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Fast Forward Fast Forward Newsletter, December 2010

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BEYOND CORE BANKING - EXECUTIVE ROUND TABLE SPECIAL

Fast Forward Fast Forward

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From Right : Dr. K.C. Chakrabarty, Deputy Governor, RBI; Dr. D. Subbarao, Governor, RBI; Shri B. Sambamurthy, Director, IDRBT

and Dr. K. Ramakrishnan, CEO, IBA; who received the First Copy

AVING successfully implemented CBS, Banks are now ready for

the optimization level. IDRBT has instigated a thought process H"Beyond Core Banking" to guide this new journey.

IT Governance and CRM are the two specific subjects that IDRBT is

focusing on in its role as a thought leader. IT Governance should promote

better performance and conformance and CRM should help in better

Customer Value capture. Several academic programmes are launched

in this direction. Shri M.V. Sivakumaran, Asst. Professor, drives IT

Governance and Dr. V. Ravi, Associate Professor, IDRBT, leads CRM

initiatives.

We launched a new Executive Development Programme on IT

Governance for Executives and have covered over 500 Executives from

public and private sector banks. We have so far conducted three

programmes and all of them were received very well.

We recently formed a Working Group on IT Governance (WGIT) with top

level leaders from Banks (both public and private sector) and external

experts. This WGIT is working towards bringing out an IT Governance

Framework for Banks in India, drawing from the various standards and

best practices available across the world. The effort is aimed at reducing

the cost of compliance to banks and bring about the much needed

clarity, understanding and focus on functional and implementable best

practices in the domain of IT Governance.

As a first step, the Working Group has brought out, in a record time, its

recommendations on a Model Organizational Structure for IT in the

Indian Banking Sector. This booklet, the first in the IT Governance Series,

was released by Dr. D. Subbarao, Governor of RBI and Visitor of our

Institute, in a colourful function at IDRBT on June 18, 2010.

This booklet was distributed to the top managements of banks across the

country and it has been received very well by the Banking Industry. Some

banks have already asked us for more

inputs for implementation purposes.

We are planning to bring out two more

documents in the IT Governance Series,

during this academic year, on a priority

basis, on Outsourcing Governance and

Information Security Framework.

To take this message forward, and to

ensure that the Executive Community

across the Banking Industry in India is

apprised of the paramount need for

according IT Governance its due place,

as emphasized by the Governor in the

booklet release function, we have

launched the IDRBT Outreach

Programme (IOP) through which we

organize Executive Round Tables (ERT)

in major cities.

The first such ERT held in Kolkata on

July 2, 2010 was a grand success. This

ERT was hosted by Allahabad Bank.

Outreach Programme: BEYOND CORE BANKING

Shri. J.P. Dua, CMD, welcoming the gathering. Shri. S. Karuppasamy, RD, RBI, Kolkata; Dr. K.C. Chakrabarty, Deputy Governor, RBI;

Shri. B. Sambamurthy, and Shri. Bhaskar Sen, CMD of United Bank of India are seated on the dais

Over 107 Executives from 11 Banks, from Chief Manager to General

Manager, participated in this meet and appreciated the new initiative from

IDRBT.

Shri J P Dua, CMD, Allahabad Bank welcomed the gathering.

Shri B. Sambamurthy, Director, IDRBT, in his opening remarks outlined the

new orientation of IDRBT and its desire to reach out to the banking

community in addressing their core concerns on technology deployment

and management.

A thought-provoking keynote address was del ivered by

Dr. K.C. Chakrabarty, Deputy Governor, RBI and Chairman of IDRBT. Shri S.

Karuppasamy, Regional Director, RBI, Kolkata and Shri. Bhaskar Sen, CMD

of United Bank of India also participated in the inaugural ceremony.

1. Mr Sambamurthy , Director IDRBT, Shri J P Dua, CMD, Allahabad Bank,

Mr Bhaskar Sen, CMD , United Bank of India, and other distinguished

guests, ladies and gentlemen. I am indeed very happy to be in your

midst today for the IT Conclave being organised by IDRBT and share my

thoughts with you on banking technology beyond Core Banking Solution

(CBS).

