Newsletter, October 2009 - IDRBT

Fast Forward
October 2009
A CASE FOR IT GOVERNANCE IN BANKS
ANKING Technology in India is now
two decades old, counting from the
BR a n g a r a j a n C o m m i t t e e o n
Computerisation in Banks, 1989, which gave it a
push. By now, most of the Banks have attained
sufficient maturity in technology adoption,
upgradation and even absorption. A few banks
have even moved on to achieve some technology
innovation capabilities. There have also been huge
productivity gains.
The time is ripe for the banks to concentrate more
on making their IT implementation and usage
more efficient and effective. They need to explore
the ways and means of unlocking value from the
way IT is deployed, used, controlled and
integrated into the business of the bank. In short,
they have to get a firm grip over IT Governance -
concept, awareness and the extent and depth of
implementation.
What is IT Governance?
IT Governance, spearheaded by the IT
Governance Institute ( www.itgi.org), broadly
covers the following:
Alignment of IT Strategy with Business
Strategy
Making IT deliver Value to Banks
IT Risk Management
IT Resource Management and
IT Performance Measurement
Strategy Alignment
Strategy alignment is to ensure that IT is deployed
to help, maintain or improve business activity or
processes. For example, a one-year-old ATM
Network of a bank with only a daily average of 30
transactions per ATM (TPA) when compared
with its peer having over 300 TPA is a clear case of
the IT telling the Business to rise and meet the IT
vision and implementation.
The problem here may be that the bank in
question either installed more ATMs than its
customers needed or the ATMs were not installed
in convenient locations for their customers to fully
exploit or its customer profile is such that they are
not in favour of using ATMs or it may even be a
case of a sheer game of numbers wherein this
Bank wanted to score over its benchmark rival or
competitor by installing so many ATMs.
An indicator of better alignment would be
enrichment of the number and nature of delivery
channels with a higher proportion of products and
services moved to electronic, self-service and 24/7
platforms.
Value Delivery from IT
In simple terms Value Delivery means getting a
better Return on Technology Investment (ROTI).
This can be done through so many ways: reducing
the cost of operations, improving revenues,
launching new products and services that are IT
enabled, clearly specifying and monitoring the
deliverables from IT and so on.
For example in transactions done through ATMs
and Internet Banking, the bank is making the
customer do the complete transaction himself,
without any manual intervention from the bank.
To that extent, the transaction load on the
branches comes down. And this is a measurable
savings in costs of operation, that too with
improved customer satisfaction and complete
accountability and responsibility laid at the
customer’s door. Value Delivery from IT, as a
concept, is yet to take-off in India and hence the
level of awareness and commitment to this is very
low in most of the banks.
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