Disruptive Innovation Is The Key

by Sunil Kumar    May 26, 2006

Considering present-day challenges, mass customization and large scale commoditization happening in the IT space in India and worldwide, a need was increasingly felt to sharpen the corporate imagination and stress on a comprehensive approach for issues pertinent to the banking arena. For this and more, the BankTech Congress, an annual event for enterprise CXOs started yesterday in Mumbai.

Anuj Bhargava, CIO, HSBC started the event by stating that compliance was one of the most important issues facing the banking fraternity in the current scenario.

Increasing demand polarized the way banking was evolving. The interrelation of IT with banking required CIOs to think and leverage on IT to attain a sustainable competitive advantage. Here, disruptive innovation was what CIOs needed to chart a roadmap for the future.

To ensure that IT was not very expensive, there was an increasing need for customer-centricity and internal efficiencies in the enterprise. Challenges faced by retail banking CIOs included increasing automation and a comprehensive need analysis.

A senior management dashboard needs to have reviews of overall bank/ branch performance and considering legacy systems still in place, IT and business has to be perfectly aligned. A cost-value proposition ensures that IT and business needs to be in sync. Performance validation also has to take into account organization-wide issues, the interaction of disparate systems and also consider performance bottlenecks overall.

CIOs need to consider channelising investments. Business requirements need to be in sync with testing, validation and implementation support for people in a typical enterprise.

Touching on BASEL-II norms and the impact they would have on the compliance, R Bhaskaran, CEO, Indian Institute of Banking & Finance talked on the evolution of risk management systems and its future.

All commercial banks stipulated by the RBI should have cumulative provisioning and consider prevailing infrastructure issues, as 60% of data would eventually become inactive. Other issues included scaling of infrastructure in the financial arena and the necessity of a backup/ DR system in place.

Nigel Stewart, Head of Risk Management, McAfee, APAC stressed that for an enterprise-wide risk management framework, credit and operational risk had to be managed well. There was also a necessity to evolve a comprehensive risk- response system and effectively categorizing credit and operational risks.

Dhruv Singhal, Head - professional services, BEA India, discussed the importance of operational risk. Considering BASEL-II, its relevance and the way operational risk was evolving, management and CXOs across the spectrum needed an effective benchmark for measurement of key risk indicators. Going ahead maximizing business value in the current landscape would mean appointment of a chief risk officer. Large spends in the financial services arena would be gearing up to meet BASEL-II compliance mandates, anti-money laundering challenge and a siloed, focused approach towards making companies increasingly compliant in the future.

The BFSI space also had to contend with issues such as data quality and bringing India up-to-scratch in the BASEL-II compliance arena, concluded Singhal.