By L S Subramanian, Board Advisor and Management consultant in Banking, Financial Services & Capital Markets
A retrospective on the technology transformation that quietly changed Indian banking
There was a time when a bank customer in India was, for all practical purposes, a customer of a particular branch.
The account was there. The records were there. The people who knew the customer were there.
Many banking activities required a visit to that branch.
It seems remarkably distant today.
More than a decade ago, I spent several years researching the impact of Core Banking Systems on India’s public-sector banks. My research covered five PSBs and examined the transformation from both perspectives—the customers experiencing the changes and the bank officials working within the changing environment.
The research used structured questionnaires administered to 512 customers and 131 bank employees from the five PSBs, supplemented by discussions with senior bankers.
I was not a banker. I came to banking from technology.
Perhaps that outsider’s perspective was useful. I was interested not simply in whether the technology worked, but in what happened to the institution and its customers when it did.
Looking back from 2026, the consequences travelled much further than I could have imagined.
The Customer Escapes the Home Branch
The first great achievement of CBS was conceptually simple but enormously important.
It separated the customer from dependence on the home branch.
By centralising the core processing and data of a bank, geographically dispersed branches could increasingly function as parts of a single institution.
The customer became a customer of the bank, rather than merely a customer of one branch.
This enabled the idea of “anytime, anywhere banking.”
Today, that phrase sounds almost quaint.
The modern customer increasingly expects banking not merely anywhere, but everywhere.
The Bank Learns to See Itself
The customer-facing benefits of CBS were only one part of the transformation.
Centralised banking also created centralised data.
That changed the ability of banks to manage themselves.
Management information could become more readily available. Asset Liability Management could draw upon a consolidated view of the institution. Risk management benefited from better information. Reporting to management, boards and regulators became easier.
The significance of this is sometimes overlooked.
CBS did not merely allow branches to communicate with one another.
It helped the bank see itself.
This became increasingly important as banks grew larger and financial management became more sophisticated.
One of the themes I explored during my research journey was risk management in Indian banks. In retrospect, I see this as a natural extension of CBS. Once transactions and customer information are captured centrally, the resulting data becomes an asset for managing the institution itself.
Technology Absorbs Scale
CBS also changed productivity.
The public-sector banks I studied operated through periods when recruitment was restricted. Employee numbers reduced over time through retirement and voluntary retirement.
Yet the branch network did not simply disappear.
Technology allowed increasing volumes of banking activity to be processed without requiring staff numbers to increase proportionately.
As routine transactions subsequently migrated towards ATMs and digital channels, employees could increasingly be deployed towards other activities.
The branch began to change from being primarily a transaction-processing centre into a place for customer relationships, advice and sales.
From the Branch to the Keyboard
My research journey also led me to study Internet Banking.
In a study of Internet Banking utilisation and customer satisfaction among 117 respondents in Mumbai, more than 90 per cent of the particular sample used Internet Banking, but only around half expressed satisfaction with the services offered by their banks.
That research captured an interesting transitional period.
Customers had escaped the branch—but they were still sitting in front of a desktop computer.
Internet Banking offered considerable convenience. Customers could view statements, transfer funds, pay bills and perform transactions without visiting a branch.
But the interface was often clunky.
The technology had changed the location of banking faster than it had perfected the experience of banking.
Then came the mobile phone.
The Bank Moves into the Pocket
India’s mobile revolution fundamentally changed the equation.
Affordable smartphones and inexpensive mobile data brought digital services within reach of an enormous population.
Banking no longer required a branch.
Increasingly, it did not require a desktop computer either.
The mobile phone became the bank.
Several forces accelerated this transition.
Demonetisation provided a significant push towards digital payments. India’s digital-payment infrastructure expanded dramatically. Private-sector applications helped make digital transactions intuitive. COVID-19 subsequently reinforced remote and contactless financial behaviour.
None of these developments was created by CBS alone.