2. Let me begin by asking, what is the purpose of technology? All of us

would agree that technology has no longer remained just a means for

automating processes. It has revolutionised every industry in the world

by rendering faster and cost effective delivery of products and services

to customers, who in the normal course could not have afforded the

same, and at the same time producers of goods and services would

remain viable and profitable. Technology is the surest and most

appropriate way of bringing inclusion in respect of any product and/or

service.

DG'S SPEECH

Banking Technology Beyond CBS - Issues and Way Forward

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3. As regards the banking sector, technology has completely changed

the nature and pace of delivery of banking services world over. Not

only has it improved the speed but also the quality of the services

delivered, and has at the same time ensured tremendous reduction

in transaction costs for the banks as well as customers and made it

possible to provide customer service through various delivery

channels.

4. In a developing country like ours, technological advancement

enables a broader and inclusive banking sector and in the process, is

a key driver for the sustained and inclusive growth of the economy.

Having realised the close association between technology, inclusion

and economic growth, the Reserve Bank of India with the help of

institutions, such as IDRBT on the one hand, and the banking sector

on the other, have been actively involved in utilising technology for

the development of the Indian banking sector. IDRBT, let me note

here, has been an important facilitator in the adoption and

development of technology in the Indian banking sector.

5. The changing face of the banking sector aided by technological

innovations can be seen from various developments in the recent

past. The most noteworthy has been the usage of the ATM

technology. ATMs started as substitutes for bank branches allowing

their customers to withdraw cash anytime and extend their services

wherever it would not be viable to operate a physical branch. The

delivery channel revolution can be said to have begun with the ATM.

The phenomenal success of ATMs had made the banking sector

develop more innovative delivery channels to build on cost and

service efficiencies. As a consequence, banks have begun to

introduce tele-banking, call centres, Internet banking and mobile

banking.

6. Tele-banking is a good medium for customers to make routine

queries and also an efficient tool for banks to cut down on their

manpower resources. The call centre is another channel that

captured the imagination of banks as well as customers. At these

centres, enormous amount of information is at the fingertips of

t r a i n e d c u s t o m e r s e r v i c e

representatives. A call centre not only

cuts down on costs but also improves

customer satisfaction. Moreover, it

facilitates 24x7 working and offers the

“human touch” that customers seek.

Mobile banking can be regarded as

“the delivery channel of the future”.

This is because it offers portability and

convenience to the user. It is just like

having a bank in the pocket.

7. It would not have been possible for

banks to give the full benefits of tele-

banking, mobile banking, internet

banking, card banking (multiple

delivery channels) to all its customers

without an appropriate banking

solution. Centralised CBS has been one

such development which has

revolutionised the banking sector. CBS

can be defined as a solution that

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Shri. Albert Tauro, CMD, Vijaya Bank welcoming the gathering…. Shri. Dilip Mavinkurve, MD, State Bank of Mysore; Dr. K.C. Chakrabarty,

Deputy Governor, RBI; Shri. B. Sambamurthy, and Shri. P. Vijayabhaskar, Regional Director, RBI; Bengaluru are on the dais

Dr. K.C. Chakrabarty, Deputy Governor, delivering the keynote address…

enables banks to offer a multitude of customer-centric services on a

24x7 basis from a single location, supporting retail as well as

corporate banking activities, as well as all possible delivery channels

existing and proposed. The centralisation thus makes a “one-stop”

shop for financial services a reality. Using CBS, customers can access

their accounts from any branch, anywhere, irrespective of where

they have physically opened their accounts.

