How should the Indian banking sector develop through technology innovations?

I believe, the most of the changes in the landscape of financial sector would be technology driven. In the ultimate analysis, successful institutions will be those which continue to leverage the advancements in technology in re-engineering processes, delivery modes and offering state-of-the-art products and services providing complete financial solutions for different types of customers.

Implementation of technology solutions involves huge capital outlay. Besides the heavy investment costs, technology applications also have a high degree of obsolescence. Banks will need to look for ways to optimize resources for technology applications. In this regard, global partnerships on technology and skills sharing may help.

This is the major point which i think - Recruit the Young minds b,cos creative thinking and challenging attitude is the foremost when it comes to developing through technology innovation.

Better service with continued  long term relationship with customers.Proper information to customers.

Even though the policy of "TOO BIG TO FAIL" has failed completely in western countries, the chances of this concept failing is remote as long as RBI is able to exercise the regulatory control as it is to-day.The main reason for the global financial meltdown is lack of regulatory control in the name of free enterprise.Ultimately the government intervention in these countries came to bailout the failing banks.Since public sector banks in India had government ownership it has escaped from the global wrath.Even the Nobel laureate Thomas Friedman has told the US Media that if they has Governor like YV Reddy, Us would have escaped the bank failures.

So to compete with the global banks, all public sector banks must be merged and converted into one big bank of government and public sector ownership.In this also only individuals must be allowed to have share up to 49% with government retaining 51%,private institutions must not be allowed to own the shares to avoid manipulations.initially it will not be possible to merge all the nationalised banks with SBI in view of various factors.So government can make all these banks as subsidiaries of SBI immediately by way of an ordinance.After making these as subsidiaries, a road map to be drawn up to merge by relocation of branches and also to have a uniform technology to integrate the services

Further to avoid monopoly of  only one large Public sector banks,private banks,foreign bans and co-operative banks must be allowed to open bank branches without any restrictions in cities which are not having multiple bank branches or not having any bank branches.Now most bank branches are located in metros and urban and semi-urban centres and rural population are still not able to get ample banking or investment opportunities or cheaper credit facilities. We can have bank branches in the remotest parts of our country and grow in larger scale and at the same time spread our wings globally to emarge as a new banking destination on pure banking products and avoid exotic derivative products.

US is still not open to services sector in WTO,but want our doors open to market their manufacturing sector.

So we will be able to emerge as the largest and no.I bank in the world serving poorest of the poor in remote corners of our country and also the richest nations in the world.

THIS WILL BE THE REAL VICTORY OF PUBLIC SECTOR ENTERPRISE FOR THE SAKE OF PUBLIC INSTEAD OF GREEDY PRIVATE SECTOR WHOSE MAIN AIM TO ACCUMULATE PRIVATE WEALTH AT THE COST OF POOR SECTIONS OF THE SOCIETY

If all the banks do just care the banking needs of its existing and newly walking in customers, it would elevate the bank's standing in all parameters, instead of spending a lot capital on advertisements and doing nothing when the customer approaches them would not serve the purpose, of course innovations, value additions and updation of technology are must for the growth?

Indian Banking system should continuously peruse technological innovation to improve their performance in the cut-throat competition scenario. Indian banking system should adopt TQM ( Total Quality Management) through continuous enhancement of their quality of service. With advanced technology , automation of the banking sector through intranet ,internet ,telephone banking ,ATM , service online ,voice mail , computer supported co-operative work systems , distributed operating systems , groupware , and other electronic communications. European Commission has introduced a Payment Services Directive which was adopted in 2007 which paved the way for further entrepreneurship and innovation in the European payment market by introduction of a new authorization regime for so-called ‘payment institutions” that are neither building societies ,banks , nor e-money issuers.

This new technology will enhance the efficiency, competition and innovation in European payment market by elimination barriers to entry and thereby ensuring fair market access. Investing on innovation will definitely bring many benefits to banking sector. The UK is the largest single international banking sector accounting for one-fifth of the globe’s cross-border lending. About 5% of UK’s GDP comprises of the income from the financial services. The banking sector of UK is the large spender on IT systems and services and in 2004 , UK spent about £ 6.6 billion. Indian banking industry should embark on consolidation by merging various banks so that performance and profitability can be increased. Further , it should outsource its back-office transactions so that profitability can be maximized and that can be invested on the innovation process.

