IT IN BANKING INDUSTRY

ATMs Electronic Banking Branch Banking

Branch 3 Branch 2 Branch 1 Head Office Branch 4

Branch n Branch 6

Branch 5

Committees on Computerisation in Banks in India 1982-1995

1. Working Group to consider feasibility of introducing MICR / OCR Technology for Cheque processing (1982) Convenor : Dr Y B Damle, Advisor, Management Services Department, RBI
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Committees on Computerisation
2. Committee on Mechanisation in the Banking Industry (1984) Chairman : Dr C Rangarajan, Deputy Governor, Reserve Bank of India
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Committees on Computerisation
3. Committees on Communication Network for Banks and SWIFT implementation (1987) Chairman : Shri TNA Iyer, Executive Director, RBI

Committees on Computerisation
4. Committee on Computerisation in Banks (1988) Chairman : Dr C Rangarajan, Deputy Governor, RBI
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Indian Banking-Now...
Transparency in Banking; Compliances Narrow Banking Relationship Banking Retail / Personal / Private Banking Hi-tech Banking E Age-Banking Mobile Banking / Phone Banking Network Banking Virtual Banking Universal Banking Online Banking / Internet Banking
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WHY TECHNOLOGY IN BANKS ?

TO TRANSFORM FINANCIAL SERVICES INDUSTRY IN THE NET-WORKED WORLD
BANKS TO BE CUSTOMER CENTRIC PROVIDE SERVICES / PRODUCTS ACROSS A RANGE OF CHANNELS TO BE FUTURISTIC AND HAVE TIME VALUE IN ALL ITS DEALINGS WITH CUSTOMERS
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Many Benefits of Technology

Increased operational efficiency, profitability & productivity Superior Customer Service Multi-channel, real-time transaction processing Better Cross-Selling ability Improved management / accountability Efficient NPA and Risk Management Minimal transaction costs Improved financial analyses capabilities
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Pre-requisites for Technology

Human Resource Empowerment Business Process Re-engineering

Planning for

Disasters
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Focus aspects of Commercial Banking

BANKS BUSINESS

LOANS & MISC. SERVICES

RAISING DEPOSITS

Core Banking (CBS) Electronic Banking Any Branch Banking CRM

MIS & Intranet

ATMs
POS Terminals and Cash dispenser

Corporate Network

Card Management Document Management

Risk Management

Resource Management

BANKS BUSINESS

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Benefits of IT in Banking
To Banks
Large satisfied customers and higher retention Scope to attract new customers Improve quality and differential services Greater opportunity to cross sell Sharing network and Cost Saving Increased volumes and profits Reduce overall risk with proper MIS

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Benefits to Customer
More convenience & flexi timings Better awareness of products & services

Up-to-date information on accounts

Low cost of accessing the accounts

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BANKS IT STRATEGY
INVESTMENT IN HARDWARE ACQUIRING / DEVELOPING SOFTWARE TRAINING OF STAFF AT DIFFERENT LEVELS NETWORKING OF OFFICES R-S-U-M? SECURITY FOR TRANSACTIONS & INFO GLOBAL REACH ONLINE BANKING, OUTSOURCING
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DEVELOPMENTS
ALPMs CRM, KYC, AML

CLEARING HOUSE
CREDIT/DEBIT CARDS

Core Banking Solutions

KISAN /SME CARD

INFINET, RBINET
BANKNET

SMART CARDS
INTERNET BANKING

MICR, ATMs, SWIFT

ECS, EFT, SEFT, RTGS

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ALPM
ALPM Advanced Ledger Posting Machine Micro processor based electronic device used for maintenance of primary ledgers, working out products and interests at periodical intervals, preparation of account statements and listing of standing instructions to be executed in the accounts.
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MICR CLEARING
Magnetic Ink Character Recognition Introduced in 1987 in the four metros 1,047 Clearing Houses; 42 with MICR SB/CA Cheque leaves standardised size (8 X 3 2/3) are pre-printed with the bank-branch code and account type in MICR strip, while the amount is read manually and fed into the system using the encoders for funds settlements Speeds up clearing work BC/DW/TC/DD/PO/GC/IW/RW/SI...
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Automated Teller Machines

