

The process for the eighth editi

March 2012 with a jury meetin

was chaired by Mr. KV Kamath,

Dr. R. B. Barman, Forme

Dr. K. Ramakrishnan, CE

Prof. G. Sivakumar, IIT

Prof. U. B. Desai, Indian

The awards categories for the y

1. Use of Technology for Fi

2. Mobile Banking & Electr

3. CRM & Business Intellig4. IT Implementation and

5. IT for Operational Effect

6. Managing IT Risk

The jury also decided that IT in

given the past experience wher

the categories banks may be as

may be requested for further d

that the category may be drop

banks on innovation but the rexpected from the banks in nex

Evaluation Process

Strong and heartening respons

overall increase in level of conf

banks, with 138 nominations, p

banks. Banks were segregated

crores.

2. Introduction

Financial services especially ban

multiple areas like service deli

data management), cost reduc

communication technology (IC

geographic and time boundari

service delivery. The Banking s

systems to assist and complem

ment & Research

y


xcellence in Banking Technology

ion of the excellence in banking technology aw

g to discuss and finalize the award categories.

hairman ICICI Bank and comprised the followin

r Executive Director, RBI (Jury Member)

O, IBA (Jury Member)

umbai (Jury Member)

Institute of Technology, Hyderabad (Jury Memb

ar were as follows:

nancial Inclusion

onic Payment Systems

nce Initiatives anagement

iveness

novation be one of the parameter for judging t

e the nominations were not very strong, the jur

ed to reply on any innovative initiative and if fo

tails. However once the evaluation was comple

ed. The jury also noted that multiple initiatives

esults are not yet visible and strong responsyears awards.

was received from the banks in all awards cat

idence and maturity in use of technology in b

articipated in the awards process, comprising

into large and small category based on deposi

ks have been early adopters of technology and

ery (alternate channels), operational effectiv

tion, productivity enhancement and governan

) has helped banks increase their scope and

s. Indian banks today have global operations

ctor has and continues to implement new inf

nt growth. Banks have been significantly upgra


2011

ards was initiated in

he jury for the year

:

er)

he nominations, but

y felt that in each of

und substantial they

ted the jury decided

have been taken by

e in the category is

gories, indicating an

nking. A total of 30

21 large and 9 small

t size of INR 50,000

have leveraged it in

ness (workflow and

ce. Information and

scale to overcome

and round the clock

rmation technology

ing their technology


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in Banking Technolo

infrastructure to bring down co

and operational efficiency.

A look at the IT expenses1

(both

increased from Rs. 269 crores in

The IT expenses grew by appro

increasingly embarking on trans

service their clientele. Their IT e

Figure 2

IT strategy and vision

IT is recognized as a key Strate

competitiveness of businesses.

banks to define long term IT vi

1Based on a sample of 26 banks (1

above and below Rs.50,000 crores.

269

373

35

2009-10

5%

5%

16%

0%5%

10%15%20%

All Banks

Small Banks

Y-o-Y Growth in IT

2010-11

ment & Research

y


ts of resources, facilitate cross selling and enha

capital and operational) of banks shows that th

2009-10 to Rs. 283 crores in 2010-11 and Rs. 30

Figure 1

ximately 9% in FY12 as compared to 5% in FY1

formation and undertaking technology adoptio

xpenses grew by 16% in FY11 and 32% in FY12.

Figure 3

ic function, as appropriate use of IT can impro

The increasing criticality of ICT in banking ope

ion and strategy aligned with business goals a

large and 8 small) categorized as large and small bas

283308

391422

41

2010-11 2011-12

Average IT spend (Rs.cr)

All Banks Large Banks Small Banks

Large Banks

spend

9

32%

0%10%20%30%40%

All Banks

Small Banks

Y-o-Y Growth

2011-1


ce customer service

average spends has

8 crores in 2011-12.

1. Smaller banks are

to retain, grow and

e the efficiency and

rations have led the

d objectives. The IT

ed on deposit base

54

%

Large Banks

in IT spend


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vision provides direction to IT i

IT strategies of bank have been

IT with Business requirement

components of IT vision and str

Use IT to provide and e Enable branches/users t

Optimize transaction ha

High availability and per

Decision support syste

Security and protection

IT Governance policy an

Strategies to reduce car

Banks have also put in strong m

IT steering committee and proj

business owners to facilitate an

3. Use of Technology f

Technology has been a major dr

cost and illiteracy among the ta

handheld devices for custom

authentication and IT infrastruc

regulatory policy relaxation on

and self help groups for credi

addition the governments sup

viability of the initiatives.

