impact of computerization & e-business on banking sectors a study of s.b.i

8/2/2019 Impact of Computerization & E-business on Banking Sectors a Study of s.b.i

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CERTIFICATE

This is to certify that the dissertation report title IMPACT OF

COMPUTERIZATION & E-BUSINESS ON BANKING SECTORS A STUDY OF

S.B.I submitted by MONIKA GUPTA enrollment no. 07100500336 during

semester IV of MBA program (Batch 2007-09) embodies original work done by

her.

Signature of faculty guide:

Name:

Destination:

(MONIKA GUPTA)


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ACKNOWLEDGEMENT

I acknowledge my heartiest thanks to all the persons who helped me in preparing this

report.

I am deeply incepted to Mr N.N. Pandey for providing me an opportunity to

take my project that suggested and guided me throughout the project.

This project was a great experience for me. As it made me aware about the

professional culture that exists in an organization, about the market, qualities required

to work and how to deal with the customers.

I am heartily indebted for the co-ordination of all staff who gave their valuable

time in listening me and provide information, which are important for project & without

whom my project would not have been completed.

In last I am thankful to all my friends and my parents who provided me all his

experience and encouraged me constantly to complete this tired project.

[RICHA YADAV]


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CANDIDATE DECLARATION

I Richa Yadav of M.B.A, Department of Management Studies,

Institute Of Management Studies hereby declares that all theinformation facts and figure presented in this report are based on my

individual work.

This project is my original work and it has not been presented

elsewhere.

RICHA YADAV


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EXECUTIVE SUMMARY

STATEMENT OF RESEARCH

IMPACT OF COMPUTERIZATION & E-BUSINESS ON BANKING SECTORS A

STUDY OF S.B.I.

OBJECTIVE OF RESEARCH

Evaluate the advantages off core banking

benefits to customers of SBI

RESEARCH METHODOLOGY:

Exploratory research.

INSTRUMENT USED: -

DIRECT INTERACTION

TELEPHONIC INTERVIEW

DATA COLLECTION PROCESS/FIELD WORK

Secondary sources

* primary sources


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EXECUTIVE SUMMARY

This project was undertaken in SBI in 4th semester for the partial fulfillment of Master

of Business Administration from INSTITUTE OF MANAGEMENT STUDIES. The

main objective of the project is to analyses the IMPACT OF COMPUTERIZATION &

E-BUSINESS ON BANKING SECTORS A STUDY OF S.B.I.

Research was done through customers feedback survey, personal interview, and

telephonic interview. Research was done in SBI bank. Survey was done through

questionnaire with those who visited these customer service points of SBI.

Although most of the account holders are satisfied with the services of SBI but

problems that Account holders are facing like, ATM failure, low speed of money

transaction than ICICI and HDFC.


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INDEX

SERIAL N0. CONTENT PAGE NO.

1. INTRODUCTIONa)Industry Overviewb)Company

Overview

7-1617-36

2. Objectives 37-38

3. review Literature 39-40

4. Researchmethodology

41-46

5. Interpretation of

data

47-63

6. Recommendation 64-65

7. Conclusion 66-69

8. Bibliography 70-71

9. Annexure 72-74


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INTRODUCTION

INTRODUCTION TO INTERNET BANKING


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The Internet banking is changing the banking industry and is having the major effects

on banking relationships. Even the Morgan Stanley Dean Witter Internet research

emphasized that Web is more important for retail financial services than for many other

industries. Internet banking involves use of Internet for delivery of banking products &

services. It falls into four main categories, from Level 1 - minimum functionality sites

that offer only access to deposit account data - to Level 4 sites - highly sophisticated

offerings enabling integrated sales of additional products and access to other financial

services- such as investment and insurance. In other words a successful Internet

banking solution offers

Exceptional rates on Savings, CDs, and IRAs

Checking with no monthly fee, free bill payment and rebates on ATM surcharges

Credit cards with low rates

Easy online applications for all accounts, including personal loans and mortgages

24 hour account access

Quality customer service with personal attention


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DRIVERS OF CHANGE

Advantages previously held by large financial institutions have shrunk considerably.

The Internet has leveled the playing field and afforded open access to customers in the

global marketplace. Internet banking is a cost-effective delivery channel for financial

institutions. Consumers are embracing the many benefits of Internet banking. Access

to one's accounts at anytime and from any location via the World Wide Web is a

convenience unknown a short time ago. Thus, a bank's Internet presence transforms

from 'brouchreware' status to 'Internet banking' status once the bank goes through a

technology integration effort to enable the customer to access information about his or

her specific account relationship. The six primary drivers of Internet banking includes,

in order of primacy are:

Improve customer access

Facilitate the offering of more services

Increase customer loyalty

Attract new customers

Provide services offered by competitors

Reduce customer attrition


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INDIAN BANKS ON WEB

The banking industry in India is facing unprecedented competition from non-traditional

banking institutions, which now offer banking and financial services over the Internet.

