State Bank of Pakistan (SBP) Deputy Governor Yaseen Anwar said on Saturday that future success of the banking industry was dependent upon the effective usage of Information Technology (IT) and passing on its benefits to bank customers in terms of cost, speed and convenience. Delivering his keynote address at the “IT & Banking Conference, 2011” jointly organised by SBP and Pakistan Software Export Board here at a local hotel, the deputy governor stressed that no bank could survive today without a sound IT infrastructure.
The reason behind this is that banks do not sell tangible products rather “customer experiences” and “customer possibilities”, he noted. Enhancement of these experiences is driven by opportunities generated by the use of technology. Anwar pointed out that in recent decades, technological innovation had made its way into the banking sector. “Not only has IT become a key factor for managing all types of banking operations, but has also come up as a key driver for financial inclusion, both in terms of products and services,” he said.
Customers, who were initially exposed to ATMs, now find a blurring of boundaries between the telephone, PC and even television. The convergence of these media is making access to financial services far easier and better. He highlighted that the use of IT was now defining customer service standards of banks due to an augmented usage of phone banking, IVR systems, internet banking, ATMs, POS, credit cards and other modes of transactions under the brand of e-banking he added.
Through the technological platform, numerous banking services have not only enhanced business volumes of banks and increased access to geographical regions with limited or practically no banking facilities, they have also brought operational and cost efficiencies, he observed. He further added that more recently, information technology has brought about another revolutionary change, defining how banking will be conducted in the future. By making branchless banking possible, the whole concept of brick and mortar branch is changing.
“The need for a customer to visit the branch where his/her account is parked is no more an obligation,” he indicated. Branchless banking has the potential of changing lives of those people who are still deprived of banking and financial services, he added. The SBP deputy governor believed that Pakistan provides a vast area to banks for expansion in this regard as 85 percent of the population remains untapped by the banking sector today.
“Many banks are moving towards more sophisticated IT based solutions to run their businesses efficiently and facilitate financial services for customers,” he mentioned. He also mentioned that some banks have implemented Core Banking Solutions which marked a paradigm shift as bank customers can now access their accounts from any of their branches. Anwar acknowledged that such systems had enabled banks to perform efficient data analysis that help them in developing business strategies.
“Sophisticated IT systems are also helping banks in managing local human resource requirements of banks operating in multiple countries.” However, he emphasized that the minimum security standards must be adopted to ensure safety, security and maintenance of e-banking transactions. Banks must design fool-proof data security processes. He stressed that the SBP had issued various guidelines on critical subjects pertaining to operational continuity and data security and safety.
“These guidelines provide a minimum set of standards to be met by banks on relevant issues and banks should strive to exceed these minimum standards in order to maximize the stability of its operations”, he added. IT advancement had helped banks in managing the complex Capital Adequacy Framework and local banks were now better placed to measure, monitor and control credit, market, and operational risks, he believed.
“More and more banks are moving towards an integrated platform for managing various transactions including foreign exchange, money market, fixed income, and derivatives,” he added. Anwar observed that although banks in Pakistan had come a long way in implementing technological systems, our banking system was still quite far from the desired level in terms of quality and quantity of IT based solutions provided to customers. He believed that although some foreign and large local banks had made significant progress in establishing superior e-banking platforms, yet on an overall basis the impact was inadequate due to the limited outreach of these institutions.
