Big Thrust for Banking Technology

Technology is now the spearhead for Banking, making it more convenient for the common man and expanding its reach to the underbanked and unbanked areas. Indian banks are putting in place a robust infrastructure to leverage the benefits of IT.

The Institute for Development and Research in Banking Technology (IDRBT) has played a catalytic role in this transformation of the Indian Banking and Financial Sector. Today, the 2nd of August, 2013, the Institute made a few key contributions to fast forward the technology revolution in the Indian Banking and Financial Sector. A brief on these contributions are hereunder:

Center for Information Assurance and Management (CIAM) in collaboration with State University of New York at Buffalo, USA

The rapid proliferation of various delivery channels in the form of Internet Banking, Mobile Banking, ATM, etc., is increasingly exposing banks to new risks such as identity theft, hacker attacks and other security threats. These are issues which are not confined to any one country but are global in nature given the widespread advances in computing and internet technologies.

The Center for Information Assurance and Management (CIAM), being set up in collaboration with the State University of New York at Buffalo, USA, will serve as the "one stop" resource center for all information assurance and management technology, tools, literature, and experts for the Indian Banking and Financial Sector. Specifically, it will:

  • Carry out research and development in the areas of Information Security, Information Assurance and Management, Cyber Forensics and related areas with a specific focus on the Banking and Financial Sector
  • Provide thought leadership and mentoring to the BFSI sector (Banking, Financial Services and Insurance)
  • Conduct employee development training programmes both within India and internationally
  • Research and publish scholarly articles in premier journals and conferences
  • Develop frameworks and standards for the banking industry
  • Cultivate a pool of international experts in the relevant areas for collaborative activities.

Dr. D. Subbarao, Governor, Reserve Bank of India and Visitor, IDRBT, launched the Center for Information Assurance and Management (CIAM) at IDRBT today.

Pilot Project on Cloud Computing

Cloud Computing is transforming the way IT services have been delivered over the last decades. It offers the capability to create a highly mobile and virtual infrastructure and provides flexibility to scale up/down based on demand. The Banking and Financial sector can benefit from the fact that cloud computing provides:

  • Flexible, agile, self scaling operating/business model to meet the growing business needs in a dynamic and competitive landscape
  • Significant savings in infrastructure costs
  • Transform business processes and enhance ability to grow in new sectors or regions without the time and cost burdens involved with establishing a physical presence.

The objective of this project is to set up a Community Cloud on a pilot basis for Indian Banks to provide Infrastructure-as-a-Service (IaaS). IDRBT has chosen IaaS as it provides banks comfort of managing infrastructure as they would normally do in their data centre. This would extend to Platform-as-a-Service and Software-as-a-Service as banks get comfortable on data privacy and security and licensing.

So far, Andhra Bank, Syndicate Bank, Allahabad Bank, Canara Bank, Corporation Bank, and Bank of India are a part of this project.

Dr. D. Subbarao, Governor, Reserve Bank of India and Visitor, IDRBT, launched the Pilot Project on Cloud Computing at IDRBT today.

IDRBT Cloud Security Framework for Indian Banking Sector

The rapid emergence of cloud computing is transforming the way organizations think about their IT resources. Cloud computing, which offers vast cost-effective computing resource as a service on a pay-per-use basis in different models, is proven to directly translate to less upfront capital expense and reduced IT overheads.

Organisations including banks now understand that cloud computing offers the possibility of being able to seamlessly change IT without expending the time and resources in setting up, configuring, and deploying new systems. This technology offers a more efficient use of resources such as storage, memory, processing, applications and bandwidth ensuring high availability, security and quality. The advantages of Cloud Computing are many.

The Institute has developed the IDRBT Cloud Security Framework, which is a set of guidelines and best practices, for the Indian Banking Industry. The Framework aims to help banks to understand and address Security concerns in the cloud environment. It addresses all aspects relating to Security of Cloud Computing, which need to be examined by banks intending to use Cloud Solutions.

The framework covers the following topics on Cloud Security: Cloud Security Management, Data and Information Security, Application and Process Security, IT Infrastructure Security, & Physical and Logical Security.

Dr. D. Subbarao, Governor, Reserve Bank of India and Visitor, IDRBT, released the IDRBT Cloud Security Framework for the Indian Banking Sector at IDRBT today.

Please click here to download the Cloud Security Framework book

IDRBT Green Banking Framework for Indian Banking Sector

Banks and financial institutions are concerned about the overall impact of depletion of environment. General frameworks describing corporate climate strategies are difficult to transfer to the Banking Sector. Such frameworks usually focus on basic industries, examining the dependency of companies on fossil fuels and exploring the effects of extreme weather events and regulation on corporations.

Banks and financial institutions can play a major and decisive role in the global efforts to make our planet a better place to live in. As providers of finance, banks can ensure that businesses adopt environment-friendly practices. Incentives by way of offering cheaper funds for adopting green technologies will have a long term beneficial impact on the environment.

