CII’s 2nd International Banking Tech Summit 2007 gets off to a flying start
With the high growth activity and levels comes the increased competition in the banking sector and technology has emerged as the key differentiator in the marketplace. As the Indian banking sector experiences significant double digit growth, it is emerging into a market that is becoming increasingly regulated in keeping with global trends and practices. In keeping with this scenario, Confederation of Indian Industry organized the Second International Banking Tech Summit, 2007 in Mumbai on January 16 2007.
In his introductory remarks, Mr Shrinivas V Dempo Deputy Chairman – CII Western Region and Chairman & Managing Director V S Dempo & Co. Pvt. Ltd pointed out that in recent years, technology has acted as the driver for managing and processing customer and operational data effectively and efficiently, to fuel top line growth & facilitate marketing activity.
Explaining the summit and its objectives, Mr Deepak Ghaisas Chairman – CII’s Banking Tech Summit 2007 and CEO – India Operations & Chief Financial Officer i flex solutions Ltd said the Indian banking system was seeing how technology is aiding the increasingly stringent and complex Governance, Regulatory Compliance and Risk Management areas through latest technology solutions which help – from monitoring Clause-49 compliance to managing data in line with Basel II recommendations.
He explained that with such increased activity happening in the sector, and technology at the forefront of enabling these developments; “Expanding Horizons Through Technology” was the theme for the summit. “CII’s 2nd International Banking Tech Summit 2007 seeks to bring together eminent personalities from the Banking, Technology and Consulting industry along-with policy makers and various stakeholders on a common platform, to discuss and debate on issues impacting the industry and how technology will aid in achieving future growth perspectives,” Mr Ghaisas said.
He added that the Summit would also analyse the preparedness of the Indian banking sector to compete globally, deploying effective technology solutions.
The Summit saw the release of a CII – PwC Study on “Expanding Horizons Through Technology” at the hands of chief guest Dr R B Barman Executive Director Reserve Bank of India, and post the release, Mr John Garvey, Partner, Financial Services Leader PricewaterhouseCoopers Pvt. Ltd made a presentation which looked at the international scenario vis-à-vis banking and technology. “Comparing the international scenario to the Indian scenario, when it came to best practices, he said there were some areas where the Indian banks were in harmony with international trends, but the areas where they were not represented an opportunity. “When you look at international banks they provide an opportunity for the Indian banking sector to learn from both, the success and the mistakes,” he said.
In his inaugural address, Summit chief guest Dr R B Barman Executive Director, Reserve Bank of India spoke of increased use of technology in the Indian banking sector. “Technology allows lot of innovative services to be provided to customers,” he said. He mentioned that electronic banking systems now accounted for 60 per cent of number of transactions, but it was just 25 per cent when measured in volume terms. “The effort should be to reduce dependence on cheques,” he said. Basel II should not be taken as a regulatory need, but as a means for banks to do business in a more efficient manner, it would help banks better manage risk, he added.
Listing some of the changes that confronted the banking sector, Dr Barman pointed out that the profit making model was shifting from corporate to retail. He also mentioned the challenge of serving rural areas, which he termed as a ‘challenge’. While Information technology was a solution, ultimately it would be the people who would use the system who would make a difference that would make it a success or otherwise. “IT can help, but it is people who drive the initiative,” he pointed out.
In the first Plenary, Session Chairman Mr Deepak Ghaisas touched on the theme, “O pportunities & Projections”. He first laid ground for the session’s proceedings, explaining that it would be a SWOT analysis for the banking sector besides emphasizing on leveraging opportunities and analyzing projections to enhance the sector’s growth. “In this session, the attempt is to unleash the latent potential in the Banking sector and set the tone for the Banking Tech Summit 2007, i.e. ‘Expanding Horizons Through Technology’,” he said.
Given the increasing interest on Mergers & Acquisitions in the Banking arena, the presentation by Mr O P Bhatt Chairman State Bank of India was; “Mergers & Acquisitions – Does Size Matter?”
He began by questioning the basic premise, whether bigger was indeed better, leading on to the emerging trend of M & A, and the role of size in M & A. “Banking is a service industry, what we sell is service,” he pointed out. “Does a larger size guarantee better service?” he pondered. He was quick to point out that technology was needed for banks to provide best services to their customers, the entire process being expensive and requiring regular updates, it make sense for smaller banks to look at M & A so as to get the ‘bigger size derived cost-advantage benefit’.
He pointed out that the RBI was committed to allowing ‘easier’ access to foreign banks, which would enter the Indian market with heavy pockets and latest technology coupled with a wide product range. “These banks will target the top customers of existing Indian banks, and to face up to this competition, there is a need for Indian banks to ‘scale up’,” he said. He gave the example of Mittal – Arcelor and TATA – Corus, and pointed out that no Indian bank was in a position to play a role in any such process – they just weren’t big enough. SBI and its Group banks shared a common IT platform, in a way it was ‘virtual integration’ and the day a decision would be taken on merging, it would be a simple matter of bringing down the fire walls,” he pointed out.
Mr Manish Khera Chief Executive Officer Financial Information Network & Operations Pvt. Ltd spoke on “Raising the Bottom of The Pyramid – Tapping Rural Demand”. He began by mentioning that there was a huge demand at the bottom of the pyramid, which banks were unable to meet as of the present. He also pointed out that ‘bottom of the pyramid’ was not exclusively rural. Poverty line definitions would show ‘Bottom of The Pyramid’ in urban areas also, he said.
The second point he made was that the share of non-agricultural output exceeds agricultural output in the rural economy. In this scenario, he pointed out that while the banking sector was unable to penetrate this segment of the market – banking accounted for just 20 per cent – others, like micro finance providers were bridging the gap.
He said this was on account of a mismatch in demand and supply, between what the customer in this segment wanted and what the actual response of banks was. “There is a need to have a second look at the approach,” he said. “Delivery model and regulation were two aspects that needed to be given a second look,” he said.
He said the need was to further emphasise on methodologies which could be employed in tapping rural demand – in other words, how the ‘bottom of the pyramid’ could be pushed up.
16 January, 2007