RBI asks banks to use tech to cut costs, improve service

MUMBAI: The Reserve Bank of India has asked banks to use technology more effectively with a focus on bringing down costs and improving customer services in its information technology (IT) vision document for 2011-17. The vision document, prepared by the high-level committee headed by RBI deputy governor KC Chakrabarty , has directed banks to work towards implementation of technology in achieving cost efficiency in small value transactions, improved customer services and effective flow of information within the banks and the regulator.

The report also pushes banks to move from core banking solutions to greater use of information technology in their management of information systems, regulatory reposting , customer relationship management and risk management and financial inclusion. The report has noted that: “Although banks have deployed technology for transaction processing, analytical processing by banks is still at a nascent stage,” adding that using technologies like cloud computing , virtualisation and open source technologies can help banks drive up their operational efficiencies and consequently, pass on the cost benefits to the customers.

In terms of information management, the report does admit “a strong linkage” in the use and sharing of information for decision making is missing within the bank (read RBI). “This, to some extent, has bred information illiteracy within the organisation,” it said. The committee, in the report, specifies the role of IT in banking, with the major objective being balancing the three Cs — cost, control and customer services and adoption of technology-based strategies for financial inclusion. The analytics have to be used for improving consumer relationship management and detection of fraud in the system.

Mr Chakrabarty said in his speech at a seminar organised by the Institute for Development and Research in Banking Technology (IDRBT): “Technology should work for the business in its aim to make its products and services relevant and accessible to its customers, instead of a fixed sunk cost that sits heavily on a bank’s P&L account.” He has further said, technology should also not only be looked as a cost-cutting tool but as a value creating opportunity to customers.

Source: EconomicTimes