8. CBS has now stabilised in the banking sector. Most branches of

commercial banks, including the RRBs, are being progressively

brought into the core-banking fold. So far, 79.4 per cent of the total

number of public sector bank branches has adopted CBS. With this

remarkable progress in the adoption of the CBS technology, let us

pose a few basic questions to ourselves. Do we, as bankers, know

how many customers our banking sector serves? Do we, as bankers

and as customers, know how many products our banks offer? I am

sure, the answers based on credible information to both these and

many such simple questions are not available with us even after the

adoption of CBS technology. “Information” from “Information

Technology” indeed seems to be missing or seriously lacking.

9. Globally, after technology adoption, 90 per cent of the banking staff

is involved in “front office” jobs of enhancing customer base and

ensuring customer loyalty. Only 10 per cent of the banking staff is

involved in “back office” jobs. The situation in India even after the

adoption of CBS is exactly the reverse. A large part of our back office

staff is still heavily involved in the preparation and submission of

various returns. To these concerns, I would say that we need a MIS

server to generate returns automatically. We also need the

centralisation of KYC Norms and one-window-for-all-functions in the

banking sector. A mammoth public sector enterprise like the Indian

Railways has managed to harness IT to ensure one-window-for-all-

functions. We should then ask ourselves, why the banking sector

cannot emulate the same. Answer is simple, we need to change our

business processes, systems and delivery models.

10. IT should help banks not just to deliver robust and reliable services to

their customers at a lower cost, but also generate and manage

information effectively. Information should consist of data which

should be collected based on the principles of integrity, reliability,

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and accuracy. Banks are piling up large volumes of data relating to

customers and transactions. However, how far has this information

been subjected to meaningful analysis, usage and creation of a

database with the banking sector, with an objective to meet not only

the diversified internal and external MIS requirements but also using

this information to increase the volume of profitable business using

unique techniques of Customer Relationship Management (CRM), is

also not known .

11. This is why, I would say, there is a need to look beyond CBS. In today's

world of cut-throat competition in the banking sector, retaining

customers along with growing customer base has become very

important. In order to enhance the effectiveness of the various

channels such as branch banking, mobile banking and internet

banking, banks may consider the use of a comprehensive CRM

solution which would enable them to access the entire customer

details and provide a 360 degree view across channels and products

and enhance service quality.

12. CRM can be defined as the process that has the potential to make the

right offer to the right client, at the right time via the right channel.

Information on business profiles of banks and its margins, risks

associated with the businesses, number of products, customer

information, business volumes and income from various verticals

play an important role in focussing on a profitable and effective

CRM.

13. There are four ways in which CRM enables the development of new

capabilities in CBS to cope with emerging realities around risk,

regulation and customer retention. First, it can offer a unified view

of the customers. Secondly, it can help provide a consistent message

to customers. Third, it can provide end-to-end customer care.

Fourth, it helps in building long-term customer relationships. Fifth,

it helps in identification of best customers. CRM is thus recognised as

an avenue for banks to go beyond other banks in terms of customer

retention and increase in business volumes.

14. CRM, however, has certain pre-conditions for its successful

implementation. First, business requirements and targets have to be

defined. I would say that technology has to make the solution, not

the other way round. Secondly, it is important CRM does not solve all

the problems a bank has, so first it may be necessary to analyse the

problems, and the possible impact of CRM, then prioritise. Third,

banks need to understand that they need to make a beginning. It may

be a small start but it is important to start. They can learn and

improve later. Fourthly, Business Process Re-engineering (BPR) of

processes would be required before implementing the CRM. Fifth,

there is a need to change the mindset of employees.

15. Finally, for CRM to succeed, we also need to have in place IT

governance, which is another area that would be covered in today's

seminar. Governance is not about what decisions get made – that is

management – but it is about who makes the decisions and how they

are made. IT governance is the process of specifying the decision

rights and accountability framework to encourage desirable

behaviour in the use of IT. As in the case of corporate governance, IT

governance is the responsibility of the board of directors and

executive management. In fact, it could be said that in the banking

sector, IT Governance is an important sub-set of overall Corporate

Governance.