Business Growth

FI has been the policy thrust a

towards increasing inclusion. T

generated in the FI initiatives

processes. On an overall basis nsmall banks show a large increa

adding upto a quarter of their c

2Data is based on the nomination s

ment & Research

y


itiatives, and aligns IT objectives with the bank

designed to provide necessary support to impro

and reduce costs. The following aspects int

tegy for effective and efficient use of technolog

able scale to cater to business growth

o provide quality services to customers

ndling capability of the Bank

formance of systems

s based on single version of truth

of customer data privacy

d procedures

bon foot prints

echanisms to align IT and business objectives. IT

ct level committee have been put in place with

ensure that IT initiatives are driven by business

or Financial Inclusion (FI)2

iver of FI initiatives in India and globally. The ini

rget customers were all solved by the use of te

r acquisition and transaction processing, us

ure for driving down costs are slowly making FI i

ranchless banking and business correspondent

t as well as savings linkage has created adeq

port in terms of electronic transfer of benefi

ea in the past few years and banks have mad

he efforts have begun to stabilize and suffici

with stabilization business models, technolog

o-frill accounts opened by banks grew by 36% ose in percentage due to the base effect. Overall

stomer base every year indicated by the media

ubmitted by 18 large and 4 small banks for the categ


s mission and vision.

e Business, i.e. align

er alia form critical

.

strategy committee,

representation from

goals.

tial hurdles of reach,

chnology. The use of

e of fingerprint for

initiatives viable. The

to enroll customers

uate momentum. In

ts is also adding to

e remarkable efforts

nt traction is being

infrastructure and

er the last year. The half of the banks are

growth of 28%.

ry


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Figure 4

The outstanding balances in no

million and median of Rs.895

smaller banks have also started

Figure 6

The average active (accounts wi

some improvement. However it

ratio of more than 10%, the rem

Figure 8

Business and operations m

Banks have experimented with

based models, mobile vans and

3.153.85

1.97 2.34

All Banks Large Banks

No-frill accounts (milli

Average Me

2,590

3,164

895

2,014


Balance o/s in No-frill ac

Average M

226

4

-

100

200

300All Banks

Small Banks

Active no-frill accounts (

Average

ment & Research

y


Figure 5

-frill accounts show a sizable growth with an

illion. The large banks expectedly are driving t

to make their presence felt.

Figure 7

ith at least 4 transactions in the last financial y

is an area of concern as only 7 out of 22 banks

aining 15 banks hover around 1-1.5%.

Figure 9

del

various business models namely brick and

ultra small branches. A mix of all three models

0.01 0.01

Small Banks

on)

ian

36% 36%28% 27%


Growth of No-frill ac

Average

11 3

Small Banks

counts (Rs.mn)

edian

79%43%35% 35%


Growth in balance o/s in

accounts

Average

285Large Banks

000s)

15%

20%

0%

10%

20%All Banks

Small Banks

Active no-frill acco

Average


verage of Rs. 2,590

e FI agenda and the

ar) have also shown

have active accounts

ortar branches, ICT

is today deployed by

49%

111%

Small Banks

counts

272%

100%

Small Banks

No-frill

15%

Large Banks

nts percentage


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banks and the primary mode o

correspondents (BCs) and self h

The enrollment of BCs and linka

1,788 BCs and 74,000 SHGs link

86% driven by large banks. A to

nominating banks of which 18,1

Figure 10

Figure 12

Technology infrastructure d

Banks have deployed either the

For in-house systems banks hav

Core Banking System (C

The accounts of financial inclus

required for conducting basic b

value high volume transactions.

Financial Inclusion Gate

The FIG purpose is to integrate

promote BC interoperability a

1,788

2,48

-

1,000

2,000

3,000All Banks

Small Banks

Business Correspond

74

3

-2040

6080

100All Banks

Small Banks

SHGs (000s)

ment & Research

y


distribution and reaching the target customer

lp group (SHG) linkage.

ge of SHGs has improved drastically with banks

ed. Growth over the previous year for BCs has

tal of 39,346 BCs and 1.62 million SHGs have b

60 BCs and 349,389 SHGs have been added for t

Figure 11

Figure 13

eployed

in-house or out-sourced model for FI technolo

put in place a separate CBS and FI server.

