Internet hits the Indian banking sector-ICICI most aggressive user of Tech
Two years ago if you had sent an email to your banker in India regarding your account, chances are that you would not hear from your banker for the next 48 hours. Not any more. Today, banks in India have begun keeping a close tab on their email, Internet and telephone lines.
If in those days the bankers were waiting for customers to walk in for their business, now it is the customers who are waiting for their bankers. If a corporate had to make several trips for an overdraft facility or a term loan, retail customers had to make a few trips to the bank just to open a savings account. Again, not any more. Today you send an email or pick up a telephone and your banker lands at your doorstep.
Welcome to the new invasion of technology in the Indian banking system. The liberalisation and the technology-invasion have worked wonders for the Indian banking sector, say bankers. If ICICI has shown what technology can do for banks, others have quickly realised the potential and are fast trying to catch up with it.
Both ICICI and its banking outfit, ICICI Bank, have been among the most aggressive users of technology in banking business in recent times. ICICI Bank and the older institution, ICICI, were early entrants into Internet banking, making other institutions look at technology more seriously. Partly as a result of this, today some of the older institutions such as the Unit Trust of India are talking Internet and inter-connectivity more often and more seriously than their younger and more modern counterparts!
Is technology then the new driver in the Indian financial system? When all the banks and financial institutions are offering the vanilla product, the differentiation had to come from somewhere else, says a foreign banker. With the markets getting less price sensitive, the accent shifted to service, and this automatically put pressure on the institutions to adopt technology as their USP, he points out.
The bankers say that the new generation private banks had to face the disadvantage of not having branch networks comparable to those of banks in the public sector. But these banks found the easy way out by investing heavily in technology which is why, today, some of the new banks are tough competition to the older, more established players in the industry. According to industry estimates, some of these new banks on an average send out 500 emails on a daily basis regarding new products, services, or other routine matters.
Internet banking is fast catching up with these banks and the next phase seems to target the portal business. While Citibank and ICICI have already made inroads into this nascent sector by tying up with some of the portals, even the others in the business are making their moves with an eye on e-commerce. "Banks in future will be looking at how to leverage a portal's strength for their business and the next one year might well see a lot of tie-ups in this direction," vouchsafes a private banker. Standard Chartered has already announced that it would take the Net route for its future expansion and others such as IDBI Bank, Global Trust Bank and HDFC Bank are expected to follow suit.
The banks in India might have missed the bus earlier but not any more says an analyst. And the technology invasion is not restricted to private and foreign banks alone. Even the older players in the business with their strategic partners are now charting their growth for the future based on technological innovations. Banking will never be the same again in India.
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