The deregulation of the banking industry coupled with the emergence of new

technologies, are enabling new competitors to enter the financial services market

quickly and efficiently.

Indian banks are going for the retail banking in a big way. However, much is still to be

achieved. This study which was conducted by students of IIML shows some interesting

facts:

Throughout the country, the Internet Banking is in the nascent stage of development

(only 50 banks are offering varied kind of Internet banking services).

In general, these Internet sites offer only the most basic services. 55% are so called

'entry level' sites, offering little more than company information and basic marketing

materials. Only 8% offer 'advanced transactions' such as online funds transfer,

transactions & cash management services. Foreign & Private banks are much

advanced in terms of the number of sites & their level of development.


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EMERGING CHALLENGES

Information technology analyst firm, the Meta Group, reported that "financial institutions

who don't offer home banking by the year 2000 will become marginalized." By the year

of 2002, a large sophisticated and highly competitive Internet Banking Market was

develop which was be driven by

Demand side pressure due to increasing access to low cost electronic services.

Emergence of open standards for banking functionality.

Growing customer awareness and need of transparency.

Global players in the fray

Close integration of bank services with web based E-commerce or even

disintermediation of services through direct electronic payments (E- Cash).

More convenient international transactions due to the fact that the Internet along

with general deregulation trends eliminates geographic boundaries.

Move from one stop shopping to 'Banking Portfolio' i.e. unbundled product

purchases.

Certainly some existing brick and mortar banks will go out of business. But that's

because they fail to respond to the challenge of the Internet. The Internet and its

underlying technologies will change and transform not just banking, but all aspects of

finance and commerce. It represents much more than a new distribution opportunity. It

will enable nimble players to leverage their brick and mortar presence to improve

customer satisfaction and gain share. It will force lethargic players who are struck with

legacy cost basis, out of business-since they are unable to bring to play in the new

context.


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MAIN CONCERNS IN INTERNET BANKING

In a survey conducted by the Online Banking Association, member institutions rated

security as the most important issue of online banking. There is a dual requirement to

protect customers' privacy and protect against fraud. Banking Securely: Online

Banking via the World Wide Web provides an overview of Internet commerce and how

one company handles secure banking for its financial institution clients and their

customers. Some basic information on the transmission of confidential data is

presented in Security and Encryption on the Web. PC Magazine Online also offers a

primer: How Encryption Works. A multi-layered security architecture comprising

firewalls, filtering routers, encryption and digital certification ensures that your account

information is protected from unauthorized access:

Firewalls and filtering routers ensure that only the legitimate Internet users are

allowed to access the system.

Encryption techniques used by the bank (including the sophisticated public key

encryption) would ensure that privacy of data flowing between the browser and the

Infinity system is protected.


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BANKING SOFTWARE

Banking software portfolio

When it comes to banking software, one size does not fit all. Each business partner of

Strategic Information Technology (SIT) has their own approach. Our most successful

banking partners are visionaries. They've taken a unique approach to the market and

have leveraged Portfolio Plus banking software to be successful. They've also

adapted to the realities and pressures of the markets they serve. That is key. Without

this adaptability they would not be successful. Portfolio Plus, with its Plug-In Banking

software architecture enables an environment in which it is easy to adapt.

BANKING SOFTWARE A TOOL FOR GROWTH

Portfolio Plus is based on Plug-In Banking architecture. What does this mean? We

could answer with pages of technical jargon (and we'll gladly offer those details to you

when you're ready), but suffice to say, from a business perspective, the Plug-In

Banking architecture allows you to purchase exactly what you need to begin and

then add components and scalability accelerators, at a later date. The net result is

you get to start with a low capital outlay and increase your banking software

investment in proportion to your success.

Adaptable Software + Adaptable Vision = Market Success


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INDIA MARKET

Table 1 provides a summary of five key issues facing India's banking sector.

Issues Facing the Indian Banking Sector

Issue Description

Competition The Indian banking sector is highly competitive, with both private and

public institutions competing

across a range of financial products. Much of this competition stems

from the growth of the individual

consumer as a force in the marketplace. Private banks were the most

aggressive at servicing this

segment and forced the concept of customer service into the fore.