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16. Given the enormity of investment in IT infrastructure and the ever-

increasing dependence on IT for operating and managing the day-to-

day business activities, there are concerns among various stakeholders

and the upsurge in the call for IT Governance has stemmed from this

concern. IT Governance in banks focuses on information technology

systems, their performance and risk management.

17. With the high rate of technological obsolescence, the need for proper

IT governance, particularly in the case of banks, is gaining prominence.

Adoption of IT Governance in banks would result in effective control

and derive better value on the huge IT infrastructure created by banks.

This would ultimately result in enabling better alignment between IT

and Business, create efficiencies, enhance conformity to

internationally accepted best practices and improve overall IT

performance of banks.

18. To implement an effective governance structure, organisations

particularly those having significant IT investments are constrained by

certain factors. Common among such inhibiting factors are poor

strategic alignment between business and IT strategy, absence of

appropriate and re-engineered business processes and delivery

models, lack of project ownership, poor risk management, ineffective

resource management. Time has come for banks to focus on these

issues by going beyond CBS systems and thereby reap the full benefits

of technology upgradation.

19. Another important aspect of IT governance is the need to address

enhanced security concerns associated with technology. Though the

seminar will be addressing such issues , I would only like to draw your

attention to the plethora of terms used in cyber crime world, such as,

Malware, Viruses, Trojans, Worms, Spyware and Bots, Phishing Spam

and Spoofing, etc. Basic security measures involve protection by well

selected passwords, change of file permissions and back up of

computer's data. Security will probably always be high on the IT agenda

simply because cyber criminals know that a successful attack can be

very profitable. This means they will always strive to find new ways to

circumvent IT security, and users will consequently need to be

continually vigilant. This again requires banks to go beyond CBS as of

today.

20. To sum up, I would say that Information Technology has come a long way

in the Indian banking sector. However, a lot still needs to be done

particularly in terms of reorienting the existing CBS and other

technological solutions in the banking sector towards more customer

centric and yet, more well-governed technological solutions,

improving MIS capability in terms of quality, speed and integrity,

harnessing IT for effective CRM, thereby, increasing business and

profitability. Robust IT security and finally better IT governance for

achieving better risk management should be the key focus areas of the

banks beyond the physical implementation of CBS in the coming years.

21. Banks need to know that IT holds the way forward for a more cost

effective and yet, inclusive banking system. They also need to

remember that banking is about branding and relation building with

customers and in this relation building, IT can be an important

instrument. It is the realisation of this potential of IT among banks and

their ability to harness this potential that would pave the way for

growth of the banking sector in the years to come.

22. I thank the IDRBT for inviting me over to share my thoughts with you all,

and wish the deliberations of the roundtable all success.

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Shri. B. Sambamurthy, Director, IDRBT delivering his talk on CRM…

The next talk, on CRM for Banks by Shri. B.

Sambamurthy, Director, IDRBT focused on

the need for banks to strengthen their

capabilities to identify and exploit cross-

selling opportunities with their existing

customers even before adding more new

customers. The technology deployment so

far has only helped banks in improving

productivity gains, efficiency gains with

multiple channels and new products. But it

has not really helped them improve their

basic selling and cross-selling capabilities.

This is because banks tend to focus on

product profitability instead of customer

profitability since they did not have correct

and complete information about their own

customers, in the first place. To take

themselves to the next level banks will

have to think of converting their Core

Banking System(CBS) which is essentially a

transaction engine into a highly effective

information engine which will support Customer Relationship

Management (CRM) since, CBS will only help to “run” the business

whereas CRM only will help to “grow” the business. This calls for a new

look at IT – not as Information Technology but as Information and

Technology since technology by itself does not bring in useful

information to the decision maker's table.

The new approach would call for a multi-pronged approach to IT

involving People, Process and Technology. In terms of people, banks

should have a completely new set of professionals like Data Quality

Manager, Data Architects, Information Architects, Data Miners, Business

Analysts, Segmentation Manager, Chief Information Officer and so on.

