technology in banking and foresight for bta_2012
TRANSCRIPT
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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
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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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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 4
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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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 5
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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 6
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
All Banks Large Banks
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
Technology in Banking: Towards Optimization and Effectiv
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%
All Banks Large Banks
Growth of No-frill ac
Average
11 3
Small Banks
counts (Rs.mn)
edian
79%43%35% 35%
All Banks Large Banks
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
e Utilization of IT Resources 7
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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 8
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
Technology in Banking: Towards Optimization and Effectiv
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 Utilization of IT Resources 9
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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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
All Banks Large Banks
Mobile Banking user base (
Average Med
771
1,001
64 94
All Banks Large Banks
Mobile fund transfer user
Average Me
ment & Research
y
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 10
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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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
Technology in Banking: Towards Optimization and Effectiv
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 (
e Utilization of IT Resources 11
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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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
Technology in Banking: Towards Optimization and Effectiv
, 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
e Utilization of IT Resources 12
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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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
Technology in Banking: Towards Optimization and Effectiv
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/
e Utilization of IT Resources 13
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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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 14
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
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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 15
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
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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 16
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.
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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 17
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
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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
Technology in Banking: Towards Optimization and Effectiv
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
e Utilization of IT Resources 18
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