BS):

ion are hosted in a separate CBS which offers

nking transactions and does not clog the existi

way (Switch):

all diverse front end technology platforms with

nd integrated middleware, referred to as th

175Large Banks

nts

86%

65%

0%

50%

100%All Banks

Small

Banks

Growth in BCs

89Large Banks

28%

11%

0%

10%20%

30%All Banks

Small Banks

Growth in SH


is through business

having an average of

been approximately

een linked by the 22

he year.

gy implementations.

ll the functionalities

g bank CBS with low

Banks CBS and thus

Financial Inclusion

86%Large

Banks

28%

Large Banks

s


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Gateway. This switch would ma

responsibility mostly resided wi

like NPCI/ UIDAI. It would act a

DCMS for Rupay Cards, offer us

facilitate reconciliation and MIS

In the outsourced model the n

interface/ establishment of co

hand held terminals, webcams,

photo and finger prints of the c

Financial inclusion initiatives

customers being acquired and b

large scale and low cost. The

measures through Aadhar and

sustained momentum of FI in

products through BCs and SHG

banks themselves.

4. Mobile Banking an

Mobile Banking Business G

Banking has been one of the ea

the advent of smart phones.

provision was the main driver,be executed through the mobi

agnostic and interoperable acr

USSD and Plain text SMS Bankin

The use of mobile is more as an

however its utility in funds tran

and banks need to popularize th

Figure 14

3Data based on nomination submit

879

166

-

500

1,000

1,500All Banks

Small Banks

Avg daily number of alerts

(000s)

ment & Research

y


nage the diverse authentication modes (till dat

th the BCs) and interface seamlessly with the e

a repository of Biometric Fingerprints and aut

er friendly interfaces for customer enrolment a

etc.

ecessary IT infrastructure is provided by the se

nectivity with CBS of bank, supply of point of

biometric reader to the field BC for capturin

stomers at villages.

ave started to generate momentum with in

anks making increasing efforts to deliver basic

technology enabled service delivery model c

other electronic benefit transfer (EBT) mec

itiatives. Some banks have also begun to o

leading to improved viability for the interme

Electronic Payments3

owth

rly adopters of mobile technology and really co

hile during the early stages, led by the privat

banks today provide a wide range of transactioile phones. Majority of m-banking application

oss telecom service providers and available vi

g.

information channel rather than for any actual

sfer can be vital especially for remittances und

e same to FI customer base.

Figure 15

ted by 18 large and 7 small banks for the category

,117

Large Banks

pushed by banks

1

1.1

-

50.0

100.0

150.0All Bank

Small Banks

Average daily information aler

users (000s)


e the authentication

xternal environment

entication, maintain

nd kiosk applications

rvice provider which

sale (POS) devices/

of enrolment data,

creasing number of

anking services on a

upled with viability

anisms will lead to

fer micro-insurance

iaries as well as the

me into its own with

banks, information

n services which can today are handset

a SMS, GPRS, WAP,

banking transaction,

er financial inclusion

0.5

147.0

s

Large Banks

s pulled by


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in Banking Technolo

The total customer base enroll

were registered only for alert s

them were registered for mobil

have mobile customer base of

Figure 16

While the banks have managed

the channel for banking transac

Figure 18

The average daily value of mo

However the growth for the ye

and concerns on security.

3.28

4.33

0.92

1.52


Mobile Banking user base (

Average Med

771

1,001

64 94


Mobile fund transfer user

Average Me

ment & Research

y


d for mobile banking stood at 81.7 million; ho

rvices pushed by the banks. Only 23% of the to

le funds transfers. Additionally only 9 large ba

ore than 1 million.

