An Overview of Technology Adoption by Indian Banks

Technology as the differentiator has become the driver of the Indian banking business since the past decade with the financial sector reforms providing firm foundation. The question of implementing technology has now transformed into 'how from the estimate, the cost per transaction through a branch, ATM and Internet works out to about Rs.66, Rs.22 and Rs.10 respectively, ignoring the extreme variations owing to the investment cost vis-à-vis the number and nature of the transactions. Moreover, technology has resulted in improved quality of service, any time/anywhere banking, focused product delivery, cross selling opportunities, multi-channel touch points for consumption of services, etc In the industry, IT has graduated from being viewed as a Cost Centre to a Profit Centre. The line between IT and non-IT functions has got increasingly blurred. The IT personnel have to know the business and the business personnel should be IT conscious. The limited security-oriented perspective of IT has given way to wider areas such as value for investment, performance measurement, etc. As more and more Indian banks are moving towards centralisation and beginning to offer innovatively packaged multi-channel products involving huge investment, IT Governance has become the norm of the day. Thankfully, it is already practised knowingly or unknowingly by the Top Managements of the banks in some form or other as observed from the several IT related subjects finding place in the agenda of most Board meetings. However, adoption of a structured IT Governance framework would enable a bank to perform its business in an orderly and effective manner benefiting the customers and, in the process, aid in its own survival and growth. This needs to be considered against the fact that nearly 70% of all customer defections is a result of poor customer service. After all, it is estimated that it costs 5 times more to acquire new customers than to retain the existing ones and that about 20% of the customers contribute to 80% of the profits.