Co-op banks cooperate for core banking

Seven years after the reputation of co-operative banks took a beating in the wake of Ketan Parekh scam, there is a new wave of resurgence in co-operative banks in Gujarat, which are now using technology to woo their old customers back.

Six co-operative banks in Gujarat have come together to create a Total Branch Automation (TBA) and core banking software custom-made for them, which is nearly one-fifth of the market cost. The move is aimed at cutting down the enormous software and installation charges.

Core banking refers to networking of branches, which enables customers to operate their accounts and avail of banking services from any branch of the bank on a single network, regardless of where he or she maintains an account.

The banks include Vijay Co-operative Bank, Sardar Ganj Co-operative Mercantile Bank, Gandhinagar Urban Co-operative Bank, Kalol Nagrik Sahakari Bank, Gandhinagar Nagrik Co-operative Bank and Nadiad People's Co-operative Bank. The cost of the TBA services has been divided amongst them while core banking has already been implemented at Vijay Co-operative Bank and Gandhinagar Nagrik Bank.

Apart from being able to operate through a central database or a database at each branch to make transactions easier, the co-operatives will also be able to offer mobile banking, Internet banking and customised cheque books to customers. The most striking aspect of the software is the cost.

"For a bank with 10 branches in the state, Rs 5-6 lakh is required at the head office and Rs 1.25 lakh per branch. But since this was a unique initiative shared by six banks, the cost per bank came down to Rs 2 lakh," said Chirag Patel, CEO, Acute Softwares, who provided the technology support.

The initiator of the idea was Ahmedabad-based Vijay Co-operative Bank, whose general manager realised the need for introducing technology into day-to-day transactions to avoid errors and curb the wastage of time and labour through manual operations. The official sent letters to each of the co-operative banks asking if they would collaborate.

Following the completion of the initiative, a number of co-operative banks in Gujarat have since then approached Vijay Co-operative Bank to demonstrate how the system works.

"When we send a message to a customer's mobile saying the opening balance is insufficient or when we present to them a customised cheque book, the goodwill and the trust earned cannot be matched. By investing in technology, not only are we making banking easy for customers but also reassuring them that their money is safe in the co-operative bank," said GP Mistri, general manager, Vijay Co-operative Bank, which has now brought its 13 branches in Ahmedabad under core-banking.

He admitted that the initial days of the venture were quite challenging since the general perception was that a number of customers of co-operative banks were not very technology-savvy and that staff members of most of the banks themselves were not open to learning the new technology.

"Once the idea was formulated, five staff members from each bank were given training in core banking, and they, in turn, managed to train rest of the bank officials," added Mistri.