Figure 17

to register a sizable customer base for mobile

ions need to be popularized.

ile fund transfers stood at Rs. 16.85 million f

r has not been significant which could be due t

0.54 0.53

Small Banks

million)

ian

59%

57

106%

0%

50%

100%

150%All Banks

SmallBanks

Growth in Cust

9916

Small Banks

base (000s)

ian


wever most of them

tal or 18.7 million of

ks and 1 small bank

anking the usage of

r the year 2011-12.

o customer behavior

LargeBanks

omer Base


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in Banking Technolo

Figure 19

According to the recent World

2012: Maximizing Mobile (rel

worldwide, both pre-paid and

billion now, of which nearly 5

number of mobile phone subscr

There is no doubt that mobile

information device but as a cha

and interoperability will be cruci

Electronic Payments Busine

Electronic payment has been athe regulator such as electronic

time gross settlement (RTGS)

enabled interconnectivity betw

However a look at the data s

based.

Figure 21

Trends in retail payments sho

internet banking, credit cards s

credit among the general popul

16.85

12.95-

5.00

10.00

15.00

20.00All Banks

Small

Banks

Avg daily value of mobile fund

(Rs.mn)

468

15-

250

500

750All Banks

Small Banks

Average daily value of p

transfers (Rs.

ment & Research

y


Figure 20

Bank report, Information and Communicatio

ased July 17, 2012), the number of mobile

post-paid, has grown from fewer than 1 billio

billion in developing countries. The report esti

iptions will exceed the world population.

banking will become increasing critical for ba

nnel banking transactions. However the proce

ial in driving the increase in usage.

ss Growth

critical component of technology adoption by b clearing service (ECS), national electronic funds

have accelerated the pace of technology ado

een banks. This has truly manifested in anywh

ows that a large proportion of banking funds

Figure 22

that the use of debit cards has increase co

till have not gained much acceptance possible

ce or the high charge structure of credit cards.

18.37Large

Banks

ransfers

32%

1%

0%

50%All Banks

Small

Banks

Growth in value of mobil

645Large Banks

per based fund

.bn)

73

4

-20406080

100

All Banks

Small Banks

Average daily value o

transfers (


ns for Development

subscriptions in use

n in 2000 to over 6

ates that soon the

nking not just as an

s simplicity, security

nks. Initiatives from transfer (NEFT), real-

ption by banks and

re anytime banking.

transfers are paper

siderably alongwith

due to a dislike for

45%

Large

Banks

fund transfers

99

Large Banks

electronic fund

s.bn)


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in Banking Technolo

Figure 23

Changing customer preferences

income and spend, as well as n

India.

5. Customer Relations

(BI) initiatives

CRM in banks is increasingly g

necessitating improvement in c

in enterprise data warehouse a

sell to maximize share of wallet.

Customer Relationship Manag

integration of every area of bus

services and field support throu

solution has modules like Busin

Leads Management for effectiv

through any of the customer t

track campaigns undertaken by

a standardized view of require

Reporting to understand custo

Complaints Management Syste

As CRM is integrated with vario

GBM and LAPS therefore whe

continuously getting converted i

customer enabling banks in pro

An analysis of the channels sho

requests, closely followed by A

4,742

6,574

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Debit cards

ment & Research

y


, mobile and internet penetration, rising cards,

ew technology initiatives have bolstered the pa

hip Management (CRM) & Busine

ining importance. The increasing competitiven

stomer service as the differentiator. Banks are i

d CRM systems to get a full view of customer re

ement is a comprehensive approach which

iness that touches the customer-namely marke

gh the integration of people, process and techn

ess Prospect Management to enable complete

ly capturing, tracking and managing business o

uch points and maximizing conversions, Camp

various departments of the Bank, Product Man

ments and performance of banking products,

mer behavior and to offer them relevant off

for speedy grievance handling.

s legacy systems viz. CBS, ASCROM, DEMAT, De

rever the information is available same is up

into the customer data hub. This helps Bank to h

iding better service as well as cross-selling the p

ws that branch is still the dominant channel fo

TMs which means that a significant proportio

25.4

3,

33.031 5.9

Credit cards I

Average daily payments (Rs. mn)

All Banks Large Banks Small Banks


growth in disposable

yments landscape in

ss Intelligence

ess in the market is

ncreasingly investing

lationships and cross

provides seamless

ting, sales, customer

ology. A typical CRM

view of a customer,

portunities received

ign Management to

agement to facilitate

usiness Intelligence

ers & products and

bit Card Application,

dated. Thus CRM is

ave 360 view of the

roducts.

