Technology is key to managing risks in bank

Banknet India, an IT focused banking research company organized CTO Summit on 21st February 2005 to discuss the role of IT in managing risk in banks, leveraging IT for business benefits for banks, challenges of multi-channel strategies in banks, approaches to core banking solutions. CTO Summit brought together 28 CTOs, CEOs and Business heads from 15 banks and 5 IT companies.

Speakers and panelists at CTO Summit were of consensus that technology will be the key for banks in their effort to implement the Basel II norms. Technology is essential for Basel II norms because of needs like data collection, computation of the audit trail and reporting between the various departments and across the ranks within banks.

Experts agreed that data collection; networking and risk management will be the key areas where banks will need to implement technology, in their efforts to achieve standardization. A centralized IT infrastructure, customized software solutions, personnel training and seamless integration of multi-channel strategies are the imperatives for management of credit, market and operations risks.

Mr R.N. Ramanathan, Deputy Managing Director, Information Technology, State Bank of India said: "Inducting IT is required in a big way for preparing for the Basel II norms. One of the requirements for Basel II is to build up 10 years of data of all the customers. This includes both retail customers and corporate clients”

He advised that State Bank of India (SBI) plans to cover nearly 85 per cent of its business under its core banking solution by end of March 2006. The planned quantum jump in coverage of branches under core banking is a step towards adopting Basel-II prudential norms.

According to Mr R. Gandhi, Chief General Manager, Department of Information Technology, RBI, "Basel II norms came into effect because central banks all over the world wanted to bring a co-ordinated and standardized approach. Very soon the distributed processes of banks will have to go for centralization."

He added, "IT helps banks in data collection in a big way. That is why core-banking solutions are essential for strong risk management. This will also include profiling of customers and their transactions." Basel-II has advanced the urgency for banks to put in place automation systems and build the basic technology foundations to face the challenges of Basel-II.

Regarding Real Time Gross Settlement (RTGS), Mr Gandhi was of view that banks are within the pre-determined schedule of complying the RTGS norms and deadline. Mr R Gandhi also advised that RBI will finalize necessary technical process for pilot project for cheque truncation, which would use electronic images of a cheque for processing and will be in place by July.

Banknet India’s Managing Director & CEO Anurag Khanna said that the over-whelming response to the CTO summit from the bankers and IT companies confirmed the need for such interactions.

Mr Khanna announced the launch of Banknet India’s 3rd Banking systems survey and a Publication, which will provide industry expert’s insight into the technology solutions in banking and the issues related to it.

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