The Indian banking industry is currently in a transition phase. On one hand,
the PSUs, the mainstay of the Indian banking system, are in the process of
shedding their flab in terms of excessive manpower, excessive non-performing
assets (NPA) and excessive governmental equity, on the other hand the private
sector banks are consolidating themselves through mergers and acquisitions.
This makes it an ideal time for the introduction of business process
management (BPM) which along with document management are likely to be the
technologies offering highest RoIs to banks in 2004-05. These would provide an
infrastructure for process automation leading to process centralization,
outsourcing and extending the enterprise. Business process and document
management would also help ‘de-risk’ the processes by making them compliant
with statutory and regulatory guidelines without any extra effort.
Says Diwakar Nigam, MD, Newgen Software Technologies, "Owing to its high
transactions, high manpower characteristics, the work in the BFSI sector is best
suited to automation by IT. BPM is the key emerging concept for the BFSI
Industry globally and it is good to see even the Indian BFSI sector adopting to
it early. A large number of BFSI institutions like Citibank, ICICI Bank, HDFC
Bank, IDBI Bank, Global Trust Bank, BNP, Standard Chartered Bank, Bank of
Punjab, SBI, financial services like GE Countrywide and insurance players like
Max NewYork Life Insurance, Bajaj Allianz, ICICI Prudential Life Insurance have
already adopted BPM.
A large number of PSU banks like Bank of Baroda, Bank of India & Oriental
Bank of Commerce which are undertaking large scale IT initiatives to streamline
their operations, are expected to go for BPM this year. Some of the key
application areas of BPM in banks would be centralization of trade finance
operations, retail loans processing and credit approval processing. BPM is
expected to help drive up volumes and speed for these banks without a
significant impact on output quality. The convergence of the insurance and
financial services industries is providing further impetus for the rise of BPM.
Smitten by
outsourcing
If BFSI has taken
a lead in technology investment, can it be far behind in outsourcing? Certainly
Not! Many banks have already started outsourcing functions and processes like
data entry of account opening forms and cash management data, and call center
functions. This trend is likely to continue in 2004 primarily amongst the MNC
and the private banks while PSUs would take to this level of outsourcing later.
HDFC Bank has been one of the pioneers, in outsourcing most of their crucial
business processes to third parties, though the rest have not walked the same
path primarily due to security concerns. Hot areas will continue to be remote
infrastructure management. Already many BFSI companies like HDFC Bank, BNP, IDBI
Bank, Standard Chartered Bank and Morgan Stanley have already outsourced their
infrastructure management part to integrators like CMC, Wipro Infotech and
Netmagic. ASP is still out.
For PSU banks or co-operative banks fully to be networked, the prognosis 2004
- a combination of both in-house and remote centralized monitoring and
management system. Online DR sites is another area where BFSI are keen to spend.
Given that in many cases the data centers were being used by BFSI firms as their
disaster recovery sites, in all likelihood opt for online DR sites. Following
DR, security and storage would also be another area of high interest BFSI.
While the security emphasis would rest more on technologies like VPN, IDS and
intrusion prevention, the technologies to look for on the storage front in 2004
would be fiber channel SAN, iSCSI and storage virtualization.