Public banks, with their huge

workforces and antiquated technologies, were slow to react to the

challenge of the private banks. This

is slowly changing as the public sector banks begin to make the

investments necessary to compete on a more equal footing.

Youth

population

Strong economic growth and liberalization have helped create more

opportunities for wealth creation.

India enjoys a favorable demographic position with a large young,

employed population. These young

people are not averse to taking loans, and their rising income levels

make them more attractive

targets for banks. The private banks excelled in penetrating and


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marketing to these customers, and

this has helped drive retail lending.

Margin

pressures

Although growth prospects are generally good, retail margins are

increasingly under pressure,

especially in housing and auto finance. Banks are trying to diversify

through other products such as

credit cards and personal loans, but competition is fierce. The cost of

deposits has also been going up

in the face of competition from the mutual fund and insurance

industries. On the corporate side, things

look a little better, with higher margins and low nonperforming loans

(NPLs). However, intense

competition is forcing margins down, and there are concerns that a

rise in NPLs could hurt profitability.

Government

Securities

Beyond the more traditional banking services, all Indian banks are

required to keep a minimum of 25%

of their net deposits in government securities. Many banks operate

significantly above these levels,

and although some . private banks, for example . are keen to reduce

these positions, others are

reluctant to do so. The profitability of these treasury operations has

been relatively predictable, but the

low margins and risk of rate rises are of concern.

Foreign institutions


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institutions Foreign players are getting more aggressive in India and have

expanded both organically and through acquisition. HSBC and ING

have made investments in domestic firms, and many others are

waiting for opportunities to do so. Foreign investment limits have

been raised, but there are still restrictions on market entry. If the

government ever elects to privatize the public banks, foreign players

would likely be keen to take stakes. A growing foreign presence is of

great concern to local players . foreign players such as Standard

Chartered have proven themselves to be formidable competitors, as

evidenced by their success in credit cards.


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COMPANY

PROFILE


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HISTORY OF STATE BANK OF INDIA

The origin of the State Bank of India goes back to the first decade of the nineteenth

century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806.

Three years later the bank received its charter and was re-designed as the Bank of

Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British

India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840)

and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three

banks remained at the apex of modern banking in India till their amalgamation as the

Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence

either as a result of the compulsions of imperial finance or by the felt needs of local

European commerce and were not imposed from outside in an arbitrary manner to

modernize India's economy. Their evolution was, however, shaped by ideas culled

from similar developments in Europe and England, and was influenced by changes

occurring in the structure of both the local trading environment and those in the

relations of the Indian economy to the economy of Europe and the global economic

framework.


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ESTABLISHMENT

The establishment of the Bank of Bengal marked the advent of limited liability, joint-

stock banking in India. So was the associated innovation in banking, viz. the decision

to allow the Bank of Bengal to issue notes, which would be accepted for payment of

public revenues within a restricted geographical area. This right of note issue was

very valuable not only for the Bank of Bengal but also its two siblings, the Banks of

Bombay and Madras. It meant an accretion to the capital of the banks, a capital on

which the proprietors did not have to pay any interest. The concept of deposit banking

was also an innovation because the practice of accepting money for safekeeping (and

in some cases, even investment on behalf of the clients) by the indigenous bankers

had not spread as a general habit in most parts of India. But, for a long time, and

especially upto the time that the three presidency banks had a right of note issue,

bank notes and government balances made up the bulk of the investible resources of

the banks.


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The three banks were governed by royal charters, which were revised from time to

time. Each charter provided for a share capital, four-fifth of which were privately

subscribed and the rest owned by the provincial government. The members of the

board of directors, which managed the affairs of each bank, were mostly proprietary

directors representing the large European managing agency houses in India. The rest

were government nominees, invariably civil servants, one of whom was elected as the

president of the board.

Group Photograph of Central Board (1921)

BUSINESS

The business of the banks was initially confined to discounting of bills of exchange or

other negotiable private securities, keeping cash accounts and receiving deposits and

issuing and circulating cash notes. Loans were restricted to Rs. one lakh and the

period of accommodation confined to three months only. The security for such loans

was public securities, commonly called Company's Paper, bullion, treasure, plate,

jewels, or goods 'not of a perishable nature' and no interest could be charged beyond


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a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens,

cotton, cotton piece goods, mule twist and silk goods were also granted but such

finance by way of cash credits gained momentum only from the third decade of the

nineteenth century. All commodities, including tea, sugar and jute, which began to be

financed later, were either pledged or hypothecated to the bank. Demand promissory

notes were signed by the borrower in favour of the guarantor, which was in turn

endorsed to the bank. Lending against shares of the banks or on the mortgage of

houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the

business of discounts on private as well as salary bills was almost the exclusive

monopoly of individuals Europeans and their partnership firms. But the main function

of the three banks, as far as the government was concerned, was to help the latter

raise loans from time to time and also provide a degree of stability to the prices of

government securities.