ATMs or 24 hour Tellers Electronic Terminals - allow to bank at any time... On-site (near branch) and Off-site ATM ATMs facilitate withdrawal/deposit.... Customer provided with a PIN / Card Introduced in India by Foreign Banks SWADHAN / SPNS wef Feb 1, 1997 Introduced in Mumbai by IBA initiative www.iba.org.in
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ATMs
On-site and Off-site Automated Teller Machines -MOBILE, BIOMETRIC ATMs Total installed ATM base >21,000 Average withdrawal per ATM transaction - Rs 1,500 to Rs 3,000 Total cash movement through ATMs in India is Rs 35,000 - 40,000 crores every year Medium for non-cash transactions such as printing of statements, credit card enquiry, cross selling, etc
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SBIs Mobile ATM in Kerala

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Communication Networks
MICR (Magnetic Ink Character Recognition) Clearing BANKNET INFINET SWIFT Electronic Data Interchange (EDI) Electronic Funds Transfer (EFT) System Electronic Clearing Services (ECS) ATM network - SWADHAN (Shared Payment Network System -SPNS)

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BANKNET
Set up in 1991 by RBI Meant to facilitate transfer of interbank/ inter-branch messages within India by Public Sector banks who are members of this network Wide connectivity - Major Centres like Mumbai, Delhi, Calcutta, Madras, Nagpur, Bangalore, Hyderabad, Pune, Ahmedabad, Kanpur, Lucknow, Chandigarh, Kochi, Jaipur, Bhopal, Patna, Bhubaneshwar, Thiruvananthapuram, Guwahati, Panaji, Jammu, etc
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 Indian Financial Network Set up by RBI in June 1999 Satellite based WAN using VSAT (Very Small Aperture Terminal) technology The hub and Network Management System of INFINET are located in the Institute for Development and Research in Banking Technology, Hyd Major applications: E-mail, Electronic Clearing Service - Credit and Debit, Electronic Funds Transfer
http://www.idrbt.ac.in/index_fromsm.html ?infinet1.html?infinet
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INFINET

SWIFT www.swift.com
Society for Worldwide Inter-bank Financial Telecommunication HQ La Hulpe, Brussels, Belgium Provides reliable, fast tele-communication facilities for exchange of financial messages all over the world between Banks and FIs As non-profit making co-operative society in 1973 by 239 banks in 15 countries Hubs in Brussels, New York and Netherlands Rules in 1975; first message in 1977 >7,000 members in 200 countries now Handles over 7 million messages every day India a member since 1991 88 Indian banks are members as on date
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Electronic Data Interchange

Facilitates transfer of banking transactions using agreed protocol and standard data structure b/w computers Norms developed in respect of specific messages for transmission of business transactions which are electronic equivalents of commercial invoices, purchase orders, transport bookings, payment instructions etc Appropriate message formats and standards for financial applications in EDI developed by Message Development Group-Finance (constituted by IBA)
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Electronic Funds Transfer (EFT)

Hosted and operated by the RBI Permits fund transfer up to Rs 5 lacs from any account at any branch of any member bank in any city to any other account at any branch of any member bank in any other city RBI acts as the service provider as well as regulator
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ECS
Electronic Clearing Scheme (ECS) operated by the RBI since 1996-97 Utilises BANKNET and INFINET Facilitates payment from a single account at a bank branch to any number of accounts maintained with the branches of the same or other banks Eg., Payment of dividends RBI has also launched ECS Debit for payment to utility companies like Telephones, Electricity etc
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SWADHAN
Launched in 1997 India's FIRST Shared Payment Network Service covers > 1000 ATMs in 64 cities 55 member banks in the network, which include nationalized, private and foreign banks Enables member banks to share their ATMs with other participating banks

Objective - reduce the huge investment being made by the banks to deploy ATMs in different locations
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Core Banking Solutions (CBS)

POOLING DATA AT CENTRAL SERVER TRANSACTIONS OF DELIVERY CHANNELS FROM DELIVERY POINTS (BRANCH/ATM) FEED ONLINE TO HOST NO BACK OFFICE HOST DATABASE IS UP TO THE MINUTE END OF DAY (EOD) AND START OF DAY (SOD) TASKS PERFORMED AT BRANCHES WILL BE DONE BY HOST SERVER ELIMINATES BR RECONCILIATION WORK STAFF PRODUCTIVITY BANK CUSTOMER!
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Smart Cards The Future

Multi-application Smart Card Channel of the future Pilot project started Pilot Project funded by Govt. of India Project is in progress in partnership with IDRBT, IIT Mumbai and Banks Visit www.scafi.in The Smart Card Forum of India is a non-profit, multiindustry organization promoting the wide spread acceptance of multiple application smart card technology.
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THANK YOU
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