r receiving customer

of routine deposit,

31

5,311

24

ternet banking


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in Banking Technolo

withdrawals and cheque boo

phone/internet banking still ha

popularity could be the troubles

Business Intelligence

With the exception of a few ba

in place in terms of people an

management capabilities are s

adopted and most banks rely

customers additional requirem

The largest bank in the country

with seamless integration to d

exposure to Corporates, turn

provided to them. It include

corporate, campaign managem

periodic analysis of customer ch

As the proliferation of business

situation of having access to a l

data in a way that it transform

Towards this purpose many ban

process specific data marts to E

been made in procuring and d

banks make more sense of the

of the curve and need to increas

1,484

2728

-

500

1,000

1,500

2,000

2,500

3,000

All Ba

Cha

Branch Intern

ment & Research

y


requests have taken some burden of the

s a long way to go. A probable reason for ph

ome menu and waiting time.

Figure 24

ks, most others are still in the process of putti

d IT tools. BI capabilities in terms of data mi

till low. Customer life cycle management ap

on branches or other product teams to pass

nts.

has undertaken commendable initiatives in BI li

ifferent source systems, corporate one view

ver with the Bank and the income generat

s commercial, institutional, small business a

ent tool (to track campaign category, and cust

urn/ attrition, acquisition and retention.

processes on systems continues unabated, ban

t of data online. Staying competitive increasingl

into Information that can be converted into a

ks have put in place Information Management s

nterprise wide Data Warehouses. Significant in

ploying state of the art reporting and analytic

data its systems are capturing. However most b

e efforts towards effective leverage of business

2,458

2245 11

447

330.18 0.16 0.9.36 14.91

nks Large Banks Small Ban

nel wise requests received for the year (m

et banking/ email ATMs Mobile Call center/


branches. However

one banking's lower

g business analytics

ning and knowledge

roach is still to be

on information of a

ke a data warehouse

(which provides the

ed through services

nd small industries

omers reached etc),

ks are in the distinct

y means utilizing this

business advantage.

ystems ranging from

vestments have also

s tools that help the

anks are at the start

intelligence.

21 1.04

ks

)

Phone


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in Banking Technolo

6. IT Implementation

With the ever increasing use of

have effective IT implementati

requires alignment of IT plan

align business and IT teams. Mi

opportunity loss. The critical c

figure below.

Figure 2

Banks have formed various tea

officer (CTO) like infrastructure

group, governance compliance

objectives in addition to chie

implementation.

Most of the banks have put in

The data center infrastructure

standards institute and ISO 270

put in place appropriate disaste

Given the critical dependence

considering best practices un

Objectives for Information and

requirements. To ensure good s

mechanisms:

ment & Research

y


and Management

technology in all areas of banking it is becomin

ion and management plans in place. Effectiv

ith the business objectives and organization

salignment of any sort would lead to unnecess

mponents of an effective implementation pla

5 Components of IT implementation

ms under the chief information officer (CIO) a

technology group, systems management group,

and finance group to effectively align busine

information security officer to cover all as

lace adequate IT and network infrastructure fo

is mostly tier 3 and designed and maintained

01 certified. In view of the criticality of IT infra

recovery (DR) and redundancy plans.

n IT, banks have implemented a robust IT Go

der different IT frameworks and standards

Related Technology], ITIL, ISO20000, ISO27001

ynergy between Business & IT Strategy, banks


critical for banks to

IT implementation

echanism to closely

ry costs, delays and

are outlined in the

nd chief technology

technology solutions

s objectives with IT

pects of technology

r operational needs.

according to Uptime

tructure banks have

ernance mechanism

like CoBIT [Control

and other regulatory

ave set-up following


16/19


in Banking Technolo

IT Strategy Committee to pr

alignment, policy formulation, r

aspects. IT Steering Committee

set by strategy committee an

Committees for all significantly

Disaster Recovery Committee

disaster and records of all DR e

and post project Go Live, the

significantly large projects. Co

team to ensure that laid-down

senior management.

