"The focus now is to go beyond core banking"
The banking industry is currently going through an exciting phase and technology is acting as a constant enabler to the massive transformation occurring in the sector. Shrawan Kumar, General Manager – IT, Allahabad Bank believes that factors such as changing customer needs, technology-enabled business models and a fast growing regulatory environment are prompting banks in India to drive constant innovation with the help of IT. An excerpt. What are the current opportunities in the banking industry and what role is IT playing in the process? IT is no longer a matter of choice for the banking industry today. If you consider the banking scenario 10 years from now, you will notice a vast difference in the way it operates. Today, nearly all banks have Core Banking System (CBS) in place. In fact CBS has already become the technology backbone for banks today. The sector has witnessed unprecedented growth and transformation over the last five years, as it moved towards universal banking. Banks started to leverage IT and technology-based services for offering alternate channels such as smart cards, ATMs, internet, social and mobile banking. Banks have taken considerable measures to improve not only their functioning and internal efficiencies, but have transformed the overall customer experience. And all these have been possible because of technology. Therefore, the focus now is to go beyond core banking to create a differentiation that can further enrich the experience of customers. Data warehousing is an area banks are now looking into as a huge amount of data is generated through CBS. The idea is to leverage this data and analyze it in order to understand your customer better. Therefore, the other related technology that is coming up in banking is business analytics. This technology has huge opportunity for banks in the coming years. Customer Relationship management (CRM) will also be an integral part of banking because it will enable them to understand and connect their customers in a more organized and effective way. With financial inclusion in focus, banks are moving beyond their role of finance providers and are acting as consultants, tapping the unbanked population and creating tremendous opportunities for themselves as well as for the customers by leveraging IT prudently. Mobile banking is one area I would like to mention here that’s currently creating a buzz but it will continue to be an even more powerful technology that will further transform the banking landscape. What according to you are the biggest IT challenges in the banking sector? What are you doing to overcome these challenges? There are many IT challenges in the banking sector. Integration for example is one of the biggest challenges for banks today. The integration of newer platforms and technologies into the CBS remains a big challenge. For this the entire banking infrastructure needs to be robust. In other words, the CBS has to be modernized and scaled up to meet the newer business demand, which may not happen in many cases. The other challenge is to manage the unprecedented data growth and more importantly how to use the data to bring greater business value and in turn maximize the customer experience. Security of course is a challenge with the emergence of newer channels of banking including internet and mobile banking. Nevertheless, most PSBs have the basic security infrastructure in place including the various authentication and encryption systems in place. The key challenge in this area is to promote customer awareness, which is lacking in the country, and most security breaches and frauds are happening due to this factor. Apart from scaling up CBS, which solves a chunk of the infrastructural issues, banks should work towards aligning IT with business goals in a way that it enriches the customer experience and increases agility and flexibility in business. From that perspective banks are leveraging cloud computing. There are some security issues revolving around this technology, but it will solve many a technology challenges facing the current banking industry. We are also working on challenges related to compliance to address not only the current regulatory needs but also the future risk and regulatory environments. Finally, one should remember that PSBs did not have any recruitment over the past many years, which turned out to be very challenging for banks. The trend is changing now with most fresh recruits coming either from a technology background or they are users of IT. This has also made it much easier to leverage the power of technology. Do you believe the IT leader or a CIO in a bank should be a technology expert first and then other things? Although I come from a technology background, I believe IT should not be used as an end. It should be used as a means to achieve business goals. When you understand technology in the context of business, it can become a driver in achieving your business goals. As an IT leader or a CIO, one should always place business before IT and try to achieve business goals with the help of technology. The standard process in any bank starts with business and then it moves to IT. That’s because technology is a offshoot of business that is harnessed for better operational efficiency, customer experience and in turn gaining a better ROI. Going forward, how do you plan to innovate with IT? The innovation should be such that it brings maximum customer satisfaction and delight. This will be the key differentiator and help you achieve business goals with the help of IT. We will continue to innovate with the help of upcoming technologies, such as mobile, cloud and business analytics. We are also on an expansion spree. In the coming months, you will see many more branches and ATMs in the rural areas, ultra small branches, mobile integration in more services and improve existing customer access and convenience. There will also be newer product lines, new service delivery platforms and a thrust on recruitment. In other words, it is essential to place innovation at the heart of growth and leverage new and existing technology to enable this growth momentum.
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