OLD BANK OF BENGAL


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CONCEPT AND ORIGIN OF CORE

BANKING

SBI adopts core banking system and its benefits

Our Bureau

Mr. A.K. Purwar (left), Chairman, State Bank of India, with Mr. S. Ramadorai, Chief

Executive Officer & Managing Director, TCS, at a press conference in Mumbai

MUMBAI, OCT. 20

STATE Bank of India was targeting a 15 per cent reduction in transaction costs by

March 2006 , with the help of Tata Consultancy Services.

Over 250 branches of the country's biggest lender went live , on the centralized core-

banking system (CBS) implemented by TCS, SBI's prime systems integrator for the

core-banking and trade finance technology solutions.


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By March 2005, 2,000 branches across the country was brought under the CBS,

covering 60 per cent of the bank's business. By 2006, the bank covered 90 per cent

of the business under the CBS.

"One of the biggest benefits from moving to the core-banking system is that the

transaction costs will be sufficiently reduced, by around 15 per cent to begin with, but

much more in due course ", said Mr. A.K. Purwar, Chairman, State Bank of India,

addressing a press conference in 2006.

The CBS solution set being implemented includes Banks from Financial Network

Solutions, Eximbills from China Systems interfaced to each other and the existing

legacy solution.

After the full implementation, the CBS would be capable of handling 100 million

customers, 1 00,000 users and 25 million transactions a day, officials said.


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.

STATE BANK OF INDIA

The State Bank of India (www.sbi.co.in) was created in July 1955 with the objective

Of extending banking services across the newly established Republic of India. It is the

Successor to the Imperial Bank of India, which traces its origins to the Bank of

Bengal, Set up by the East India Company and the British Government in 1806. In

1959, the Seven banks that had been previously associated with the princely states

under the British Raj became associate banks under the State Bank of India.

SBI and these seven associate banks constitute the largest financial group in

the country, with a Combined market share of approximately 25%.

The State Bank of India Group has controlling interest in the seven associate banks

Ranging from 75% to 100%. These banks have a combined network of 5,100

Branches and 1,070 ATMs. The seven institutions are:

State Bank of Bikaner and Jaipur

State Bank of Hyderabad

State Bank of Indore

State Bank of Mysore

State Bank of Patiala

State Bank of Saurashtra

State Bank of Travancore

SBI Group has a total domestic network of 13,984 branches and 8,500

fully Networked ATMs. It provides a wide range of financial services for

individuals and corporate entities and has an international presence through 173

overseas offices. A life insurance subsidiary was established in 2001 with Cardiff


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SA (BNP Paribas Group) as well as a credit card subsidiary, which is run as a

joint venture with GE Capital.

EXISTING CORE SOLUTION

Before we discuss the core banking system replacement, it is useful to briefly

Describe the system the bank is looking to replace. In the early 1990s, SBI made the

Decision to computerize its branches and standardize on a common banking solution.

It implemented a distributed branch-based core solution called Bandmaster from

Kindle Banking Systems, now part of Missy PLC. SBI and six of its associate banks

Used this system, while the seventh used a homegrown system.


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THE APPROACH

BUSINESS DRIVERS

Replacing the branch-based banking system was an acknowledged necessity driven

By a number of factors. One of the most salient was that each branch was run as an

Independent operation. Customers were customers of only one branch and could not

Bank freely at any SBI branch. To permit customers to do so required building

connectivity across the branches and moving them onto a common solution.

Even more ambitious was the desire to run all eight banks on a unified technology

platform extending across the entire organization.

SBI found itself under increasing pressure from smaller, aggressive private banks, led

By HDFC and ICICI Bank, that had implemented modern, flexible core solutions from

Their inception and were free of any legacy issues. This gave them a clear advantage

Over SBI and served as a stark reminder of the work SBI needed to do. More broadly,

The Indian banking sector was changing and SBI was not well equipped to adapt. On

The other hand, with SBI's size and legacy, if the bank could become a more nimble,

Technologically savvy player, it would be in a powerful position to dominate the local

Market.


