City-based Institute for Development and Research in Banking Technology (IDRBT), along with CMC Ltd is now evolving the required technology that will enable domestic banks to foray into electronic commerce in a big way.
Sponsored by the Department of Information Technology, IDRBT will procure and build various tools that will enable quicker building of e-commerce applications in the country.
The project envisages creation of a test bed for Internet security and Internet commerce. By developing tools, building prototypes and field implementing applications the test bed will be used for e-commerce.
IDRBT is also establishing a "Center of Secure Technologies" to study the existing public key infrastructure and procure/develop necessary software tools that will help in setting up such infrastructure.
The center will also take up research and development and consultancy on security systems, security standards and electronic payment system specific to the Indian environment and will also assist in investigation of cyber crimes.
The institute was also involved in a project with IIT-Mumbai, and other institutions to develop a smart card solution that can be used here. The outcome of the pilot project is smart card standards, which have been submitted to the Reserve Bank of India for consideration as national standard.
The project assumes importance since security validation and authentication will become easy once the card is operational. Since individual computers are expected to have smart card readers in the near future, this opens a vast range of opportunities to the banking and business segments.
At present, only some of the post-liberalisation period private banks such as ICICI Bank, Citibank, IndusInd Bank and Global Trust Bank have entered e-commerce in a big way. But most of the other banks are yet to take e-commerce seriously.
According to an IDBRT working paper, in the developed countries, 20 to 30 cents per dollor of e-commerce transactions Come as income for banks. Going by Nasscom's estimate of e-commerce in India, this would mean around Rs 3,000 crore of income for banks in the current fiscal. Hence, the need for domestic banks "to buck up and absorb the technology fast", the paper said.
The working paper points out that with competition and change in lifestyle in the post-liberalisation era, traditional branch-based banking is on the decline in the major metros on one side, and banking yet to reach some remote corners of the country still.
This provides the banks an unprecedented diversity in the challenge to provide better service to maximum number of people. E-commerce could be a delivery channel that can help banks to overcome several limitations in terms of "reach" and "range" of services.
