Bangalore: Ashok Vemuri of Infosys Technologies Ltd, clearly an advocate of technology in banking, tells a tale of a year ago when he misjudged the thrust of cloud computing in the sector he oversees at his company.
“In December 2009 in the US, I was in a conference where three of us were asked when cloud technologies were going to become a reality in banking. I said five years. A guy sitting next to me said two-three years. And the third, a banker, said never,” says the senior vice-president of banking and capital markets at Infosys.
In less than a year, all his large banking clients had adopted cloud computing, a technology ecosystem that allows them and their customers real-time access to banking applications and services over the Internet, much like with email.
Easier access: A customer using an ATM. The increased IT adoption by banks offers greater convenience and safety for customers. Aniruddha Chowdhury/Mint
“That is the speed with which they are moving from a technology perspective,” Vemuri says. “Today, between Cisco (Systems Inc.), ourselves and a couple of banks, we can set up a system where you can do banking from practically anywhere.”
Both international and Indian banks are fast adopting information technology (IT) to improve efficiency, curb fraud, cut costs, comply with regulatory changes and take their products to the market faster.
For customers, the increased IT adoption by banks offers greater convenience, safety and accuracy in monetary transactions.
“A bank wants a real-time, unified view of the customer. And the customer wants a unified experience of the bank,” says Sriram Srinivasan, senior vice-president and global banking business head at Wipro Technologies. “Customer-centricity is a key driver. How do you get the right focus, the right services for the business that customers give banks?”
Bank customers have various channels of interaction today—automated teller machines (ATMs), the Internet, call centres, branch offices and even mobile phones. A simple text message can effect a financial payment as reliable and secure as with a few mouse clicks on a Web portal.
Akhilesh Tuteja, executive director at consulting firm KPMG India, who works on technologies for the banking sector, identifies the several dimensions in which IT is changing the sector. “One is clearly customer service. The second is reducing the cost of doing business. The cost of processing a cheque leaf is several-fold over the cost of an electronic fund transfer.”
The third dimension is risk management. Cellphone text alerts on credit card transactions have dramatically brought down fraud. On the banking side, analytics available today are capable of preventing even seemingly innocuous but fraudulent transactions. If a credit card is swiped in Bangalore and an hour later in Malaysia, a bank’s IT system will block the transaction. “It knows that you can’t get to Malaysia from Bangalore in an hour,” says Tuteja.
A single unified view of a customer is important on several fronts.
An average customer has a savings account, fixed deposits, a credit card account, and likely a housing or a personal loan. Banks need to link and keep track of all these on one page and evaluate credit worthiness dynamically, not just to assess risk but also to reward loyal customers with tailor-made products.
“Their (banks’) investments in technology are huge. They are doing cloud, they are doing CRM (customer relationship management), everything is happening…” says Vemuri, who oversees 36%, or about $2 billion (Rs9,100 crore), of Infosys’ overall revenue. “If you look at a bank today, they are more a technology firm than a bank.”
But the multiplicity of technology enabled channels poses a challenge—on giving customers a unified experience of the bank. Banks, thus, want more personalized and intuitive services for their customers.
A good part of the banking system in India has gone in for integrated core banking, the platform that offers a unified view of customers. A key challenge lies in standardizing how data is captured. A misplaced initial in a name can compromise a unified view of a customer.
A big bet for the future is the creation of so-called digital wallets on mobile phones. Tuteja notes that a convergence of several factors is facilitating such a adoption: “The communication devices, the security on these devices, integration of banking IT infrastructure, and the regulatory framework and guidelines from RBI (Reserve Bank of India) are all in place.”
And just how far can IT go in banking? “There are at least three to four banks abroad who are considering not having any brick and mortar infrastructure at all, which will cut down operational costs dramatically,” says Wipro’s Srinivasan.