Core banking technology puts SBI transactions on online superhighway

Written by Saikat Das | Saikat Das | Mumbai | Updated: Feb 22 2010, 05:44am hrs
Thanks to its new core banking technology, State Bank of India, the countrys largest bank, can now handle about 35 million transactions a day as compared to just 10 million earlier. Fund transfers can now take place virtually in seconds, a dramatic improvement over minimum of a day just a few years back.

The over three-fold increase in SBIs transactions capacity has benefited its whole range of customers hooked on to one or more of its 17,700 branches across the countryfrom petro-leum companies to daily wage earners, jawans and pensioners.

The key factor behind the successful completion of the core banking project, given its magnitude and complexity, was SBIs highly systematic and process-oriented culture, observes SBI chairman, OP Bhatt.

Ever since SBI started implementing its core banking technology in 2003, it has seen an estimated 60% jump in customer accounts. Currently, SBI, together with its subsidiaries, has roughly 260 million accounts. With the core banking system in place, all SBI branches are inter-connected from a centralised information technology department located at Belapur, Navi Mumbai.

Says SBIs deputy managing director (IT), A Krishnakumar, Oil firms can now get their dues from local dealers faster. Similarly, core banking helps government funds getting transferred directly to beneficiaries through SBI accounts without any third party (state government) interference.

Even the beneficiaries of the National Rural Employment Guarantee Act can now have their dues directly credited to their SBI savings account by the government authorities in New Delhi.

Its no longer necessary to use the earlier balancing of book method. Besides, errors are easily rectified, frauds are minimised and human errors eliminated. The core banking technology, christened Project SBI First, was installed by Tata Consultancy Services.

Of course, it wasnt easy to convince all customers in rural areas to use the facility. "They were initially sceptical," says Krishnakumar. Further, the bank needed to carry out rigorous training programmes for its huge staff base of 2,00,000 employees. Currently, the bank is facing a minor problem of ATM connectivity at some its remote branches, due to a shortage of power. SBI plans to switch to bio-metric ATMs, which run on non-conventional energy and are cost effective. Tenders have been placed for 500-1000 such ATMs. Typically, a bio-metric ATM costs around 2 lakh as compared with Rs 4-5 lakh for a normal ATM.

Krishnakumar observes that core banking has helped reduce stress levels among SBI employees and instead of doing the tedious job of matching debit and credit transactions to balance the books, employees are putting in more effort to cross-sell investment products and buidling customer relations. For instance, a deputy branch manager would need to make 400 entries in a ledger every day to match debit and credit transactions to balance the book.

He could rarely leave before 7 pm but today, thanks to the core banking technology implemented by the bank, he can leave earlier and his productivity too has improved.