Technology in Banking-Insight and Foresight for BTA_2011 ... - IDRBT

Technology in Banking – Insight & Foresight 8
making and risk management capabilities. Electronic payments through credit and debit cards are
also emerging as a fast-growing segment providing ease of use and convenience to customers.
The banking sector is projected to grow at a strong pace over the next decade and will need to
strongly leverage the IT infrastructure to acquire and service the customer base and risk
management.
2.3. Areas of use of Information Technology (IT)
The adoption of technology required banks to re-engineer processes, network branches and
introduce alternate delivery channels such as internet banking, phone banking and mobile banking,
data warehousing and data mining, customer relationship management, integrated treasury
management, human resource management and the implementation of core banking solutions.
In addition, many initiatives of the regulator such as ECS, RTGS and NEFT also led to overall
technology adoption by banks.
The basic technology adoption is almost complete and banks are now looking at improving the
efficiency and effectiveness of the IT Infrastructure created. Newer areas of technology initiatives are
enterprise risk management, business intelligence, improving internal effectiveness and managing IT
risks.
2.4. Productivity and Efficiency
The extensive use of IT has helped banks deliver banking services and products more conveniently
and effectively. The rapid access to critical information and the ability to act quickly and effectively
has lent a critical edge to banks. It is difficult to quantify the exact impact of IT adoption on
productivity and efficiency; however, broad parameters such as cost and profit per employee can be
used as proxy to assess the impact that IT has had. Consistent management and decision support
systems provide banks a competitive edge to forge ahead. The optimum utilization of IT
infrastructure is fast becoming a priority as banks focus on better implementation and the
measurement of efficiency parameters such as return on investment (ROI).
IT should be considered as a service unit in the bank and IT performance metrics should be
developed to properly assess benefits. Currently, there are various types of monitoring, which
happen at various levels to measure IT performance on availability, budget, projects, capacity
planning and expansion, among other parameters. Performance measurement tracks and monitors
strategy implementation, project completion, resource usage, process performance and service
delivery, using, for example, balanced scorecards that translate strategy into action to achieve goals
measurable beyond conventional accounting.
2.5. IT Governance and Management Systems
With the increasing importance of financial systems in the global and domestic economies and the
ever-increasing regulatory compliance requirements, banks are also automating risk assessment and
management systems. IT governance and management is increasingly acquiring importance with
board-approved governance policies, alignment of business and IT teams and realignment of
organization structures for the smoother implementation of IT projects. Organization structure has
Institute for Development & Research
in Banking Technology