As major implementers of technology, banks themselves can adopt green practices and thereby lead the way in this global initiative. Also, product innovation and leveraging on the use of technology enable banks and their customers to reduce the usage of resources such as paper, thereby aiding in environmental protection. As Indian Financial Sector moves to the next stage of technology adoption, it is imperative that Green Banking is adopted by every responsible financial institution.

This Framework provides the path towards Green Banking for the Indian Banking and Financial Sector, by highlighting why Green Banking is the way forward, the Processes Guidelines, Products, Services and Strategies for Greening Banking; Infrastructure required for Green Banking and some apt case studies.

Shri Anand Sinha, Deputy Governor, Reserve Bank of India and Chairman, IDRBT, released the Green Banking Framework for the Indian Banking Sector at IDRBT today.

Please click here to download the Green Banking Framework book

IDRBT Social Media Framework for Indian Banking Sector

The Generation Y can be tapped more easily at Social Media sites than brick-and-mortar branches. The huge numbers on social media leave little doubt as to its popularity. The rise of social media signals a new dawn for banks – an evolution that offers significant opportunities and challenges.

The response of banks to Social Media has largely been one of apprehension and doubt. Their concerns of privacy and security are valid. However, opportunities to improve customer engagement, service, acquisition and customer advocacy are immense on Social Media.

The IDRBT Social Media Framework for Indian Banks is a comprehensive document that covers all the aspects relating to the use of Social Media by the banking industry, right from Applications of Social Media in Banking; How to leverage Social Media for Banking, Governance Model for Social Media, Security Implications and a Social Media checklist for banks, etc. This Framework given will help the banks as they plan their approach to use Social Media.

Shri G. Padmanabhan, Executive Director, Reserve Bank of India, released the IDRBT Social Media Framework for the Indian Banking Sector at IDRBT today.

Please click here to download the Social Media Framework book

Release of Booklet on Technology in Banking

Technology today has become synonymous with banking and Indian banks have put in place a fairly strong infrastructure to leverage its benefits. IT has made a visible difference in the functioning of banks and conduct of banking operations. Banks have benefitted immensely due to scaling up of business and growth in volumes. The journey has been beneficial for the customers too, with improvement in customer service quality.

In the future, banks will have to focus on two major aspects – delivering customer satisfaction and driving business optimization. Banks today have built up significant database about the customer – demographics, transactions and behavioral data. However, the key is to derive information from this data to deliver business impact. Information and technology will have to be separated with substantial focus on information.

The second significant challenge is driving business optimization which broadly deals with highest level of revenues or returns given a particular level of resources. In achieving these objectives, banks will have to integrate people, processes and technology to deliver superior customer service. Banks will have to focus on acquiring and retaining adequately skilled manpower. Banks should also pay enough attention to re-engineering their business processes to move to the next level of growth and effectiveness as economic enterprises.

This Report, which is a joint effort of IDRBT & Ernst and Young, captures the developments in Banking Technology and the visible business impact of the initiatives.

Shri Pratip Chaudhuri, Chairman, State Bank of India, released the Booklet on Technology in Banking at IDRBT today.

Please click here to download the booklet on Technology in Banking

IDRBT Banking Technology Excellence Awards for the year 2012–13

The Institute, with a view to infuse a spirit of healthy competition and accelerate the process of technology implementation and innovation among various banks in the country, instituted the IDRBT Banking Technology Excellence Awards in the year 2001.

These Awards from the Institute are meant to act as catalysts by recognizing and rewarding the efforts of banks aimed at better use of technology, greater levels of technology absorption, and improved levels of customer service and satisfaction through innovative use of technology.

The Awards are arrived at after a careful scrutiny and evaluation of the inputs called for from all the banks on a wide range of parameters by an eminent jury. Accordingly, these awards are the best indicators of efficient and effective technology implementation and innovation in the Indian Banking and Financial Sector.

The Awards, meant to recognise and honour the best and innovative use of information technology to enhance the levels of customer service and satisfaction, were presented in the following categories:

  • Use of Technology for Financial Inclusion
  • Use of Technology in Mobile Banking
  • Electronic Payment Systems
  • Customer Management & Business Intelligence Initiatives
  • Managing IT Risk
  • Use of IT for Business Innovation
  • Best IT Team
  • Best IT enabled Co-operative Bank (one award)

Two new categories were introduced this year – IT for Business Innovation and Best IT Team. Additionally, to encourage the co-operative banks one award for Best IT enabled co-operative bank was also introduced.

Strong and heartening response was received from the banks in all awards categories, indicating an overall increase in level of confidence and maturity in use of technology in banking. A total of 34 banks participated in the awards process with 171 nominations across different categories. This is a significant increase from 138 nominations filed last year. Banks were classified as large and small, based on the deposit size of INR 50,000 crore.

An eminent jury consisting of Shri K. V. Kamath, Chairman, ICICI Bank (Chairman of the Jury), Dr. R. B. Barman, Former Executive Director, Reserve Bank of India; Prof. G. Sivakumar, Professor, Indian Institute of Technology, Bombay; Dr. K. Ramakrishnan, Chief Executive, Indian Banks Association and Dr. Santanu Paul, CEO, TalentSprint and Distinguished Fellow, IDRBT adjudged the banks.