Management of IT assets is ano

various policies and processes

practices and frameworks like

Governance infrastructure and

Below are some of the specif

applications, infrastructure & p

IT Capacity Managemen

IT Technology Infrastruc

IT New Solution Identifi

IT Change Management

IT Release Management

IT Asset Lifecycle Mana

IT Outsourcing Process IT Supplier Managemen

IT Configuration Manag

Banks have put in place a prope

the Information Security and ris

used for approving the standard

within the Bank. Periodic IS audi

Energy management and gre

management, banks are increaconsumption of data centers.

been adopted by some banks.

ment & Research

y


ovide overall direction to IT function and t

viewing IT investment, value delivery, risk man

at group head & business head level, to take fo

d drives, implements & reviews the executio

large strategic initiatives to review and monitor

for application team, DR teams, and other r

ents. Project progress is monitored throughou

re is a Post Implementation Review (PIR), whic

trol Self-Assessment (CSA), which is conduct

policies & processes are adhered and a repo

her critical component of the IT strategy and ba

to effectively manage the IT infrastructure. Ba

COBIT, ISO20000 & ISO27001 standards for

accordingly various IT Policies and procedures

ic processes, which are focused on manage

ople.

t Process

ture Management Process

ation Process

Process

Process

ement Process

t Process

ment Process

r IT Policy & IS Security Policy and set standards

ks. The Information Systems Security Standards

s and procedures to safeguard and improve the

t also creates and reinforces security awareness

en technology is also increasing forming a

singly looking at energy saving measures andreen initiatives like solar powered ATMs and


look into strategy

gement, compliance

rward the directions

n. Project Steering

project progress. IT

lated parties about

the project lifecycle

is conducted for all

d by IT Governance

rt is presented to IT

nks have put in place

k are adopting best

building a robust IT

ave been launched.

ent of information

o efficiently manage

Committee (ISSSC) is

information security

.

critical part of IT

reducing the power even branches have


17/19


in Banking Technolo

7. IT for Operational

Banks have implemented data

which in turn extracts data fro

system, credit card system etc.

dates, standardization of telep

codes based on city) and enri

extracting data from data ware

with cluster id, system id and h

This has benefited in de-duplic

segments. This enabled the ba

bank even if relationship was no

The governance process for peo

responsibilities through a specif

are not included in the scope

operations. Process governanc

involved, persons involved in t

with the commands, The activit

the regular daily /weekly/mont

procedures. The status of activi

status notes. Exceptions and err

Data management is ensured b

and procedures in order to m

manner. Standard policies pract

used for data extraction and po

the efficient sharing of infor

information throughout its lif

developed applications like rei

processing systems etc. which

applications.

Payment processing covers all

branch/remote locations with a

in a predefined route as is requi

work item not only in the cent

software, ERP while seamlessl

routing performing of tasks acr

implemented are scalable and

systems are built upon common

Operations is an area where IT

systems is a desired ideal state

state to attain. The use of IT in

process re-engineering to simp

ment & Research

y


ffectiveness

quality solution which sources its data from t

m various operation systems like core bankin

he solution standardizes (identification of gend

one numbers, area codes, mapping of cities a

ches the data of each record set. It works o

house, identifying the duplicate customers whi

usehold id. This processed data is then pushed i

tion on the entire customer base spanning acr

nk to have customers complete relationship,

t been declared by the customer.

ple includes clear definition of roles, proper ass

ic office order, segregation of duties, ensuring

of work, rotation of duties, ensuring second li

e includes proper documentation of the pro

e activity, the details of the servers and the j

y charts and check lists and monitoring mechani

hly and adhoc activities are completed. There i

ties is also monitored through key performance

or reporting and escalations are part of the gove

the development and execution of architectur

anage the information lifecycle needs of the

ices and procedures are put in place. Automate

pulation. The solution focuses on improving da

mation, providing trusted business-critical d

cycle. Workflow automation is being used i

bursement of staff expenses, leave manageme

ork with human resource management system

the processes right from inputting document

maker checker functionality to directing the wo

red by the bank. It provides facility to track the

ralization software but also in related softwar

integrating the various systems. The applic

oss various modules. In terms of system archi

enable addition of new systems and module

ly used, industry standard platforms.

can add a lot of value and seamless integrati

but due to various legacy systems in use, it h

operational effectiveness also requires a huge

lify processes and appropriately use technolog


he Data Warehouse

, loan management

er, rationalization of

d association of pin

n the basic logic of

ch are then grouped

nto data warehouse.

oss various business

rofitability with the

ignment of roles and

that conflicting roles

ine for continuity of

cess flow, activities

bs performed along

sm to ensure that all

s also error handling

indicators (KPIs) and

rnance process.

s, policies, practices

bank in an effective

d solutions are being

a quality, promoting

ata, and managing

n various internally

nt systems, payment

(HRMS) and financial

s like invoices from

rkflow automatically

present status of the

s like core banking

tions also facilitate

tecture, the systems

s in the future. The

n of all operational

s become a difficult

amount of business

y for the processes.


