The banking sector is now one of the most happening industry vertical for software products and services. Experts believe that even the economic slowdown has not made much of an impact on the IT spending of banking companies. IT infrastructure and software applications have stepped up the efficiency of banks in their internal business processes as well as in offering new products and services. For instance, banks are increasingly encouraging their customers to use automated teller machines (ATMs) and Internet banking. The reason: The cost of entertaining a customer in branch is much higher than a transaction on ATM or on the Internet.

However, technology doesnt stop there. Banking companies that have adopted the latest systems are now looking forward to integrate with external business entities to facilitate transactions like payment of phone bill, electricity bill, and buying movie tickets through ATMs.

The focus of future development is now on creating middleware software engines that will facilitate cross-channel integration. This would mean that you can buy tickets or pay your bills on ATMs, says Polaris Software Lab banking division head Rajeev Malhotra. The concerns in deploying cross channel integration are security and scalability. When a bank integrates its system with external business entities, it will have to protect its channel. Similarly, the systems will have to be scalable as customers increase gradually, adds Mr Malhotra.

Banks are now aiming for 24x7 availability of banking services and that too across channels. Multi-channel delivery is an area of significant importance for banks, says an Infosys official. Electronic delivery channels (EDCs) serve the dual purpose of increasing convenience to customers while reducing the cost of reach for the bank, he says.

According to the Infosys official, software applications are being developed for risk management too. Well researched information available in time can be of utmost importance in managing risk, agrees Mr Malhotra of Polaris.

Another software firm i-flex Solutions plans to offer its software under the application service provider (ASP) model for small and medium-sized banks. Under the ASP model, the software firms can host their software applications on Internet servers and offer access to banks on a chargeable basis.