But they were built upon a banking system whose accounts and transactions had already become increasingly centralised and connected.
CBS was the foundation upon which successive layers of digital banking could be built.
When Banking Became More Than Banking
The products offered by banks also expanded.
Today’s bank may distribute mutual funds, SIPs, insurance and other investment products.
Some banks offer wealth management. Others provide specialised cards, personalised offers and relationship benefits. Credit-information systems have added another dimension to how financial institutions understand customers.
The physical branch participates in this ecosystem, but so does the mobile phone.
Cross-selling has become both physical and digital.
This transformation brings opportunities, but also responsibilities. Cross-selling must not become mis-selling, and the increasing use of customer data must coexist with privacy and responsible data governance.
CBS and the Consolidation of Banks
Another consequence became visible much later.
India undertook significant consolidation of its public-sector banking system.
The banks involved often had different histories, organisational cultures and extensive branch networks.
But beneath those differences were centralised Core Banking architectures.
The existence of CBS provided an important technology foundation for the enormous exercise of migrating and integrating customers, accounts, transactions and data.
CBS had first helped thousands of branches operate as one bank.
Years later, the same principle of centralised banking technology helped support the integration of entire banks.
Banking Beyond the Branch
My research journey also extended into branchless banking and financial inclusion.
In a paper published in 2013, I examined how technology and the Business Correspondent model could extend financial services to India’s unbanked population. The central idea was that banking could be taken to the customer’s doorstep rather than requiring the customer to seek out the traditional bank branch.
This represented another logical extension of the CBS journey.
First, technology connected the branches.
Then it freed existing customers from dependence on a particular branch.
Eventually, technology began helping banking reach people who might never have been adequately served by the traditional branch model at all.
The Price of Convenience
No assessment of banking in 2026 can ignore the risks accompanying this transformation.
Digital fraud has become a serious challenge.
Cybersecurity is fundamental.
Customer privacy and data protection are increasingly important.
The same connectivity that creates extraordinary convenience also creates vulnerabilities. Criminals attack technology, but they also attack human behaviour through phishing, impersonation and social engineering.
Yet cybersecurity should not overwhelm the larger story.
The challenge now is to protect the convenience and accessibility that digital banking has created while preserving the trust on which banking ultimately depends.
Credit Where It Is Due
Looking back, the role of the Reserve Bank of India deserves acknowledgement.
My original research specifically examined RBI’s role in CBS implementation. The thesis recorded RBI’s objective of enabling the financial sector to leverage information technology for better customer service, improved housekeeping and systemic efficiency, and recognised its sustained role in pushing and monitoring CBS implementation across public-sector banks.
Large-scale transformation rarely happens through technology alone.
It requires institutional direction, persistence and execution.
What may once have appeared primarily as a programme to modernise banking technology ultimately helped create the foundation for a much larger transformation of Indian banking.
We Forget So Soon
Perhaps CBS succeeded so completely that we stopped talking about it.
Today, we talk about mobile banking, digital payments, fintech, artificial intelligence and personalised financial services.
CBS has disappeared into the plumbing.
But underneath much of modern Indian banking sits the transformation that first enabled thousands of branches to function as one connected institution.
The journey can perhaps be summarised simply.
CBS freed the customer from the home branch.
Internet Banking took banking to the desktop.
Mobile Banking put the bank into the customer’s pocket.
And the data generated by connected banking changed the way banks themselves could be managed.
The branch has not disappeared.
The ATM has not disappeared.
Cash has certainly not disappeared.
What has disappeared, for many customers, is the dependence on them.
Perhaps the greatest measure of a successful technology transformation is how quickly society forgets the inconvenience that preceded it.
An entire generation of Indian banking customers may never experience the world in which banking meant filling out a form, standing in a queue, waiting for information and returning to the branch where the account happened to be maintained.
And perhaps that is Core Banking’s quietest and most powerful legacy.
We forget so soon.