18/19


in Banking Technolo

Despite the intensive use of IT,

training both job skills and soft s

8. Managing IT Risk

Most banks have IT security p

regulatory guidelines. The polic

classification, access control, ch

usage policy, incident handling,

training, disposal of IT assets, et

ultimately managing and minimi

Figure 26 Managing IT Risk

On IT hardware, policies cover

installing the IT equipments li

vendor, proper environmental c

of acceptance tests to ascertai

the form of annual maintenanc

hardware inventory, logical sec

information security needs to

software risks as well as costs a

patching of the software, contr

software risks are minimized.

ment & Research

y


eople will remain a critical aspect of service del

kill will be important in achieving operational ef

licy in place which is reviewed every year in

y covers information security management (IS

ange management, backup, password policy, e

business continuity and disaster recovery plan, s

c. All these information are to have better contr

zing IT risk.

s pre-dispatch inspection, the precautions to

ke adherence to the specifications and reco

ontrols, only necessary services, etc. It also inco

whether system is working correctly, mainten

e contract (AMC), insurance, disposal of IT har

rity of hardware, backup of its data, etc. IT so

be incorporated at all stages of software d

re minimized. Software policies also cover main

lling program source library, emergency amend


ivery and continuous

ectiveness.

accordance with the

) architecture, data

mail policy, internet

ecurity awareness &

ls on IT security and

e undertaken while

mendations of the

rporates the practice

ance and support in

dware, documenting

tware policies cover

evelopment so that

tenance, upgrade or

ment, etc. so that IT


19/19


The logical access control is bas

user ID is based on the role t

information handling and proce

industry practices.

IT risks in terms of security and

and real-time alerts systems ne

to be initiated as soon as possibl

9. Conclusion

Information technology (IT) h

environment, IT is a fundamen

represents a significant area of

changing and rather than beincome up with innovative busin

number of macroeconomic fact

and work closely with the busin

Business and IT leaders must b

addressing concerns such as

fundamental operational needs

to:

Align IT strategy, investmen Provide IT enablement for k

Increase the overall return o

Reduce the cost and effort r

Establish effective IT sourcin

Improve the management o

Manage and measure IT per

However all the initiatives hav

speed with which a bank can r

effectively it can compete.

Indian banking though a late ad

of newer technologies like int

efficiency and effectiveness of b

IDRBT Team

Mr. M.V. Sivakumaran, Faculty

Mr. G. Raghuraj, General Mana

Dr. G.R. Gangadharan, Faculty

ment & Research


d on user ID. The user type and capability level

he user would perform. Most IT policies cov

ssing and the requirements of latest security st

threats need to be monitored on a continuous

ed to be implemented in addition the incident

le on indication of any threat.

as become critical for many organizations.

tal and growing component of day-to-day busi

investment for many banks. In recent years, th

g seen merely as a utility, the function is incrss improvements. With competition increasingl

rs, IT leaders have to understand the dynamics

ss to address the challenges.

lance their vision for how IT can add value to

levels of IT service and support, program

. Many banks have made progress to counter s

and efforts with the business strategy ey business process and major transformations

n IT investments

equired for IT to maintain required levels of sup

g strategies

f security, risk and compliance issues related to I

formance

to result in operational agility and not just r

spond and adapt to market changes has a dir

pter of technology has made rapid strides espe

ernet and mobile banking and IT still offers

anking as well as increasing the coverage.

er

Ernst & Young Team

Ms. Hema Jagtiani, Senio

Performance Improveme

Mr. Kamal Tirkey, Assista

Markets, Financial Service


associated with each

r all the aspects of

ndards and the best

asis and automated

response plans need

In todays business

ness operations and

e role of IT has been

asingly expected to ly being shaped by a

of this new normal

he enterprise, while

delivery and other

ignificant challenges

ort

T

main on paper. The

ct influence on how

cially in the adoption

space for improving

r Manager,

t, Financial Service

nt Manager,

s

technology in banking and foresight for bta_2012

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