Mumbai: These tumultuous times for the economy provide an opportunity for banks to experiment and invest in technology to improve their efficiency, said panellists at Mint IT in Banking Conclave held in the city on Friday.
Technology heads of private and public sector banks discussed whether technology can help banks cope with the current meltdown at Mint’s sixth “Clarity Through Debate”conclave, moderated by national corporate editor Josey Puliyenthuruthel.
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The six panellists were Chintagunta Ramnath, chief general manager, State Bank of India (SBI); Shubhalakshmi A. Panse, general manager, IT, funds management and administration, Bank of Maharashtra; Pravir Vohra, group chief technology officer, ICICI Bank Ltd; Anil Jaggia, chief information officer, HDFC Bank Ltd; Umesh Jain, president and chief information officer, Yes Bank Ltd and Haragopal Mangipudi, vice-president and business head, Finacle, Infosys Technologies Ltd.
The panellists said technology plays an important role in shaping a bank’s performance as it helps to plug revenue leakages and raising operational efficiencies that could have been overlooked when the going was good.
The debate reinforced latest findings by market intelligence and advisory service provider Interactive Data Corp. (IDC) that banks in the Asia-Pacific will invest in technology despite the crisis in the financial markets.
A survey conducted by IDC’s independent research arm Financial Insights found that 69% of the 70 chief information officers and IT decision-makers from various banks in seven Asia-Pacific markets predicted an increase in IT spending, as opposed to 15% who said IT spending could be curtailed. Some 16% said IT spending at their banks would remain the same as in the last year.
The Mumbai debate was flagged off by SBI’s Ramnath who said: “Cost cutting is possible through increasing efficiencies. Evaluating data that is available with us, we can see if there is any revenue leakage that can be plugged. We can implement technology to even cut down on transaction cost.”
Banks in India have implemented integrated technology platforms called core banking solution, or CBS. According to Ramnath, the average daily volume of transaction executed through CBS is 18 million, which crosses 20 million in peak days.
IT heads: (L to R) Chintagunta Ramnath of State Bank of India, Pravir Vohra of ICICI Bank, Haragopal Mangipudi of Infosys Technologies, moderator Josey Puliyenthuruthel of Mint, Umesh Jain of Yes Bank, Shubhalakshmi Panse of Bank of Maharashtra and Anil Jaggia of HDFC Bank at the panel discussion. Abhijit Bhatlekar / Mint
Vohra of ICICI Bank said this might be the right time to invest in technology. “When times are good, efficiency in some cases becomes a country cousin. At this time of economic downturn, it is a fantastic opportunity to look at re-engineering cost,” he said. “Now the business team will listen and value the technology teams more for good ideas. Ideas are absolute necessity to help achieve operational efficiencies.”
Jaggia of HDFC Bank said technology was required to keep basic banking business running as usual and identify new customers. “IT determines how banks are going to handle existing customers and how they are going to handle new customer acquisitions. I think, IT still has a very important role at the revenue side of the business,” he said, adding that on an incremental basis, 80% of HDFC Bank’s new credit card customers came from the existing customer base. “Technology played a very important role in identifying those potential customers,” he pointed out.
Bank of Maharashtra’s Panse gave an interesting turn to the debate of investing more in technology when she said that more than investing in new projects including technology, the stress should be on reducing operating cost. “What we have to realize is that capital expenditure, including ATM (automated teller machine) deployments, has already been incurred. Now we need to look how we can reduce the core operating cost. In that case, technology is a key business endeavour,” she said.
Technology, however, is a costly proposition and banks, no matter how big or small, are not immune from incurring the cost, Yes Bank’s Jain said.
“Both our capital and operating expenditures are large in (the) technology front,” he said. “What we have done to overcome this is...total outsourcing.”
Mangipudi of Finacle software, the CBS by Infosys being used by two out of three banks in India, said his company is ready with different models to meet the challenges Indian banks will face to facilitate a complete IT transformation.