Customisation raising tech cost for banks

Customisation of technology is increasing the technology cost for the banks in the country. Banks also need to have a business strategy and information technology strategy when they invest in technology, said Bank of Baroda chairman and managing director PS Shenoy.

He was speaking on Technology: Life -line or Cost Monster at the 25th Banks Economist Conference in Mumbai.

He said there is too much customization instead of changing or adapting to solutions. "We keep on customising to the present ways of doing things. In this case we would loose the edge," said Shenoy.

SBI deputy managing director Ashok Kini said, "If one were to convert the banks into 99 per cent technology oriented the manpower needed would be only 20-25 per cent. The cost of keeping the remaining 75 per cent manpower is much less than what the bank is spending on technology."

"The real issue is not the cost or the cost benefits. It is how technology is harnessed and used in efficient manner. It is also critical to have a business strategy and an IT strategy along with business process re-engineering (BPR) and change management," Shenoy said.

The BPR exercise needs to be undertaken to define the process. "Without BPR it is computerizing on an as is where is basis. It is also important to change the mindsets of the people.

Gunit Chadha, Deutsche Bank chief executive officer said, banks like Citibank are not known for their IT process.

"People say they are best because of the business strategies. By 2010 to 2015, technology would not be a differentiator. What the banks do in the next two-three years would make the difference," he said.

He also said that old technology should not be kept in the bank so that the bank does not take a hit on accounting practices.

"New technologies need to be bought in and old technology needs to be thrown out. This would also help the morale of the employees," Chadha added.

According to Sun Microsystems senior director, "It is only in the IT industry where the hardware and software are given and users have to integrate them. This solution may work or may not work. The users are not asking the industry to change."

Corporation Bank CMD Cherian Varghese said, "The investments into IT is substantial. Banks can share infrastructure with suitable firewalls making IT more affordable."

He also added that as technology is being implemented the float money with the banks would no longer be available. "Banks need to price their products accordingly. The days of free services are over," he said.

On the IT company which SBI proposes to start Kini said, "We are in the process of conceptualizing on what business areas the IT company will focus on. It is likely to be finalized by March 2004."

Chadha also added that some of the Indian banks could come together to set up processing centers and IT centers like some of the foreign banks.