IT challenge(d)

N. S. Vageesh

PUBLIC sector banks remain IT challenged. The percentage of business computerised has still not touched 50 in certain big banks.

Forceful prompting from the Central Vigilance Commissioner has goaded banks into computerising key branches and computerising 75 per cent of their businesses by March 2001. For instance, SBI has drawn up a Rs 700-crore technology plan to upgrade computerisation and connectivity among branches.

Bank of Baroda's Rs 250-crore technology upgradation plan involves setting up a communication infrastructure to enable better MIS and quick funds transfer. Other banks too have drawn up similar plans. But `anywhere banking' and `Internet-banking', the staple offerings of private banks, are still a distant dream for most public sector banks. ``Technology is creating a caste system among banks,'' the former RBI Governor, Mr S. Venkitaramanan pointed out at a seminar in Mumbai in February.

The PSBs are wrestling with a number of issues relating to their IT architecture. Senior bank officers say computerising rural branches is not feasible, while computerising and networking urban branches would require a complete business process re-engineering. This could lead to the eventual partitioning of banks to cater to different segments, say IT officials. They add: ``The book of instructions may have to be re-written.''

Meanwhile, migrating to new systems for these banks is proving equally painful as they are unable to decide how to integrate the old branch-centric model with the new. Retaining qualified and IT-trained manpower is also likely to be costly. Resistance from labour unions, although on the wane, still exists in pockets.

These problems notwithstanding, the PSBs have to hasten up with their plans if they are to catch up with the technology platforms of the new private banks. Considering that the retail market is being rediscovered as a lucrative lending avenue, leveraging IT will be critical. With the advent of other delivery channels, the branch reach of the public sector banks is no longer a decisive advantage.

Even this large branch network has not been fully exploited. Though 50 per cent of their branches are in the rural areas, only 30 per cent of their business comes from these areas. The major part of the business is in the urban and metropolitan areas, where private and foreign banks are steadily gaining market share.