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SYSTEM DRAWBACKS

When SBI computerized its branches in the early 1990s, it set up individual LANs at

The branches, rolled out the new Bank master system, and trained the staff on its use

And maintenance. The branches were not networked, and each had its own

Database. The Bank master system was customized to meet the particular

Requirements of each branch. Over the years, the branches further customized these

Individual systems and built a myriad of applications and processes to supplement the

Existing functionality. In essence, each branch did its own front- and back-office

operations, which led to little consistency across the organization.

Processes within the branch were effective but still highly manual and paper based.

There was little straight-through processing and thus little insight into

inefficiencies and where errors might be hiding. A major drawback to this system

was the time-consuming nature of accomplishing a variety of simple tasks, from

closing the books to servicing customer requests. In addition to these business

issues, there were challenges on the technology front. For example, development

work, application maintenance, and upgrades often occurred at the branch and could

not be managed centrally. Rolling out a common application or even implementing

common policies .security, for example. Was often a time-consuming process.


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NEW BUSINESS CULTURE

The very nature of the existing technology systems determined, to a great degree, the

Business processes, culture, and work habits of the institution. It ingrained behavior

patterns into the staff that were both positive and negative. On the one hand,

the independence of the branches led to an entrepreneurial spirit and an ability to

adapt to local conditions. On the other hand, a lack of central control led to

inefficiencies of scale. Governance was an overarching issue, especially where IT,

treasury, or financial accounting was concerned.

Perhaps most significant was the simple reality that system isolation meant

that customers were only customers of an individual branch, and this breed a

business culture anathema to the goals of a large, national financial institution.

Branch operations. Start of day, end of day, and so forth. were run independently, and

processes or activities that could be centralized and managed elsewhere were

repeated within each and every branch.


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IMPLEMENTING THE SOLUTION

SBI has a history of adapting to change. From the computerization of the early 1990s

to the current period, rarely has the bank enjoyed a period when the status quo has

been acceptable. In addition, the bank is very top driven.

Following the signing of the contract with TCS, teams from both organizations were

formed. The first job of the bank's team was to come up with a gap document, which

was presented to the TCS team. This allowed TCS to begin the necessary

development work, as significant customization was required. While the core solution

was from FNS, the final solution is more accurately a hybrid, incorporating millions of

lines of new code from TCS.


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SOLUTION CUSTOMIZATION

As part of the arrangement with FNS, TCS got the rights to modify the source code as

necessary. Before the customization could take place, however, a few

significant changes had to be made. One example relates to some of the

fundamental fields within the FNS application. The sizes of the bank number, general

number, and user number fields were inadequate to meet the needs of SBI.

While this issue sounds trivial, it required TCS to go through the entire code,

assess the impact, and make sweeping changes to the base FNS code including

architectural components.

Once these technical changes were made, TCS had to undertake the

functional customization. This was a reflection of SBI's own policies, practices,

and products. Two examples are worth noting. At SBI, a majority of transactions

have to be authorized by another officer (maker/checker concept) or individual

within the bank; thus, each transaction must go through two people before it takes

effect. This simple policy required massive customization, and the challenge was

to meet this requirement while keeping the network load low. The second example

relates to the bank's requirement that the branches be able to continue to function,

albeit with a limited transaction set, in the event of a network outage or

connectivity not being available to the host. In the event of a problem, the branches

operate as normal and transactions are stored in a local server to be posted to the

central server once connectivity is restored. The solution is also optimized to operate

across a variety of network solutions including leased lines, dial-up lines, and


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VSAT

Additional modifications were made in specific business areas to handle the volumes

and complexities of the branch-based cash, check, and clearing operations. Changes

also had to be made in terms of defining new products and in the interest calculation,

as well as to the foreign exchange operations, because of the specific reconciliation

requirements of SBI.

Many of the changes eliminated manual entry at the branches and streamlined

processes. For example, the bank wanted to provide a batch facility to process

transactions, which was not necessary with the previous system. A final change

to note related to reporting. The core banking system provides for the

generation of reports at the end of the day, but some branches required online

reports or delivery before the end of the day. In some cases, individual branches

were allowed to generate custom reports, enabling them to function more

autonomously.


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THE IMPLEMENTATION

As of December 1, 2005, 6,611 out of 13,984 branches (47%) were running on the

core banking system. Of these, 2,549 are SBI branches, while the remaining 4,062

come from the associate banks. Four of the associate banks . State Bank of Patiala,

State Bank of Travancore, State Bank of Indore, and State Bank of Saurashtra . are

now completely on the new core banking platform. For the initial rollout, SBI

Group runs eight separate databases with eight instances of the core banking

platform. The long-term vision is to merge these onto a single platform, ideally

with a single database, although the technical feasibility of having nearly 14,000

branches on a single database is still to be determined.