And the winners for the IDRBT Banking Technology Excellence Awards 2012-13 are:

Award Category Winner Received by Photos
Best Bank Award for Use of Technology for Financial Inclusion Among Large Banks State Bank of India Shri Pratip Chaudhuri, Chairman
Special Award for Use of Technology for Financial Inclusion Among Large Banks Union Bank of India Shri D. Sarkar, Chairman & Managing Director
Best Bank Award for Mobile Banking Among Large Banks HDFC Bank Shri Anil Jaggia, Chief Informaiton Officer
Special Award for Mobile Banking Among Large Banks ICICI Bank Shri Mukesh Kumar Jain, Chief Technology Officer
Best Bank Award for Electronic Payment Systems Among Large Banks State Bank of India Shri Pratip Chaudhuri, Chairman
Special Award for Electronic Payment Systems Among Large Banks ICICI Bank Shri Mukesh Kumar Jain, Chief Technology Officer
Best Bank Award for Customer Management and Business Intelligence Initiatives Among Large Banks State Bank of India Shri Pratip Chaudhuri, Chairman
Special Award for Customer Management and Business Intelligence Initiatives Among Large Banks Punjab National Bank Shri Rakesh Sethi, Executive Director
Best Bank Award for Managing IT Risk Among Large Banks HDFC Bank Shri Anil Jaggia, Chief Information Officer
Special Award for Managing IT Risk Among Large Banks Union Bank of India Shri D. Sarkar, Chairman & Managing Director
Best Bank Award for Use of IT for Business Innovation Among Large Banks ICICI Bank Shri Mukesh Kumar Jain, Chief Technology Officer
Special Award for Use of IT for Business Innovation Among Large Banks HDFC Bank Shri Anil Jaggia, Chief Information Officer
Best Bank Award for Best IT Team Among Public Sector Banks Union Bank of India Shri D. Sarkar, Chairman & Managing Director
Special Award for Best IT Team Among Public Sector Banks Bank of Baroda Shri P. Srinivas, Executive Director
Special Award for Best IT Team Among Public Sector Banks Bank of Maharashtra Shri Narendra Kabra, General Manager (IT)
Best Bank Award for Best IT Team Among Private Sector Banks HDFC Bank Shri Anil Jaggia, Chief Information Officer
Special Award for Best IT Team Among Private Sector Banks ICICI Bank Shri Mukesh Kumar Jain, Chief Technology Officer
Best Bank Award for Mobile Banking Among Small Banks Federal Bank Limited Shri Shyam Srinivasan, MD & Chief Executive Officer
Best Bank Award for Electronic Payment Systems Among Small Banks The Karur Vysya Bank Limited Shri K. Venkataraman, MD & Chief Executive Officer
Best Bank Award for Customer Management and Business Intelligence Initiatives Among Small Banks IndusInd Bank Shri Sanjay Jaswal, Chief Information Officer
Best Bank Award for Managing IT Risk Among Small Banks Karnataka Bank Limited Shri P. Jayaram Bhat, MD & Chief Executive Officer
Best Bank Award for Use of IT for Business Innovation Among Small Banks Karnataka Bank Limited Shri P. Jayaram Bhat, MD & Chief Executive Officer
Best Bank Award for Best IT Team Among Small Banks Federal Bank Limited Shri Shyam Srinivasan, MD & Chief Executive Officer
Best Bank Award for Best IT-Enabled Co-operative Bank The Shamrao Vithal Co-operative Bank Limited Shri Uday Kumar Gurkar, Vice Chairman

Speaking on the occasion, Dr. D. Subbarao, Governor, Reserve Bank of India, and Visitor, IDRBT, made the following key points in his presentation on Responsible Innovation and Regulation in the Financial Sector:

  • Five Questions: (i) In what ways are financial markets different from other markets?; (ii) What do these differences imply for responsible innovation and regulation in the financial sector? (iii) Is financial innovation good or bad? (iv) What is the Reserve Bank's approach to responsible financial regulation? (v) Does financial regulation have a role in promoting equity?
  • First Question: In what ways are financial markets different from other markets? They are not self correcting; They are highly leveraged & interconnected; They are procyclical; They are reflexive
  • Second Question: What do these differences imply for responsible innovation and regulation in the financial sector?
  • Third Question: Is financial innovation good or bad? Financial innovation is good only as long as it adds value to economic growth and societal welfare
  • Fourth Question: What is the Reserve Bank's approach to responsible financial regulation? Reserve Bank's approach to Regulation has been to preserve financial stability, promote consumer protection and develop financial markets.
  • Reserve Bank's Approach to Responsible Regulation: Proactive Macroprudential Policy; Basel III, New Bank Licenses, OTC Derivatives, Futures Market, Benchmark Rates
  • Fifth Question: Does financial regulation have a role in promoting equity?
  • Conclusion: Regulation and Innovation must go hand in hand; Regulation - Responsibility of RBI Innovation - Driving force for IDRBT & banks