Indian banks need to improve their IM systems

by CXOtoday News Desk    Nov 20, 2013

banking

It has become vital for Indian banks to go beyond just implementing IT and look at leveraging their overall Information Management (IM) capabilities better, states KPMG’s Information Enabled Banking Survey (IEB). Increasing competitive pressure and market demand has made it critical for banks to utilize their IM systems to define an Information Enabled Banking strategy for their customers.

Business Analytics can help banks identify areas of competitive advantage and risks, suggests the report. Leading banks use analytics to track behavior of customers by identifying spending patterns to leverage on cross selling opportunities. Data availability and data quality are the pre-requisite for any Business Analytics capability.About 44percent of the respondents of the survey revealed that they require at least some amount of manual intervention before they can use the data for analysis. Only 44 percent of the surveyed banks use a Business Analytics Tool, while  22 percent of the responding banks have an institutionalized procedure for business analytics

With the emerging significance of IM strategy, analytics, data quality and standardization, a well-designed and implemented IM function will not only enable business strategy of a bank but also define the same.  The Indian banking space has become very competitive and with potential new entrants from private sector, home grown Indian bankers will have to gear up and focus on leveraging their IM capabilities better. This could well be a key differentiator in market if bankers can utilize their IM systems to define an information-enabled banking strategy for their customers.” saysKalpana B, Partner, Management Consulting, KPMG in India

Data quality is one of the fundamentals for a bank in having robust IM capabilities. Ensuring quality of data is a common challenge faced by the banks considering multiple input sources, extensive digitization of existing records and large data.According to the survey, 33 percent of the respondents use automation in their monthly report generation process and 44 percent have minimal manual intervention, so as to reduce data quality issues. In comparison to this, 67 percent claim to have clean and standardized data across systems.

Most banks today follow a standardized reporting format at the local branch, region, zone and at the corporate level, but the major challenge the banks face is standardizing the report generation methodology despite having a standardized reporting form and clearly defined output. The survey suggests only 11 percent of the respondents perceive that they have advanced standardization maturity, indicating there is scope for improvements. The outcome is continued higher IT investments without strategic cost benefit

Going by the survey it is understood that information management is now recognized as a key function by banks. The Information management objectives across banks are cost efficient IM organization, business partnering decision support systems, insightful information systems, value realization from IT investments through centralization and outsourcing. These objectives need to be realized and attained in a systematic manner for banks to be able to achieve top line growth.

The KPMG banking survey was conducted amongst top 10 private banks based out of South India to understand the current Information Management landscape of banking industry. According to the survey, Information Management is the ability of organizations to capture, manage, preserve, store and deliver the right information to the right people at the right time and at an optimum cost.

According to the survey, an IM ecosystem encompasses all areas of the bank, interlinking key areas around strategy, data quality, standardization, systems, analytics, security and people. Some key fundamentals of an IM strategy are centralization, self service delivery model, automation, rationalization and harmonization, standardization and outsourcing and performance management. Each of these blocks will enable a bank’s capability to leverage their IM capability and re-align IM investments to their strategic focus.