Before we discuss the process of bringing branches onto the core system, it

is important to note that the implementation team also had to build interfaces

to a myriad of systems. These include everything from the State Bank Electronic

Payment System (STEPS) to standalone systems such as those for diamond

financing operations in some branches.

Building interfaces, however, is only one part of the implementation process.

The main body of work relates to bringing SBI Group's vast network of branches onto

the core system. To do so required the adoption of a factory approach,

employing an assembly-line process to facilitate the rapid migration of branches.


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PILOT BRANCHES

Because of the size and breadth of SBI's operations, it was necessary to minimize the

complexity of the migration process by grouping the operations around common

business areas. Ten pilot branches were chosen to represent the different types

of business. The representative branch was the largest and most complex from

an operational standpoint, so as to include all the possible functionality required

for lesser operations of a similar type. The first pilot branch went live in August 2003,

and by October 2005, seven pilots had been completed.

Although the remaining three pilots have not been contractually completed, TCS has

already finished customizing the solution and it is ready for rollout in all SBI branches.

The pilot system was useful in the initial stages of the project because it

provided invaluable experience for the implementation team and allowed for a

carefully managed rollout.


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Key Core Banking Project Benefits Realized to Date

Business Benefit Description

Technology A large, scalable technology infrastructure for the future

Standardization of platforms

Ability to easily introduce new applications such as a

planned payment gateway

Improved IT governance

Process Streamlining of processes across the group and a

significant reduction in manual activities

Multi channel, centralized view of accounts and

transactions across customer relationships

(This "single view" of the customer will be available once

the planned deduplication process

is completed.)

Broader range of products and faster time to market

For corporate customers, an interface to the ERP system

and also direct interfaces to the SWIFT

and RTGS systems (The system also provides the ability to

view the online status of corporate

Transactions.)

Improved customer response time and a single-window

concept within the branch

Reduction in processing time, errors, fraud, and


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corruption

Ability to create centralized processing resources and

groups around areas such as credit

processing, liability settlement, treasury, and trade finance

operations

Overall The SBI Group now has a single platform for group-level

consolidation of SBI and its associate

banks.

A common platform allows the group to realize synergies

and economies of scale.

Customers can build loyalty to SBI as an integrated entity,

as opposed to their branch. This

anytime/anywhere banking makes SBI a formidable

competitor because of its enormous

domestic reach.

SBI branches are now channels and focus on value-

added activities around sales and customer

service. Noncore tasks and processes have been removed,

and new services such as the

Grahak Mithra meeter-greeter have been introduced to

assist customers.


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OBJECTIVE OF

RESEARCH


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OBJECTIVE OF RESEARCH

There are two main objective of carrying out this study.and they are

Evaluate the advantages of core banking

Benefits to customers of SBI.


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REVIEW LITERATURE


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some researchers in the

field of e-banking have been engaged in quantifying the current provision of

electronic services by the banks, from an innovation and marketing point of view

(Daniel, 1999; Scruggs and Nam, 2002). Liao and Cheung (2002), Sathye (1999) and

Yan and Paradi (1998) have explored the perception of customers about e-banking or

adoption of the Internet as a services delivery channel. Others such as King and Liou

(2004) and Harden (2002) compared e-channel with other channels. Some strategic

issues such as outsourcing of e-banking initiative have been discussed by Cantoni

and

Rossignoli (2000), or competitive advantage of e-banking by Griffiths and Finlay

(2004), but the area of strategic organisational issues of e-banking has generally not

been covered adequately by the current body of literature. This paper is aimed at

helping to bridge this gap.

This paper consists of four main parts. In the first part, the papers context in current

literature will be presented. In the second part, the research framework will be

described briefly. The third part is the statistical analysis and discussions. The final

part provides a summary of the results and a discussion on the implications of the

research. The statistical analyses performed for this phase of the research are similar

to those applied by Han and Noh (1999-2000).

Critical Success


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RESEARCH

METHODOLOGY


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RESEARCH METHODOLOGY

For any project or work analysis it is important to in depth, the pattern

adopted for research to analyze the results correctly. In fact research is an art of

scientific investigation.

A most common meaning of research is A SEARCH FOR

KNOWLEDGE.It is a process by which we found hidden facts. So, the present study

or methodology has been based on field study as well as on Questionnaire. The fieldstudy is based on interview and also a Questionnaire is filled by 100 account holders.

So, according to their response of Management and Employees analysis can be

done.

