Mobile devices are going to be the next wave of technology in banking

KP Sunny, CIO, Federal Bank, talked to KTP Radhika about the bank’s IT bandwidth and how it was adopting new technologies to stay ahead of the curve

How does IT help Federal Bank enhance its business operations?
From its early days, Federal Bank has identified IT as a differentiating factor and consciously invested in it. We have a strong in-house team for managing our IT needs and independently manages a data center and DR site. Other than the ready-made software systems that we use including the CBS, LOS and CRM, the in-house team meets the day-to-day software requirements.

Our IT policy aims to ensure the continued availability of IT resources to end-users, the delivery of quality services to our customers and to manage the IT infrastructure in line with our business aspirations. We also have stringent data security policies. We were the first bank in India to offer RTGS through all of our branches and to provide IMPS transactions through Internet banking. We were also the first to introduce electronic telephone bill payment and to implement Visa money transfer.

We believe in centralization—starting with the CBS, all of our applications are hosted at the data center. Employees use a Web browser to access all of these services. As the solution warrants, we make use of advanced technology platforms. Currently, a good number of applications are running on Java. We also make use of .NET quite extensively for in-house development. Our Web site and intranet are running on portal technology. An Enterprise Service Bus (ESB) is also in place to take care of the integration of various applications. Our remittance engine makes extensive use of the ESB.

Tell us about some of the major IT deployments that you spearheaded.
In 2004, we integrated our forex and domestic treasuries. We had to do a lot of re-engineering and design new accounting procedures to capture multi-currency accounting. We also implemented a new, integrated treasury solution during the same period. Another venture was the development of our current Web site.

We are also improving the knowledge-management infrastructure, which will counter the erosion of knowledge from the bank. In a computerized environment, risk management has gained  importance. Our risk-management solutions are nearing deployment. As the number of channels available for doing transactions increase, we have to fortify multiple entry points. We also have to monitor transactions happening on all of the channels. To this end, we are implementing a transaction-monitoring tool. Another area of focus is that of improving customer service. We are taking the help of a CRM solution to support the front office in order to serve our customers better. As part of reducing the carbon footprint of the bank, we have started a green initiative by developing a new system to handle the internal document flow, which can obviate paper notes to a great extend. Another key requirement from users is for an internal centralized help-desk.

How do you ensure that IT projects and objectives are aligned with business objectives?
In the good old days, most technological initiatives started with the IT department. Today, we have experienced a shift wherein business heads have started taking ownership for projects and preside over the steering committees of all such projects. IT team members are invitees to these discussions and meetings. The management also insists that all new ventures have to be initiated by business departments with the assistance of IT representatives. Monthly management committee meetings—which have to be attended by the heads of business, IT departments and the field representatives—iron out differences and ensure alignment.

CBS is a now norm in the banking industry. What are the other IT solutions that you are looking at in order to withstand  competition in the sector?
Traditional banking has undergone a sea change with the introduction of CBS. We deployed ours back in 2006. We brought all of our branches under the system in six months. Today, retaining a customer is as stressful as acquiring one. This can be achieved by forecasting customer needs. CRM, data warehousing and business intelligence have become the necessary tools for any organization to understand its customers. The field staff is gradually realizing the cross-selling opportunities thrown up by the 360 degree view offered by CRM. Similarly, the business departments have started realizing the importance of dashboards in monitoring business growth.

How do you think Cloud Computing and virtualization will influence banking?
Cloud technology is maturing rapidly. However, the banking industry is still reluctant to embrace it in production environments. The lack of a regulatory or self-controlled prescription to ensure minimum standards is a matter of concern. The private Cloud seems to be relatively costly for the IT benefits that it can offer to traditional banking. In an industry where the demand for IT services can be fairly predicted by the growth of business and network expansion, a private Cloud—which offers IT resources on-demand and by self-allocation—may not be attractive. That said, virtualization has been utilized by the banking segment for data center consolidation and for server consolidation.

What will be the next technological wave in the banking sector?
Mobile devices will be the next wave. Management Information Systems (MIS) and dashboards on mobile devices will free managers from their desks and also act as better tools to acquire customers. Customers will definitely start demanding complex, mobile-based transactions. Bring-you-own-device or BYOD is going to change the environment in the near term. However, given the security concerns attached to it, the banking sector may not be ready to allow employees to bring their own devices onto the network.

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