First Seminar for Directors of Banks on Beyond Core Banking

Information Technology (IT) pervades every facet of banking operations and IT Governance is emerging as an important discipline to be supported by the Top Management of banks. IT Governance is an important component of corporate governance and both need to converge, since good governance besides ensuring better compliance also helps achieve better performance.

Boards of banks play an important role in laying down principles, policies and promoting best practices of IT Governance. With a view to familiarize the Board members of various banks on the important subject of IT Governance as well as other technologies such as Customer Relationship Management, Risk Management and Cyber Security, IDRBT organized the First Seminar on May 13 & 14, 2011 at IDRBT, for the benefit of Board Members of Banks.

Starting the proceedings, Shri B. Sambamurthy, Director, IDRBT, explained why the Institute is organising this very important programme. "IT Governance is a relatively new subject, even globally. But IT Governance is very critical because IT is now almost all-pervasive in Banks. Do our banks have good measures, tools, frameworks and guidelines to evaluate IT Governance? It is the responsibility of the boards to ensure that governance, both from the performance and conformance aspects, is taken care of. This seminar while providing exposure to the latest in IT governance, would also dwell on how it is linked to Corporate governance, and how the two disciplines of IT governance and Corporate governance converge and align and what implications it has on the working of a bank." He also emphasized the importance of developing information as a distinct discipline.

The seminar was inaugurated by Dr. Y. V. Reddy, Former Governor, Reserve Bank of India. Speaking on the occasion, Dr. Reddy highlighted the lessons learnt from the Global Financial Crisis, especially from the perspective of Governance by raising pertinent questions in respect of the origin of the crisis, the causative factors, and the role of various entities including the markets, participants, regulators, government, credit rating agencies, etc. He focused on the need for accountability and the role of the Governance structure in the form of the Board and their Committees and took the participants through a virtual journey of ensuring appropriate Governance.

The next key speaker was Shri Anand Sinha, Deputy Governor, Reserve Bank of India and Chairman, IDRBT. In his address, he dwelt upon IT Governance, Technology Management, CRM and Cyber Security. The salient points made by him include:

  • IT Governance depends strongly on corporate governance and the whole corporate strategy, which means that IT strategy and IT processes should be in consonance with business goals
  • Implementing new IT Governance in banks may be very challenging. For addressing the structural inadequacies in the areas of IT governance, information governance, data governance, information security governance; there is an imperative need to have synergy among these areas
  • IT investments of banks are most fruitful when they match technology strategy with business strategy, implement systems in a disciplined way, and balance value creation with increased IT capabilities
  • Data confidentiality is an issue that must be dealt with very carefully. Secured Internet technologies to contain hacking and phishing needs to be strengthened
  • Technology needs to play an important role in reducing the cost of banking services, particularly, in the rural and unbanked areas in the context of Financial Inclusion. The challenge for banks is to get the technology pieces together and adopt a strategy that is viable and sustainable in the long run
  • The rapidly growing interconnectivity of IT systems, and the convergence of technology towards industry-standard hardware and software components and sub-systems, renders IT systems increasingly vulnerable to malicious attacks. Speedy prosecution, compliance using effective security technologies and having robust law environment can serve as effective measures to counter such crimes
  • Banks need to take a disciplined approach to IT architecture, create standardized platforms, and wring more business value from technology investments
  • Adoption of appropriate IT solutions for moving towards acquiring information from the customer-centric perspective along with account or product-centric perspective would place the banks at a competitive advantage.

The other issues deliberated in detail during the two-day seminar included Principles and Concepts of IT Governance; Regulatory Framework for IT; IT Governance Framework and Practices; Risk Management, IT Strategy and Management and relationships between IT and Business, IT and Security, IT & Human Resources and IT Governance and Audit.

Thirty Two Directors of twenty banks participated. The seminar was coordinated by Shri M. V. Sivakumaran, Faculty.