Indian Business Scenario - Opportunities and Challenges Technology Management in Banks-A paradigm shift *Dr.V.

venkateshwara Rao *Professor & HOD, Pace Institute of technology & Sciences, Ongole 523272 Introduction The Indian Banking sector has emerged quite creditably in the last 20years ever since the reforms were ushered in the financial sector. The reforms have dramatically changed the Banking scenario in the country and it is now in the process of transformation and consolidation. The reforms have ultimately resulted to a heightened competition, increased autonomy and technological up gradation. Of late, technological applications have had a major effect in the operations of banks. The arrival of foreign and private banks have resulted severe competition in the industry. The banking industry is at cross roads with applications of technology which is leading towards globalization and integration of world financial markets. Against this backdrop, a modest attempt is made in this paper to examine the status of information technology in the Indian commercial banks and study the challenges they would face the present day competitive environment. Advent of I.T in banking sector: Information technology (I.T) today permeates almost every sphere of human endeavour with the advent of financial reforms in 1991 aiming to globalize and liberal Indian economy, new challenges were thrown unprecedented change in financial environment of banks. Further, there have been quantum jumps in the expectations and demands of the customers for new products and services. Banks are under pressure to offer today what customers would expecting tomorrow. Technology has emerged has a catalyst and driving force in enhancing the quality of service and improving business performance of a bank. The foreign banks and newly setup private banks are exploiting the full potential of IT are placed in a much better position to offer facilities like ATM network, anywhere/any time banking, tele-banking, Home Banking, Internet banking, virtual Banking- banking and universal banking etc. There has been fierce competition and new generation banks like ICICI bank, AXIS bank, HDFC bank and UTI bank are so aggressively delivering the goods in a most efficient manner thereby prompted the old generation banks go for higher levels of technology. Information is life blood of banks sparring over all the main areas of operations. Strides in technology at a greater pace was accomplished after 1993 when Dr.Rangarajan committee gave a broad frame work of computerization of banks Initiatives in the adoption of technology: The technology adoption of a Indian banks was a process which streamed out of a recommendation of various committees formed by the RBI. Besides, the issue of technology adoption of banks was also examined in detail by the financial reforms committee set up in 1991 and 1998 headed by Sri M.Narasimham. Almost many recommendations of the above committees have been accepted by the RBI and are being implemented now in banking industry. By leveraging technology, banks have improved their consumer services and enhanced the standards of their house keeping. The Process of Technology absorption by Indian banks has been increasing in recent years and the positive feature has been the attitudinal change among the bank staff, management, and public from reluctance to use computers. 1 Archers & Elevators Publishing House www.aeph.in

Indian Business Scenario - Opportunities and Challenges The RBI took a decisive lead in the computerization of banks. Many banking software packages for important operations have been developed and they are being widely used in the industry. The main focus of IT would BE on improving customer services, quick decision making, accuracy in dealings and increased productivity. The fast developments in the field of IT helped banks to promote connectivity among the branches and offering several on line service to their clientele Applications of IT services offered: At present most of the banking business transactions are carried with the application of information technology. Banking services are made easily and quickly accessible to customers anywhere in the world. Following are the some of the innovative services provided by banks based on technology -Automated teller machines (ATM) -Internet banking (IB) -Electronic fund transfer (EFT) -E. banking -credit cards, debit cards, smart cards - Home banking (HB) - Tele banking/mobile banking -Inter branch reconciliation (IBR) -Electronic clearing service (ECS) -Total branch computerization (TBC) -Any time Banking (ATB) -Fully electronic transactional System (FETS) -Any wheel Banking (AWB) Implementation of IT has helped banks to build up a comprehensive customers data base and research to aid strategic policy making mechanism. It has been realised that IT in banking industry is vital for sharp progress in financial intermediation and efficient delivery system Challenges before the industry: The two major challenges the present day banker is forced to face or fast changing customer expectations on one hand, and diversification of banking business in to new areas to optimize and resources and to deliver value based products to consumer on the other. The heavy initial cost involved in adoption of IT would be another constraint for some works. The application of IT is not uniform among different banks or branches of a bank. This restricts the service benefits to bank and customers alike. Another major hurdle for wide spread use of IT in the entire banking industry is the poor communication infrastructure in various parts of rural India. The big challenge is to ensure that the benefits of technology percolate to every type of banks and to all sections to consumers especially those living in rural areas. One has to note that more introduction of IT alone will not be sufficient to bring in necessary performance improvement and to get competitive edge. It is the people who have to play the crucial role in turning the technology to help the banks in promoting their performance It Requires intelligent and skilled personnel to use 2 Archers & Elevators Publishing House www.aeph.in

Indian Business Scenario - Opportunities and Challenges such technological tools. The work culture needs to be directed as per changing scenario of technology driven banking. Strategies for Effective IT management In Banks: Technology has revolutionized the way Indian banking is looked at the way it is being functioned. It has opened new avenues for the industry in terms of business opportunities and challenges. In fact, the bank competition and customer expectations have forced to evolve strategies for better management of technology. for effective technology management there should be a paradigm shift in the mindset of bankers. There is an imperative need for dissemination of knowledge relating to the latest developments in the hardware and software system. Success of technology largely depends on the quality of software management. A strategy long term plan has to prepare by every bank with corporate vision to ensure the successful role of IT. The functions and operation of bank should be redefined and necessary structural changes should be made. Sometimes banks may become victims of virus attack, frauds, hacking, internal threats and natural disorders etc; The banks should implement latest technology to avoid any untoward incidents in their branch network. The banks are not able to attract best talent in IT From reputed IT institutes in the country. The Reason is the banks cannot offer the salary and position on par with software companies. Hence, banks have to formulate a separate salary structure for IT people. It is heartening to note that many public sector banks have been investing considerable money in IT to meet future requirements of the industry. Of late, banks are diversifying in to financial services and insurance business. The mushrooming of multifunctional activities is being operated by modern technology tools. There is a vast improvement in the quality of service, productivity, profitability, transparency and increased corporate image after the adoption of technology in banks. Therefore, it is most imperative to effectively manage IT in public sector banks to face the challenges of globalised financial environment and for gaining competitive edge. Using latest and update technology that is existing globally should become the direction for Indian banks in future. Those who are proactive in future in the application of IT will survive and others will be left behind. Conclusion: This paper describes in a nutshell the evolution of banking and defines banking technology as a Consortium of several disciplines, namely finance subsuming risk management, information and communication technology, computer science, and marketing science. In summary, it is quite clear that banking technology has emerged as a separate discipline in its own right. As regards future directions, the proliferating research in all fields of Technology and computer science can make steady inroads into banking technology because any new research idea in these disciplines can potentially have a great impact on banking technology. References Cruz, M.G. (2002). Modeling, measuring and hedging operational risk. Chichester: John Wiley & Sons. Engler, H., & Essinger, J. (2000).The future of banking.UK: Reuters, Pearson Education. Graham, B. (2003).The evolution of electronic payments.BE Thesis, Division of Electrical and Electronics Engineering, School of Information Technology and 3 Archers & Elevators Publishing House www.aeph.in

Indian Business Scenario - Opportunities and Challenges Electrical Engineering, University of Queensland, Australia. Retrieved from http://innovexpo.itee.uq.edu.au/2003/exhibits/ s334853/thesis.pdf Hofmann, F., Baesens, B., Martens, J., Put, F.,& Vanthienen, J. (2002).Comparing a genetic fuzzy and neurofuzzy classifier for credit scoring. International Journal of Intelligent Systems, 17(11), 1067-1083

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