The CRM Process would call for an in-depth understanding of Customer

Life Cycle(CLC) and the varying value propositions at each stage of the

CLC. The CRM Process starts with the knowledge discovery about

customer needs, preferences and behaviour which gets built into

product and market planning and useful customer interaction which

further leads to intensive analysis and informed refinement of the

original premises of customer preferences, needs and behaviour to fine

tune product planning and market intervention.

CRM, to be effective, is to be implemented in a suite – Operational,

Analytical and Collaborative CRM - and not just in a piecemeal manner.

Data storage about customers from

different touch points

Using Data Warehousing and Data Mining to

solve various Business problems

Interaction with customers, Data

collection about customers, Managing Call centers,

Communication and Channel integration

Segment customers by business value

Model new customer characteristics

Assess affinity to a product, service or message

• OPERATIONAL CRM :

• ANALYTICAL CRM :

• COLLABORATIVE CRM :

ANALYTICAL CRM WILL HELP US:

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Learn how frequently to contact each customer

Do Market basket analysis (cross-sell/up-sell)

Manage Multiple Campaign response models

Develop Churn models

Understand Customer Lifetime value/Growth models

Evolve Credit Risk Scoring

Effective CRM initiatives will usher in the following benefits for the Bank:

Reduced cost of sales

Improved customer service and support

Competitive edge in the market

Increased customer satisfaction and loyalty

Easy identification and exploitation of new selling opportunities

Increased wallet share with more products being sold per customer

Banks to be effective, going forward, will have to be known as CRM Banks

instead of just being a CBS-enabled entity, he said. The need of the hour is

to understand the Customer Lifecycle Value and help the customers grow so

that the banks can grow with them.

Shri Sambamurthy summed up his talk by saying “Efficient capture and

effective utilization of customer data by a well-deployed CRM solution in

banks will lead to a situation where Customer is King and Information is

Emperor.”

The next talk on Enterprise Architecture (EA) for Banks was presented by

Shri. K. Vijayaraghavan, an IT Consultant in Banking and Financial Services.

Emphasizing the fact that Enterprise Architecture is a blueprint using which

an organization can achieve business objectives at hand and in the future,

he listed out some emerging needs of business in Banking as follows:

Multiple channels

Financial Inclusion Initiatives

New Business Models with focus on fee-based services

Competitive efficiency

Need for improving customer satisfaction

These emerging and ever-changing needs keep the expectations from IT

also changing from cost reduction and efficiency to customization,

standardization, reduced complexity and so on. A well-defined EA will

reduce the number and complexity of the interfaces between the

components, thereby improving the ease of:

Application portability

Component upgrade

Component exchange

Component development and maintenance Interoperability

EA can provide an effective strategy to handle change and assess impact on

IT Systems. The overall EA can be viewed as a pyramid structure.The four

major components contain the following elements:

Business Architecture

Strategy Maps, Corporate Goals, Corporate policies

Operating Model

Business Processes

Information Architecture

Data Models

Metadata

Application Architecture

Application Software Inventories and Diagrams

Interfaces between Applications

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The CRM Process

Analysis & Refinement

KnowledgeDiscovery

customer Interaction

MarjetPlanning

Learning

Action

CRM Journey

DWH

DM

AnalyticalCRM

Maturity Level and Time

OpCRM

CBS

CRM

1 2 3


Capture Customer Lifecycle Value

CustomerLifetime valueManagement

Adolescence

Student

BeginnerEarning

High Earning

Pre - Retirement

Retirement

OpCRM

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• Infrastructure Architecture

Middleware

Hardware

Platforms

Hosting

The evolution of EA will lead to the delivery of strategic business value

through standard interfaces and business componentization, as

depicted here below:

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The phased improvement in agility and cost control will lead to

organizational transformation, as follows (the Gartner View):

Shri Vijay concluded by reiterating the fact that EA would succeed only

when all the stakeholders are involved and fully committed:

