Banks lack technology vision: Chakrabarty

Coming down heavily on banks for not optimally leveraging technology, the Reserve Bank of India (RBI) today said there was clear lack of vision among banks in rolling out customer-friendly technology. It said technology implementation in public sector banks appeared to be more for regulatory and policy compliance.

“There is clearly an absence of vision of how technology is going to drive business and customer relationship. Thus, technology adoption in banks is a result of external pressures rather than a vision shared by the bank staff,” RBI Deputy Governor K C Chakrabarty said today. “This has oriented the banking technology to be more employee-friendly rather than customer-friendly,” he added.

Chakrabarty said lack of long-term vision and strategy had impacted the way technology had been used. “It has been ‘implemented’, it has not been embraced, optimised or leveraged to the full.”

Most banks in India are using information technology to meet core needs. The central bank said despite technology, bank penetration and productivity had not risen as desired.

Commenting that empirical evidence suggested the cost of small transactions had not come down, Chakrabarty said unless low-value transactions were done cost-effectively, efficiency could not be enhanced drastically.

Calling for integrating information and technology, RBI has observed that banks are collecting huge data that is not being meaningfully analysed. “It would not be wrong to say that ‘information’ from ‘information technology’ is missing,” said Chakrabarty.

‘Capital flows not a concern’

Reflecting comfort with investments into the country, the Reserve Bank of India (RBI) today said it was not concerned about capital flows for now. There was no concern on capital flows into India as of now, said RBI Deputy Governor K C Chakrabarty. He was speaking on the sidelines of a banking conference. Foreign institutional investors (FIIs) have invested $13.25 billion in India’s capital market in calendar year 2010, according to Securities and Exchange Board of India data. India’s foreign exchange reserves have grown by $6.4 billion since the end of 2009 to $282.84 billion as on August 27. RBI had flagged managing capital flows as a medium-term challenge in its annual report for 2009-10.

Volatile capital movements have influenced domestic stock prices, exchange rates and domestic liquidity significantly in the past. In 2009-10, the current account deficit widened to 2.9 per cent of the gross domestic product, according to RBI.