RESEARCH DESIGN

I have used the STRATIFIED RESEARCH DESIGN (STRATIFIED SAMPLING) .In

this sampling design the population divided into several sub-populations that are

individually more homogeneous than the total population (the different sub population

are called strata) and then we select items from each stratum to constitute a sample.

Since each stratum is more homogeneous than the total population, we are able to

get more precise estimates for each stratum and by estimating more accurately each

of the components parts, than we get better estimate of the whole.


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UNIVERSE AND SAMPLE

(SAMPLE SIZE)

1. I had prepared one common Questionnaire for both sides Management &customers.

2. The universe of the study is constituted by the account holders and SBI staff 100members was taken up to conduct the study.

3. In my survey I have administered questionnaire among 100 members from (bothemployees and customers) and those were asked to put tick appropriate optionmentioned in the questionnaire.

DATA COLLECTION

PRIMARY DATA

Primary data are those, which are collected afresh and for the first timeand thus happen to be original in character. Through there are many ways of

collecting primary data all have not been used are:

Questionnaires

Observation

Informal Talks

Direct Interviews

SECONDARY DATA

Secondary data are not originally collected but rather obtained frompublished sources. These data collected through literature, Office orders, circularsReports, Journals & Magazines, Articles, and Company Policy Manuals & throughWebsite of the company by Internet.


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PROCESSING AND TABULATION

The collected data were edited in order to ensure that all the required

information had been gathered and irrelevant information removed. After editing thedata were classified in the form of tables. The questionnaire was launched with a view

of examining and evaluating the scheme of various aspects of the scheme in vogue.


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IN THIS STUDY

In this study, we examine the transformation of the State Bank of India, which

is currently engaged in the largest centralized core banking system rollout ever

Attempted.

BRIEF DESCRIPTION OF THE SOLUTION

The State Bank of India is implementing a turnkey, centralized core banking solution,

Heavily customized to the bank's requirements. The solution includes retail and

Corporate banking modules,trade finance, and a general ledger.

The focus of this study is on the core banking system rollout, which is slated

to involve 13,984 branches. These include the branches of SBI as well as its

seven associate banks. While each of the eight banks will initially run its own instance

of the core solution, the vision is to eventually consolidate all eight onto a single,

common platform.


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SITUATION OVERVIEW

India has become accepted as the offshore location of choice for a range of

Technology and back-office functions. What is less well known, however, is the quiet

Transformation occurring within India's own financial sector. Although the banking

Industry is still a reflection of the country's nascent state of development, remarkable

projects are being undertaken that can provide lessons for countries all across

the world, particularly in developing economies such as China, Indonesia, or Brazil.

One project in particular is that of the State Bank of India.

A few numbers highlight the scale of this project: This core solution will be

responsible for running 13,984 standalone branches, handling a wide variety of

Business lines across the entire country. The solution will have to handle more than

100 million customers, 120+ million accounts, and more than 25 million daily

Transactions. The solution will have to scale to levels well beyond this as SBI

Continues to grow its customer base.

This project is much more than just a technology implementation and has

Necessitated a massive transformation across people, systems, processes, and

Governance. Although the project is still a few years from completion, the

changes have already been significant. It should be noted that this project must be

viewed in the right context. SBI is a giant public-sector institution with all the

problems and challenges that come with this moniker. It operates in a developing

economy the size of a continent, and thus comparisons with Western institutions or

those of developed economies in Asia are not appropriate. The project is remarkable

for what it is and the lessons it offers similar institutions around the world.


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Interpretation of Data


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Q1. ARE YOU USING INTERNET BANKING?

TOTAL SAMPLE SIZE 100

0

10

20

30

40

50

60

70

YES NO


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YES 70%

NO 30%


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Q2. WHY ATM IS BENEFICIAL FOR YOU?

0

10

20

30

40

50

60

70

24 X 7

GLOBLE ACCESS

FOST PROCESSING

FREE BANKSTATEMENT


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24 x 7 61%

GLOBAL ACCESS 12%

FAST PROCESSING 09%

FREE BANK STATEMENT 18%


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Q3. DO YOU THINK ABOUT SECURITY LEVEL OF COREBANKING?

0

510

15

20

25

30

35

40

45

50

HIGH

LOW

VERY HIGH

VERY LOW


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HIGH 45%

LOW 30%

VERY HIGH 10%

VERY LOW 15%


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Q4. WHICH AGE GROUP IS USING CORE BANKINGAT MOST?

0

10

20

30

40

50

60

70

BELOW 25

BELOW 35

BELOW 45

ABOVE 45


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BELOW 25 60%

BELOW 35 20%

BELOW 45 10%

ABOVE 45 10%


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Q5. WHAT DO YOU THINK ABOUT COREBANKING SERVICES OF SBI?

