Information technology-led enablers have had an impact on the banking, financial services and insurance (BFSI) sector. But we forget that technology adoption is a two-way process.
I find that whether in the BFSI sector, or in any business where technology is driving change, the basic features are adopted first and the full functionality of a technology is rarely explored. Take ATMs (Automated Teller Machines). A regular customer will say ATMs are for drawing cash. How many people really know how to use its other features such as fund transfers?
In a country such as India, where Internet penetration is growing, but on a low base, technology will continue to play a significant role. People are already getting used to technology-enabled banking at various levels and in varying degrees.
It is not a question of technology capability in most cases. All banks have core banking solutions, yet success in getting a truly unified view of the customer—on both static and dynamic transaction analytics—is reflected in varying degrees.
It is about how integrated the technology platform is, the data quality, and above all, the last mile—the branch staff’s skills in interpreting and communicating.
So when we talk about technologies to increase productivity, the challenge is not just about capabilities, but about inclination. True IT-led productivity change will happen when people are willing to go the extra mile to absorb and pay, with time or cost, for more than the basic features. Manual intervention still dominates many processes, even when a transaction is initiated or closed electronically.
The other important point in technology adoption is the need to create a wider understanding to maintain a certain minimum control for safe operations.
Banks spend a lot of time and money educating customers about protocol around PINs (personal identification numbers) and passwords.
Regulators have been instrumental in creating safe operating platforms around electronic banking and trading. The challenge is to expand this enabler.
How many, even among the skilled class, use electronic payments though many banks offer this on a secure platform?
As youngsters will be the main drivers of emerging trends in electronic banking and other forms of financial management on the move, formal training may be introduced in colleges to embed an understanding of security in such financial dealings. They need to understand the difference between using the Internet or mobile phones for a Facebook update and for a banking transaction.
P.R. Somasundaram is the chief executive officer of Lakshmi Vilas Bank.