Technology in Banking
Technology in Banking
Towards Improving Business Performance and Customer Engagement
Institute for Development and Research in Banking Technology
(Established by Reserve Bank of India)
Banking Technology – Towards Improving Business Performance and Customer Engagement resources
|2
Foreword
Technology today has become synonymous with banking and Indian banks have put in place a fairly strong infrastructure to leverage its benefits. IT has made a visible difference in the functioning of banks and conduct of banking operations. Banks have benefitted immensely due to scaling up of business and growth in volumes, the journey has been beneficial for the customers too, with improvement in customer service quality. While for larger banks the IT capital expense to total IT expense ratio has stabilized to approximately 18%, smaller banks are increasing their capital expenditure to acquire IT infrastructure, with approximately 54% capital expenditure. Most banks have also put up a robust mechanism for governance and management of IT assets with board level committees and alignment of functional and technical teams for IT implementation. In the future banks will have to focus on two major aspects – delivering customer satisfaction and driving business optimization. Banks today have built up significant database about the customer – demographics, transactions and behavioral data. However the key is to derive information from this data to deliver business impact. Information and technology will have to be separated with substantial focus on information. Banks will need to have a significant level of integration of data warehouses and analytical capability both in terms of people and tools to face this challenge. In addition banks will also need to have a robust customer life cycle management program to effectively utilize the information. The second significant challenge is driving business optimization which broadly deals with highest level of revenues or
Towards Improving Business Performance and Customer Engagement
Institute for Development and Research in Banking Technology
(Established by Reserve Bank of India)
Banking Technology – Towards Improving Business Performance and Customer Engagement resources
|2
Foreword
Technology today has become synonymous with banking and Indian banks have put in place a fairly strong infrastructure to leverage its benefits. IT has made a visible difference in the functioning of banks and conduct of banking operations. Banks have benefitted immensely due to scaling up of business and growth in volumes, the journey has been beneficial for the customers too, with improvement in customer service quality. While for larger banks the IT capital expense to total IT expense ratio has stabilized to approximately 18%, smaller banks are increasing their capital expenditure to acquire IT infrastructure, with approximately 54% capital expenditure. Most banks have also put up a robust mechanism for governance and management of IT assets with board level committees and alignment of functional and technical teams for IT implementation. In the future banks will have to focus on two major aspects – delivering customer satisfaction and driving business optimization. Banks today have built up significant database about the customer – demographics, transactions and behavioral data. However the key is to derive information from this data to deliver business impact. Information and technology will have to be separated with substantial focus on information. Banks will need to have a significant level of integration of data warehouses and analytical capability both in terms of people and tools to face this challenge. In addition banks will also need to have a robust customer life cycle management program to effectively utilize the information. The second significant challenge is driving business optimization which broadly deals with highest level of revenues or