Intelligent adoption for business

With the first level of automation like core banking implementation, 2004-05
would see spending where they would turn data into information so that it can be

adequately monetized to enhance profitability. This calls for widespread

adoption of business analytics–including business intelligence tools, which

are likely to be integrated with CRM solutions during the year.

Intelligent Adoption for Business

While RBI, ICICI Bank, HDFC Bank, IDBI Bank, LIC and Standard Chartered Bank

have already gone for BI implementation in 2003, many more like Punjab National

Bank, Bank of Baroda are slated to follow suit this year.

With retail banking through multiple channels expected to become a norm for

the larger banks and insurance companies, BI would be absolutely crucial for

them to retain and acquire customers to survive.

"BI tools help individual banks to know the entire history of the

customer, which in turn enables the bank to offer services suited to him,"

says Arjun Erry, director-sales, SAS India.

Relationship managers would be expected in 2004 to oversee even larger

portfolios of customers as technology makes their interactions more efficient,

but CRM technology would help to customize and personalize the delivery of

products and services more effectively.

Likewise, keeping track of sales, leads, contacts, referrals and cross-sells

now consume far too much of a commercial banker’s time. Sales force automation

technology in 2004 would reduce this chore to a minimum, enabling the banker to

spend more time with clients and potential clients.

De-risking through regulation

Developments on the regulatory side are also creating a compelling case for

automation of Indian banks. Nothing illustrates this better than the activities

on the risk management front occurring under the Basel II guidelines.

The New Basel Capital Accord or Basel II is contributing to the soundness of

the financial systems of a country by implementing minimum capital requirements

on credit, operational and market risk. Therefore, complying with the Basel II

requirements would be imperative for Indian banks in 2004-05 to participate in

the global financial services industry.

Says Tripathi, MD, Infrasoft Technologies "If not Basel II, even Indian

banks need to follow something similar to it to devise a comprehensive plan to

mitigate risk on their currency as well as devise an organizationally sound risk

management strategy".

While ICICI has already adopted some of these measures, a host of other banks

are expected to do so during the current year.

Big Brother is watching

With the Money Laundering Act 2003, likely to come to force in 2004, banks in

India will have to take prevention of money laundering as a critical business

sustaining activity.

The bill works out modalities of disclosure by financial institutions

regarding reportable transactions, confiscation of the proceeds of crime,

declaring money laundering as an extraditable offence and promoting

international cooperation in investigation of money laundering.

Most have realized that they need a comprehensive solution that provides the

greatest possible scalability and flexibility. After all, the consequences of

failing to detect criminal financial behavior are serious. The only defense a

highly effective anti-money laundering (AML) system.

Only eight PSU banks and private banks like ICICI which have offshore

entities are in different phases of deploying such systems. While Tripathi feels

that all banks with international ambitions need to go for AML solutions, he

also feels that it would act as a useful deterrent against black money.

However, he expects 2004-05 only to be the initiation of AML systems in the

country, while the real boom time should come somewhere in 2005-06.