Private banks around the world are keen to invest heavily in technology, with special emphasis on Internet banking, a research conducted by consulting firm PricewaterhouseCoopers had found little over a year ago. To quantify the technological inclination of these banks, it had predicted that the median Internet spending among the surveyed banks in the US is expected to touch $4 million annually by the year 2003.
Even in India, the Information Technology (IT) spend in the financial services/banking sector is significant, according to PwC partner & head of capital markets Kaushik Dutta. Financial services have been a large spender on IT, largely due to the CVC guidelines and the push given by the Reserve Bank of India for automation, says Mr Dutta. In what may sound as a warning bell, he says that banks that delay implementing Internet banking could lose their technology-savvy customers. However, so far the spend has been mostly on branch-based solution and local-level small servers and desktops in the country, Mr Dutta adds.
The multinational and leading private banks are amongst those using the state-of-the-art technology, helping them launch advanced products and services for their customers. For instance, have you ever wondered what goes behind a Flexi Deposit or Unitised Time Deposit Says Nucleus Software CEO Prakash Pai: This product is possible only because of technology. Explaining the concept, Mr Pai says that in such a deposit, the customer can create deposits which can be broken in units of Re 1. This deposit account can be linked with a savings or a current account and if a cheque hits the account and there is insufficient balance, the system will break the deposit and only withdraw as many units as required to clear the cheque. Also, the customer is penalised only for the number of units broken.
Also, it is technology that enables banks to design flexible loan products for their customers, according to Mr Pai. Because of the use of technology again, banks and institutions can aim to offer loans and credit cards in a short time, he adds.
From loans to anytime (ATM) banking, credit card processing to recovery management, Internet banking to mobile banking, technology is at the heart of it all. Providing software solutions to the banking majors are Infosys, i-Flex, Polaris, Nucleus Software, Nelito Systems, Rainbow Information Technologies and Gemplus Technologies, among others. To give an example of the potential of software solutions, the biggest revenue stream for Infosys remains the banking, financial services and the insurance segment.
The card industry, an integral part of the financial services market, has also witnessed tremendous technological innovations. MasterCard International vice-president and country manager (South Asia) Sameer Vakil says: Recognising the need for the latest technology and systems, we were the first in the cards industry to launch a state-of-the-art VSAT network for moving data securely and quickly between member banks and MasterCard. This was the first VSAT network in the Asia-Pacific region also, he says.
Visa International, another major card company, too is looking at various technological options for the Indian market. According to Visa International executive vice-president (South-East Asia) James Murray, the company is working on IT-led e-commerce and m-commerce initiatives for the country. So far, it has implemented a number of technological initiatives in the Asia-Pacific region, including Cardholder Risk Identification Service (CRIS) for monitoring credit card transactions and National Application Review Service (NARS) which allows member banks to share information on card applicants.
Giving an overview, Credit Card and Management Consultancy (CCMC) senior consultant Pushpendra Mehta says that banks in India spent the 1990s developing new products and technologies. ATMs, phone-banking, Internet bankingall of these leveraged technology to serve the one-stop financial service needs. But, now what next Perhaps, an automated loan machine, he suggests.
On a more futuristic note, Mr Mehta says that technology will play a critical role in the future of financial services. towards that end, banks and credit card issuers are currently investing in improved internal technology.
More specifically, Internet banking and broad function kiosks hold the biggest promise for the future, according to Mr Mehta. Also, the voice recognition technology will be refined and will replace touch-tone access to telephone customer-information systems, he says. In other words, the customer will be able to call the banks system and say account balance or transfer funds and the transaction will take place without having to push any buttons or having to listen to a long list of menu selections. Image technology, too, will advance, enabling computers to capture the handwritten information from the face of a document, he says, looking ahead a few years from now.
The way a customer experiences banking has already changed considerably over the years. With the banking hour syndrome a thing of the past for many of us, its time to look forward for more. So over to the bank of future!