Banking wallet big for technology this year

MUMBAI, INDIA: O P Bhatt, Chairman, State Bank of India said that the SBI is planning to open about 1,000 new ATMs in the current year under its technological initiatives.

Speaking at CII’s BANKing TECH Summit 2010, Bhatt said, “We are emphasizing on mobile banking along with some major technology projects like data warehousing this year. Tenders will be issued for the payment system gateway solutions to increase the use of technology.”

He further said that the bank currently has 70,000 branches, 20,000 ATMs catering 286 million customers. Out of 65,000 villages in India, only 30,000 are covered by the commercial bank branches. Hence, more banks, branches and services will be needed which necessitates greater penetration of IT,”  Bhatt said.

S R Rao, Additional Secretary – Information Technology, Ministry of Communications & Information Technology, Government of India said that the mobile banking would improve and encourage banking in rural areas.

“In India, the average population per branch ratio is 16,129 whereas in the US and UK it is 2,702 and 4484 respectively. There is a huge scope for banking in rural areas as they still remain untapped and it can be possible through mobile banking. In 2009, there were 136 million mobile subscribers in rural areas which are estimated to increase to 280 million by 2012 and 320 million by 2015. By next year the mobile subscriptions will cover India’s entire rural population.”

The ministry is working out different technological options through which banking could be made easier through mobile. Mr Rao informed that the technological initiatives in banking through public private partnership could go up to the tune of $10 billion. “We are looking at shifting the cash base transactions to electronic base. Projects worth Rs 8,000 crore may go to the private software companies this year.”

N Chandrasekaran, Chairman – CII’s BANKing TECH Summit 2010 and Chief Executive Officer & Managing Director, Tata Consultancy Services Ltd talking on importance of data security said, “There are more than 12 million customers of US based bank affected because of backup data breach.  One of the world’s largest bank has a back up data breach affecting almost 4.5 million customers.  What can be done to avoid these disastrous situations which could affect the survival of any financial institutions? Therefore, needless to say data management is an important integral part of a bank wherein quality, duplications and managing the entry level are critical.”

Along with the technological initiatives, banks are also focusing on cost efficiency in the industry. Shikha Sharma, Managing Director & Chief Executive Officer of Axis Bank Ltd said, “Due to lower volumes the spread rates are higher in India. Compared to developed countries where the interest rates spread is between 1 to 2 per cent, in India it is as high as 3 per cent because the volume of business in India is one sixth of Western countries.”

In his welcome address, Arun Nanda, Deputy Chairman – CII Western Region pointed out, “The technology is perceived as a strategic function to help meet the bank’s objectives in most areas of operations. Innovations in technology, along with the changing nature of delivery of banking products and services, are perceived to have a significant impact on the existing technology landscape.”