Key stakeholders must support the architecture program to

ensure success

IT represents just one of the key stakeholders

Business support is critical to achieve IT support

Then, Shri. M. V. Sivakumaran, Faculty, IDRBT started his talk on IT

Governance Framework for Banks by highlighting the urgent need for

adopting and improving IT Governance principles and practices in Banks:

To improve the quality of IT decisions

To improve the outcomes of IT initiatives

To have better control over IT expenditure

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BusinessSilos

StandardizedTechnology

OptimizedCore

BusinessModularity

Locally optimalbusiness solutions

Enterprise - widetechnologystandards

Standardizedenterpriseprocesses/data

Standard Interfacesand businesscomponentization

StrategicBusiness Value

Optimiseand Refine

Technology EnablementTools and platforms for construction and deployment.

Technology ControlManagement and Governance

Procedural EnablementMethodologies, Practices, blueprints, policies

Procedural ConsistencyEnforcement of Procedures

People TransformationRoles, skills, and organization

StrategicTransformation

Gartner

Phases

Ag

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Infrastructure Architecture

Enterprise Architecture

InformationArchitecture

ApplicationArchitecture

BusinessArchitecture

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To improve the “returns” on IT investments

To recover from significant IT failures

To effectively protect IT assets

To augment competitive capabilities

To efficiently support business plans

To improve accountability and responsibility at all levels

To improve banks' efficiency and effectiveness

To strengthen corporate governance

With over two decades of experience in dealing with IT applications,

platforms, infrastructure and vendors banks are now well poised to

embark on IT Governance, he said.

IT Governance, as a concept was explained with reference to banking.

The five major domains of IT Governance are:

Strategic Alignment of IT and Business Objectives

Value Delivery from IT

IT Risk Management

IT Resource Management and

IT Performance Measurement

IT Strategic Alignment is an effort to ensure that IT strategies are aligned

with business strategies to work together to achieve the corporate goals.

Valuable inputs for this domain can be drawn from the Control

Objectives for Information and related Technology(COBIT) framework

developed by the IT Governance Institute (ITGI). COBIT has four

domains, namely, Planning and Organisation(PO), Acquisition and

Implementation (AI), Delivery and Support (DS) and Monitoring and

Evaluation (ME). Strategic Alignment is covered by PO in COBIT. Banks

can look at various strategic alignment models and select the one best

suited for them. Adopting an appropriate Enterprise Architecture

Framework(EAF) will play a greater role in achieving strategic alignment

of IT. Some of the most popular EAFs are:

The Zachman Framework

The Open Group Architecture Framework (TOGAF)

The Federal EAF (FEAF) - USA

Treasury EAF (TEAF) – USA

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Shri. K. Vijayaraghavan talking on Enterprise Architecture…

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The ultimate goal of strategic alignment of IT is to move away from the

present paradigm of IT Dept. Vs. Other Depts. to achieve synergies of

collaboration with mutual understanding and common awareness of

corporate goals and objectives.

Value Delivery can draw inputs from the VAL IT framework of ITGI and

also the AI and DS domains of COBIT. Value Delivery from IT focuses on:

Value Governance

IT Portfolio Management and

IT Investment Management

The crux of the issue in Value Delivery is to achieve the much needed

clarity on the Value Parameters:

The definition of “Value” from a new IT initiative

Who will create this “Value”

How this “Value” will be created

When this “Value” will be created and

How this “Value” will be exploited.

And the critical success factor for ensuring Value Delivery is achieving

clarity and consensus on the “Value” of a new IT initiative, at the

earliest, at the planning stage itself. Making it a post-implementation

exercise will lead to obvious pitfalls of subjectivity, lop-sided claims

(and counter claims too) and even avoidable blame games.

