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Web Mindset Begins To Seep Into Indian Banks

The liberalization of the Indian economy and the increasing diffusion of information technologies like the Internet seem bound to change the way Indian banks think of themselves, their customers, and their competitors.

Internal Webs (in the form of Intranets) have helped banks bridge their currently separate pools of IT deployment and leverage their internal data resources for competitive decision making. The global reach of the Internet opens up new customer bases, new delivery channels, and improved interactive services. Banking activities like basic retailing, sales of equity, account inquiry and funds transfer are relatively easy to open up to the Net.

But the Internet also blurs traditional organizational barriers and national boundaries, thus ushering in new and nimble competitors from unexpected quarters--from within the country and from abroad.

The newly formed private banks in India--lean and Web-savvy--have reportedly siphoned off 15 percent of the accounts from public sector banks. Indian banks now need to aggressively and proactively harness a wide range of information technologies to handle distributed operations, asynchronous functioning, scalability and data management, according to N.R. Narayana Murthy, chairman and managing director of Bangalore-based software company Infosys.

In the current climate of "open finance" mergers and acquisitions, and global direct banking trends, InfoSys recently hosted a conference in Bangalore on banking technology--BancIT--which attracted over 200 representatives from about 40 Indian banking and financial organizations.

"A Web-enabled interface can help the combined transaction environment of the bank with the wider world of the Internet," said Nandan Nilekani, deputy managing director of InfoSys. The other impact of Web technologies is in the convergence of voice, video and data over a single IP (Internet protocol) network.

In the way they differ in harnessing technologies like the Web, Indian banks fall into three categories, according to Deepak Rao, associate director at Cooeprs and Lybrand. "Laggards" have delivery channels restricted only to branches, "followers" use a limited amount of electronic delivery of products and services, and "leaders" adopt an expanded, segmented, and customized range of products via multiple delivery channels.

Business process re-engineering and IT are changing the profile and performance of banks worldwide. All the banks in the Top 10 worldwide list in 1981-83, such as Deutsche Bank, were nowhere to be found in the list in 1991-93, which featured other banks like Bank of America and Banc One, according to Rao.

IT vendors and software companies have come up with numerous Web solutions geared toward the banking and financial services industries. The Sun Connect architecture, a roadmap to implement and deploy transactional Web-based financial services using Java technology, is being used by Fleet Bank, CitiBank and the Bank of Montreal.

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