Technology - Managing the Inflexion Point

With the help of business-enabling technology, banks across the globe are adopting innovative methods to discover new opportunities, convert perceived gains and seal deals. These novel methods result in a triad of benefits – cost reduction, transaction efficiency, and automation.

Over the past five years, the Core Banking Solution and electronic channels have replaced traditional banking processes and given new meaning to transaction processing in banks. In developing countries such as the BRIC economies, i.e. Brazil, Russia, India and China, IT expenditure in the banking sector has been steadily increasing. Nonetheless, the technology adoption rate is bound to plateau, due to the presumption that a saturation point due to a large quantum of automation technology being introduced into a semi-automated environment. This plateau is similar to an inflexion point. The inflexion point is a function of variables such as capital spends, operating expenditure, human capital, effort expended and complexity. At present, banks are trying to regulate investment in ventures which may be seen as capable of deriving benefits in the long term – a hallmark of technologies such as CRM, Web 2.0, and Service Oriented Architecture, etc.

In order to remain competitive, banks must concentrate on three core aspects:
· Differentiation on the outside through innovative products and technology enabled service channels
· Simplification on the inside through technology convergence
· Execution mastery through strategic thinking and day-to-day excellence in operations

Technology Wave in Banking

Some incredible stuff is happening on the technology front in banking across the world. The infusion of IT and the high acceptance rate is akin to manna from heaven for the IT vendor and solution provider community. This offtake for capital heavy IT solutions, is primarily happening from the standpoint of differentiation and yes, long term strategic cost reduction initiatives.

Initiatives that are hogging the IT limelight in the banking sector - CRM, ERP, BPM, Assurance solutions, Payments channel integration, Networking, Lean Data centre management, Web 2.0, Outsourcing 2.0, Mobile banking, rural banking.

However, what must be remembered at all times is that the most important aspect around all this is revolving is the bank's customer - and this translates to customer data and the ways and means of slicing,dicing and above all - protecting the data. IT Security is of paramount concern. IT Security is no longer an option but a compulsory requirement for banks to remain a centre of trustworth computing.

CTOs have a very large role to play ensuring that kid-hacks and code-junkies do not get lucky one fair day and exploit a vulnerability that may have been picked up through a simple port scan on a public ip belonging to the bank's web-servers. Initiatives such as regular penetration tests on the backs of comprehensive vulnerability assessment exercises and follow-ups along with up-to-speed IT infrastructure are a must for keeping the institution's business strategy running.