IT Risk Management can be improved with the help of the Risk IT

framework from ITGI as well as inputs from popular standards like the

ISO 27000 series and ISO 17799:2000. Managing IT Risk essentially means

focussing on:

Risk Governance

Risk Evaluation and

Risk Response

It can be safley assumed that IT Risk contributes to more than 50% of

operational risk in banks, in the current context. From regulatory

disclosures we can see that banks are

providing anywhere between 25 and 60

percent of their Net Profits towards

Capital Adequacy for meeting

Operational Risks, under the Basic

Indicator Approach(BIA). BIA, as we

know, is not scientific since it seems to

penalise performers by insisting on a flat

rate(alpha) of provision, in relation to

Income generated. Down the line, when

banks can move to Advanced

Measurement Approaches(AMA) they

can convince their Boards and the

Regulators of their better risk

management capabilities. This may lead

to considerable reliefs from Capital

Adequacy provisions to the tune of over

Rs.1300 Crores for a bank like SBI. Banks

can gain enormously through better IT

Risk Management provisions and

practices. This is another form of “value

creation or retention” since it provides

banks the much needed leverage on

their earnings.

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Shri. M .V. Sivakumaran, Faculty, IDRBT talking on IT Governance…

IT Resource Management as a discipline can benefit enormously

from adopting the IT Infrastructure Library (ITIL) principles and

practices which clearly define two major areas of focus: Service

Delivery and Service Support. These two areas are dealt with in

greater detail as follows:

Service Delivery

Service Level Management

Continuity Management

Finance for IT Management

Availability Management and

Capacity Management

Service Support

Service Desk

Incident Management

Problem Management

Configuration Management

Change Management and

Release Management

The corresponding COBIT domain is Delivery and Support (DS).

Adopting a combination of the best practices across these two

popular frameworks will help banks to have better control over

their IT Resources:

Information

Applications

IT Infrastructure and

People

IT Performance Measurement (ITPM) is an area which is yet to be explored by

banks. ITPM, to be effective, should focus on outcomes and not just outputs.

What the bank wanted to do must reflect in the output whereas why the

bank wanted to do it will be reflected in the outcome. For example,

installation of an ATM Network is what the bank does and this output can be

easily measured on various parameters like speed, geographical or branch

coverage, cost efficiency, service levels and so on. Whereas, why the bank

goes in for an ATM Network may be:

To control customer attrition

To get more and more customers for retail deposits as well as loans

To improve the average CASA deposits to have a healthy mix of

demand and time deposits

To reduce the cost of funds by increasing the demand deposits

portfolio

As such, measuring the outcome of the ATM Network may need a totally

different set of inputs and may even take more time. Going beyond outputs

and outcomes, there is a compelling need for banks to move away from an

overwhelmingly financial parameter oriented performance measurment to

a much more balanced approach which takes into account various other key

factors of organisational performance and development. This is where

adopting the Balanced Scorecard Approach (BSA) to Performance

Measurement will bring in enormous value and visibility to banks, helping

them to evaluate perfomance on multiple facets like:

Financial parameters

Internal Process Improvement

Innovation and Learning and

Customer Satisfaction

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Prof. G. Sivakumar, IIT, Mumbai, presenting the Enterprise Architecture


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To enable banks to adopt IT Governance at the earliest, IDRBT is in the

process of developing a new IT Governance Framework that would offer

A carefully chosen, easy to use consolidation of best practices

from various frameworks and standards – the Best of Everything

in one place.

Easy understanding and interpretation of the concepts

A means to avoid/reduce cost of compliance/ certification to

various standards

Implementable guidelines across all domains

The effort, of course, is not to waste time and energy on reinventing the

wheel. The IDRBT framework visualises a new model of IT Governance as

described in the diagram beside.

Based on this model, as a first step the Working Group on IT Governance

has come out with an Organisational Structure for IT in the Indian

Banking Sector. Apart from the Organisational Structure, the Working

Group has also suggested IT Governance Mechanisms to facilitate

Strategic Alignment of IT with Business. It has suggested the following

committees – detailing the constitution, frequency of meetings, etc., to

put Alignment in Action:

IT Strategy Committee – Strategic Level

What , Why

IT Steering Committee – Tactical Level

How, Who

Project Steering Committee – Operational Level

What, Who, When, Where, How

The Working Group has also illustrated the roles and responsibilities of

the important functionaries in IT like the CIO, CTO and CISO.