0

5

10

1520

25

30

35

4045

50

VERY GOOD

GOOD

POOR

VERY POOR


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VERY GOOD 45%

GOOD 35%

POOR 10%

VERY POOR 10%


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Q6. WHICH BANKS DO YOU THINK HAVEFASTEST SERVICE?

0

10

20

30

40

50

60

SBI

HDFC

ICICI

HSBC


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SBI 52%

HDFC 28%

ICICI 15%

HSBC 05%


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Q7. FACTOR WHICH YOU CONCEDER IS BEST INSBI?

0

5

10

1520

25

30

35

40

45

50

FAST TRANSACTION

ATM

SECURITY

LOAN SERVICE


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FAST MONEY TRANSACTION 30%

GOOD ATM 45%

SECURITY 15%

LOAN SERVICE 10%


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Q8. HOW LONG YOU ARE USING SBI COREBANKING SERVICES?

0

5

1015

20

25

3035

40

LESS THAN 1 YEAR

2 YEARS

3 YEARS

4 YEARS


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LESS THAN 1 YEAR 10%

2 YEAR 25%

3 YEAR 35%

4 YEAR 30%


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RECOMMANDATIONS


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RECOMMENDATIONS

1. Massive programmers of training are required for employees.

2. After training period performance rating must be published.

3. Regarding the maintenance of ATM SBI should be aware.

4. Reduce the transaction cost on withdrawal by other banks ATM.

5. ATM service must be implemented in rural areas.


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CONCLUSION

\\


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CONCLUSION

The State Bank of India, the countrys largest commercial lender, has increased the

size of its minimum term note (MTN) programmed to $5 billion from the earlier $2

billion. The net interest income (NII) of private banks for the January-March quarter is

seen rising 40-50% and in case of public sector banks, the increase is likely to be 15-

20%, according to an earnings poll of seven brokerages.

State Bank of India is the largest bank in India. It is also, measured by the number

of branch offices and employees, the largest bank in the world. It recently

celebrated its 200th anniversary. It has an asset base of $126 billion and is a

regional banking behemoth. It is a nationalized bank with the Reserve Bank of India

having a 60% stake which is likely to be reduced.

One of the biggest benefits from moving to the core-banking system is that the

transaction costs will be sufficiently reduced, by around 15 per cent to begin

with, but much more in due course ", said Mr A.K. Purwar, Chairman, State

Bank of India,


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LIMITATIONS


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LIMITATIONS

1. Due to less time period it is not possible for me to gather all the information.

2. Biasedness is there.

3. Being a student it is not possible for me to spend a lot of money on a project.


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BIBLIOGRAPHY


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BIBLIOGRAPHY

BOOKS REFERRED:-

1. Managing Indian Banks: challenges ahead= vasant c joshi and vinay v

joshi/sage publications.

2. Practical Banking Advances=Bedi H.L& Hardikar V.K\UBSPD Publishers and

distributors,2001 edition.

INTERNET:-

www.SBI.com

www.sbi.co.in

www.bankersindia.com

www.google.com
http://www.airtelive.com/http://www.airtelive.com/http://www.relianceinfo.com/http://www.bankersindia.com/http://www.bankersindia.com/http://www.google.com/http://www.google.com/http://www.bankersindia.com/http://www.relianceinfo.com/http://www.airtelive.com/


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ANNEXURE


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QUESTIONNAIRE

CUSTOMERS NAME: - ______________________

ACCOUNT HOLDERS PROFILE

(a) Age ( in year)

25-35 35-45 45-55 55 andabove

(b) Educational background

10+2 Graduate P.G. Professional degree

(c) Income slab

1-1.5 Lacks 1.5-2.5 lacks 2.5-3.5 lacks 3.5 andabove

1- Are you using internet banking?

Yes No

2- Why ATM is beneficial for you?

24 X 7 Global Access

Fast processing Free bank statement

3- Do you think about security level of core banking?

High Low

Very High Very Low

4- Which age group is using core banking at most?


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Below 25 Below 35

Below 45 Above 45

5- What do you think about core banking services of SBI?

Very Good Good

Poor Very Poor

6- Which banks do you think have fastest service?

SBI HDFC ICICI HSBC

7- Factor which you conceder is best in SBI?

Fast money transaction Good ATM Services

Security Loan services

8- How long you are using SBI core banking services?

Less then 1 year 2 years

3 years 4 years

impact of computerization & e-business on banking sectors a study of s.b.i

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