BANKING IN TECHNOLOGICAL

PARADIGM
ANUPAM JHA
 History
1870 – Bank of Hindustan – First Bank

Presidency Banks - Bank of Calcutta, Bank of Bombay and Bank of Madras

1921 - All 3 banks amalgamated and became Imperial Bank of India

1934 – RBI was Constituted

1949 – RBI came under government control

1955 – Imperial Bank became State bank of India

 Introduction
“Accepting, for the purpose of lending or investment of deposits
of money from the public, repayable on demand or otherwise and
withdrawable by cheques, draft, order or otherwise.”

A bank is an institution that deals with money and Credit.

However, in reality Banks are service organisations selling banking
services.

Economic importance:
Contribution to GDP – 4.7%
Employing approx. 1.5million employees
 Evolution
• Post Independence
– The Banking Regulation Act provided that no new bank or branch of an existing bank
may be opened without a licence from the RBI, and no two banks could have common
directors.

• Nationalization
– Nationalisation of the 14 largest commercial banks

• Liberalisation
– Liberalisation Policy was implied which gave licences to a small number of private banks.
– Relaxation in the norms for Foreign Direct Investment
 Banking v/s Finance
Banking:
A Bank is a financial institution licensed by a government.

Its primary activities include borrowing and lending money.

It provides Services like Credit card, debit card , interest on deposits,

Finance:
A financial institution provides financial services for its clients or members.

Probably the most important financial service provided by financial

institutions is acting as financial intermediaries.

Most financial institutions are highly regulated by government bodies

 Banking activities
The banking activities can be classified as :

Accepting Deposits from public/others (Deposits)

Lending money to public (Loans) 
Transferring money from one place to another (Remittances) 
Acting as trustees 
Acting as intermediaries 
Keeping valuables in safe custody 
Collection Business 
Government business
 Services provided by banks
• Keeping money safe while also allowing withdrawals when needed
• Issuance of check books so that bills can be paid and other kinds of payments can be delivered by
post
• Provide personal loans, commercial loans, and mortgage loans (typically loans to purchase a home,
property or business)
• Issuance of credit cards and processing of credit card transactions and billing
• Issuance of debit cards for use as a substitute for checks
• Allow financial transactions at branches or by using Automatic Teller Machines (ATMs)
• Provide wire transfers of funds and Electronic fund transfers between banks
• Facilitation of standing orders and direct debits, so payments for bills can be made automatically
• Provide overdraft agreements for the temporary advancement of the Bank's own money to meet
monthly spending commitments of a customer in their current account.
• Provide Charge card advances of the Bank's own money for customers wishing to settle credit
advances monthly.
• Provide a check guaranteed by the Bank itself and prepaid by the customer, such as a cashier's
check or certified check.
• Notary service for financial and other documents
IT-BASED BANKING SERVICES

UNLOCKING THE BUSINESS

POTENTIAL
 Customer insights
• Banks have lots of data about their customers, but
still don’t fully leverage it.
• Some banks have started using “Analytics” to
develop a better understanding about customers.
• With much better data mining and analytics,
banks need to graduate to understand and
anticipate the needs of the customers better so as
to ensure congruence in terms of customer
experience as well as better rates of sales
conversions.
• Reduce the cost of banks.
 Contd….
• Banks have also to implement far better
“customer relationship tools with “Customer
One View” campaign management and sales
funnel management features.
• Telecom Industries and Hospitality Industries
have used these technologies far better.
• Next decade will see a significant progress on
this front.
 Digital Marketing
• used technology to service their existing customers
and to keep costs under control
• No big leap in terms of acquiring customers using
digital channels.
• Gen-Y will socialize on the Net( chat rooms, social
networking sites, and so on), buy on the net and
even learn on the net and so on.
• Will mean developing a new set of expertise to
understand the medium, how it is consumed , how
to create a reach which is targeted, and how to
create conversion from ‘interest’ to ‘sale’
 Contd…
• Will entail creating products which will get
instant interest and fulfillment.
• Banks will need to make this huge leap if they
have to remain relevant for the next
generation customers.
 New-age branches
• Obituary of branches as a channel was written
at the peak of the internet boom, but rose like a
phoenix and came back in reckoning.
• Need to look at the retailing industry to adopt
practices and formats which will redefine the
customer experiences in terms of look, feel,
point of purchase marketing, merchandising,
display, modes of interaction with the customer.
• They need to go a step further and personalize
the experience of the customer.
 Contd…
• The new age branches will have
• Open formats with flexibility of customer self service or assisted
self-service or banker assisted service using equipments and
devices.
• Customer will be recognized and will see specific offers on screens.
• Will be able to interact with experts over two-way video conference
• All this will require a whole range of technologies relating to banking
devices, VoIP, telephony, and digital devices.
• Without this transformation the branches may indeed lose their
relevance
 Mobile and Net
• While Net banking usage has seen a reasonable growth,
mobile banking is still in its early days/infancy.
• Mobile as a medium will outgrow the other channels.
• Suffers from many problems relating to standardization of
operating systems, protocols, security issues, evolving
regulatory framework, and so on.
• Banks have a great advantage if they can create platforms
which are agnostic to specific operators, operating systems,
etc. and take the entire Net banking proposition to the mobile
phones.
• Another league of experience when it integrates voice
technology and web technology and when Net and mobile
platforms merge.
 Contd….
• Redefine how banks deliver service to their
customers.
• It is imperative that banks have cutting-edge
presence and capability in this space.
 Documents and payments
• Banks have been able to convert interbank
transactions into electronic message formats.
• Will be at the forefront of elimination of
documents and paperwork.
• Need to upgrade significantly on document
imaging, electronic messaging formats,
integration capabilities to enable paperless
transactions across multiple entities.
 The under banked/unbanked
• Most banks have looked at this segment as largely
unprofitable.
• Use of biometric technology and mobile has made
limited impact.
• In the years to come cost of transactions and
delivery to this segment profitable and may be the
focus area of many banks.
• Lord Meghnad Desai has advocated that everything
should be given to the poor in cash and put directly
into their bank so that it will be more beneficial to
the poor.
 Conclusion
• Challenge on the technology front is dynamic
• Depends on the state of the technology absorption in
the specific bank and ever changing and evolving
world of technology.
• But what is clear is that banking without technology
is inconceivable now and in the future .

Hence banks must make it their business to be at their

cutting edge of the developments in technology that
can have a transformational and may be even
disruptive impact on their business
THANK YOU