Shri. Sivakumaran concluded by saying that the Working Group would

focus on other important areas like Outsourcing Management and

Information Security Management in the coming year, and come out with

useful recommendations/guidelines for the Banking Industry.

The curtains came down with a Vote of Thanks by Shri. M.R. Nayak,

Executive Director, Allahabad Bank.

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13

Strategize

ITGovernance

Operate

Assure Build

CorporateGovernance

ITGovernance

Shri. M.R. Nayak, Executive Director, Allahabad Bank proposing a Vote of Thanks…

The Second ERT held in Bengaluru, on Saturday, August 7, 2010 took the

programme to the next level. This ERT was hosted by Vijaya Bank. With 137

executives from 24 banks participating, it turned out to be a huge success.

Shri. Albert Tauro, CMD, Vijaya Bank, welcomed the gathering. Shri.

B. Sambamurthy, Director, IDRBT introduced the concept of ERT and the desire

of IDRBT to reach out, in his opening remarks. The Deputy Governor Dr.K.C.

Chakrabarty delivered the Keynote Address. Shri. B. Sambamurthy, talked on

CRM for Banks. Prof. G. Sivakumar, Head of the Dept. of Computer Science, IIT

Mumbai delivered the talk on Enterprise Architecture for Banks. And Shri M.V.

Sivakumaran, Faculty, IDRBT made a presentation on IT Governance Framework

for Banks. Shri. P. Vijayabhaskar, Regional Director, RBI, Bengaluru and Shri.

Mr. Dilip Mavinkurve, Managing Director, State Bank of Mysore also participated

in the Inaugural Ceremony. Smt. Shubhalakshmi Panse, Executive Director,

Vijaya Bank, proposed a Vote of Thanks.

The Third ERT in Chennai, was hosted by Indian Bank at their Indian Bank thManagement Academy for Growth and Excellence on September 4 , 2010. An

overwhelming gathering of 310 executives from various banks made it a grand

success.

Shri. T.M. Bhasin, CMD, Indian Bank welcomed the gathering. Shri B.

Sambamurthy, Director, IDRBT explained the concept of ERT.

Shri. S. A. Bhat, CMD, Indian Overseas Bank welcomed the new

initiative from IDRBT. Dr. K. C. Chakrabarty, Deputy Governor,

RBI delivered the keynote address. Prof. D.K. Subramanian

shared his views on Enterprise Architecture for Banks. Shri.

K.R. Ananda, Regional Director, RBI, Chennai also participated

in the Inaugural Ceremony. Shri. B. Sambamurthy made a

presentation on CRM for Banks. Shri. S. Ganesh Kumar, CGM,

IDRBT talked on Enterprise Architecture for Banks. Shri. M. V.

Sivakumaran, Faculty, made a presentation on IT Governance

Framework for Banks. Shri. Anup Sankar Bhattacharya and Shri.

V. Rama Gopal, Executive Directors of Indian Bank, delivered

the Vote of Thanks for the Inaugural Ceremony and the ERT,

respectively.

The Outreach Programme and the Executive Round Table

demonstrate in letter and spirit the reorientation of IDRBT and

its renewed desire and dedication to reach out to the

stakeholder community and work towards outcomes that

would be of direct relevance to the entire Banking Industry.


14

Smt. Shubhalakshmi Panse, Executive Director, Vijaya Bank, proposing a Vote of Thanks…

Shri. S. Ganesh Kumar, CGM, IDRBT talking on

Enterprise Architecture for Banks

Institute for Development and Research in Banking Technology

( Established by Reserve Bank of India )

Castle Hills, Road No. 1, Masab Tank, Hyderabad - 57, A.P, INDIA

Ph. No: +91-040-23534981, Fax: +91-040-23535157.

e-mail: [email protected], http://www.idrbt.ac.in

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