R.V.Seckar M.Com , F.C.S , LLB , AICS (UK)

The use of information technology in the Indian banking sector was a corollary of the liberalization process initiated in the country in the early 1990s. The Indian banking industry is witnessing rapid change given the evolving regulatory environment, rapid technological advancements, heightened competition and consolidation. On the other hand, with the global recession looming, the industry is now exploring process innovation and is more aggressively adopting technolog which will help in value creation Worldwide. Post liberalization, with RBI tightening its regulations, PSBs have undertaken massive computerization to achieve 'Total Branch Automation'. With privatization and increasing competition, all the large banks are now aggressively implementing 'Core Banking Solutions'.

In my view, Indian banks are currently witnessing robust growth under the influence of a changing regulatory environment, rapid technological advancements, heightened competition and consolidation. This changing landscape in the banking industry is driving banks to explore the outsourcing option to achieve efficiencies. The banking industry was one of the first to outsource business processes to third party vendors in the Indian market. Banking is also one of the large segments in terms of total outsourcing opportunity in the domestic BPO industry.

This is the major point which i think - Recruit the Young minds b,cos creative thinking and challenging attitude is the foremost when it comes to developing through technology innovation

I found lot of place mostely in private banks every thing is centralised and every customer of the bank is not able to get through the process designed for and ultimately dissatisfaction is generated in the mind of customer and he back out from the bank and he advertise too to his circle. Bank should establish a system by which the proper resolution can be made at locally or branch level. Customer satisfaction is must in every case.

Any technology based idea becomes popular when the end users find it interesting and not confusing. Thus borrowing from David et al's Technologically Acceptance Model (TAM), my research paper on the same topic tested on 200 banking customers yielded that banking innovations were most dependent on -

• Perceived ease of use
• Spread of internet/ATM in accessible areas
• Literacy

We all are quite aware that banks are already utilizing 'n' number of ways to service their customers also these ways are working effectively. Now, in my opinion, the job of Bank manager it to analyse the service options that he/she is spending on via any CRM tool and work for the betterment of that service system which the segment the bank is catering to, prefers the most.

Technology should not just be used to service the customers but to analyse and determine a common virtue, which could finally streamline the entire process of 'Service Delivery'.

The real issue with Indian banking industry currently, and we are in 2009-10, is under-financing credit worthy customers. Banks have yet to do a remarkable job in collecting and distributing funds. Going forward, technology should be used to bridge this missing link. How to evaluate credit worthiness and sell credit products in a simpler and efficient manner should be the question to answer. In retail segment, perhaps the unique ID project (being undertaken by GoI) may be leveraged where banks can gather credible customer information for credit rating. In the corporate segment, banks can work with credit agencies to systematize customer evaluation and use it for faster approvals and efficient credit management.

Technology can only do so much and unless and until the people behind the machines, in this case,( bankers) change their mental makeup, nothing will actually alter. The gizmos and gadgets can add to the glitter and shine of the banks, but what matters is how they are used and their power is harnessed. Coming to grips with the required technology and trying to inculcate the habit of increasing customer satisfaction, all the while, is what would help banks in the long run. A lot of bank employees, are complacent and indifferent to the needs and anxieties of their customers, and this leads to customer dissatisfaction breeding a negative brand image. Straddling new technology and changed mind set could be keys for future development.

Indian banks today facing dirth challenge wherein at one side there is a consumer base located in city demands service oriented high end technology and other end there ia equal mass of people who have very limited access to developments and banking structure as whole.

In order to have sustained growth banks cannot neglect this rural masses and that's why banks can use technology to their advantages to increase penetration and enlarge their customer base.

Once the gap between these 2 requirements are less banks can have unified technology deployement.

I think the first and most important for banks is to participate the Financial Inclusion program started by RBI. Banks should aggressively engage/employ the BCs (BAnk Correspondents) 

Mobile platform can be used to extend the banking to such unbanked customers. For more details, read financial inclusion program.