Banking on Technology - India

The Economic Times Banking Technology Conclave

3 September 2010, Mumbai

 Foreword
Today Information Technology (IT) not only facilitates automation of process and data
processing but also provides more value addition to the entire Banking Business.
Further, it is directly and visibly linked to 'value to customer'. In such a scenario should IT
be delivered and managed within the Bank or outsourced?

The key challenge is to proactively respond than be reactive to change. Banks are now
expecting outsourced service organizations to proactively sense business needs and
Kumar Parakala
change rather than be told to change.
Executive Director &
Head - IT Advisory While the emergence of communication frameworks has been a boon to business but
KPMG in India and EMA
integration of various structured and unstructured data will be the key for prompt and
personalized services. Banks are deploying sophisticated analytical systems to enable
personalized communication and services to customers. A Bank that communicates well
is able to sense and change faster.

Cloud computing is a technology being critically examined as a business enabler.

Technology service providers globally have firmed up cloud platforms that have opened
vistas for agile and cost effective solutions. It is pertinent for Indian Banks to consider
early adoption to the cloud.

As Bankers focus more on the core businesses, these being exciting times for
technocrats, they should decide business case formulation and deployment for future
technology. It would be fair to say that prepositions such as 'with' and 'on' are about to
give an entirely new meaning when used in conjunction with 'Banking' and 'Technology'.

KPMG has been interfacing with a large number of Banks in India and has been an
advisor to many of them. We are uniquely placed to provide insights into trends and
opportunities, for the Banking and Technology industry. This publication demonstrates
the importance and reliance that Banks place on technology and value delivered by
Banks through technology. We are confident that the views elicited during the current
edition of the Banking Technology Conclave, will be useful for the Banks in their journey
to integrate technology more seamlessly with business.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 Conclave 2010
KPMG has been associated with The Economic Times Banking Technology Conclave for
four years now as Knowledge Partner. Over this period we have seen many changes in
industry many of them arising due to changes in regulation and technology. The
fundamentals of banking may remain the same, but the manner in which we perceive
'value', from banking services has been changing almost every six months. This is due
to the pace at which technology is changing and the means and tools that technology
Abizer Diwanji provides us with. Today, if a bank can assure its customer of a viable 24x7 interface, it
Executive Director & has a hope of retaining the customer for longer time.
Head - Financial Services
KPMG in India This seminal event is structured to showcase thought leadership in banking technology,
with leaders from industry interacting with their peers from IT in order to discuss the
future of the business-IT interface. We have endeavored through our survey in the last
few years to bring out the trends and changes in the Banking Technology.

We are pleased to present the results of the “Current State to Future Growth” survey
on the occasion of The Economic Times Banking Technology Conclave 2010.

It provides insights into what constitutes a CEO's technology agenda in 2010. It will be
imperative for Banks to embark upon new technology solutions to optimize cost and
enhance value proposition.

With this survey, we are able to provide the current and possible future trends in the
banking technology. We are sure these insights will be thought provoking and useful
reading.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 Table of
Contents

Introduction 05

Profile of Banks 07

Strategic IT Initiatives 08

IT Performance Measurement and Process improvement 10

Measuring Return on Investment in IT 13

Risk Management 15

Conclusion 18

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
04 BANKING ON TECHNOLOGY - INDIA

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 05

Introduction
The incessant push from Indian Banks to migrate onto enterprise transaction systems
augurs well for the banking industry. Over the past few years, we have seen core
banking system rollouts happening in thousands of branches across the country – with
Banks grappling with the challenges of implementation and rollout. However, these
challenges have been gradually overcome, with appropriate amounts of innovation in
process and technology showing the way. As next steps, Banks are embarking on
various initiatives measuring enterprise value, one view of the customer and channel
integration among other things.

Another focus area for Banks in India is use of Business Intelligence for regulatory
reporting, customer and corporate purposes. As in core banking, Banks are getting their
data aggregation layers in place to facilitate projection of data in the form of static and
dynamic reporting capability. This would be a logical extension of operational data
aggregation using core banking systems. Systems such as core banking and business
intelligence, if used synchronously, will add phenomenal enterprise value to business. In
addition focus on integrated payment channels that provide real/ near-real time services
by way of straight through processing (STP) and 24 x 7 operations will be key
differentiators in banking technology going forward.
Kunal Pande
Director - IT Advisory The Economic Times Banking Technology Conclave 2010, in its fourth edition, is a coming
KPMG in India together of leaders in the banking industry to discuss opportunities and challenges
afforded by the current ecosystem. The 'Current State to Future Growth' survey
endeavors to showcase trends in banking technology applicable to Banks in India
belonging to the public, private and MNC segments.

The survey – Current State to Future Growth' has focused on current state and future
prospects on following four pertinent areas:

? Strategic IT Initiatives
? IT Performance and Process Improvement
? Measuring Return of Investment in IT
? Risk-Compliance and Reporting.

Not surprisingly, a lot of what we hear about globally in terms of technology and
process, is already well on the way to getting applied in India.

The results presented in this report are all statistically pertinent.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
06

Survey

‘ Banking on Technology - from

Current State to Future Growth

’
© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 07

Profile of Banks

This survey is based on focused discussions with Banks in India IT Team

spread almost evenly across the Public, Private and MNC bank The Banks have IT team ranging from less than 50 to more than
segments along with a detailed questionnaire. In order to put the 500 personnel, but majority have a team in the range of 100-500
rest of the IT focused analysis in perspective, we have presented a personnel. Private Banks surveyed have medium to large internal
brief profiling of the Banks. IT teams. A majority of the Public Banks surveyed have medium
sized internal IT teams in the range of up to 200 personnel.
We have covered representative sample across the above
segments, including banks from less than 1,000 employees to
more than 10, 000 employees. Most of the Banks surveyed play Outsourcing is also gaining momentum in the Banking industry.
significant roles in the retail as well as corporate banking The deployment of outsourced IT personnel is relatively higher for
environment in India. Private Banks. MNC Banks have also embraced the outsourcing
philosophy In India.

Employee Strength
6%

<1000
27%
1001 - 5000

67% >5000

Business focus

18% 41%
Retail
Corporate
Investment Banking

41%

IT team size

10%
1 - 50
17% 21%
51 - 100
101 - 200
201 - 500
500+
21% 31%

Source: Current State to Future Growth

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
08 BANKING ON TECHNOLOGY - INDIA

Strategic IT Initiatives

Strategic IT initiatives have long term impact on the entire business and are
focused on enhancing Banks' value propositions. Therefore, these
initiatives are prioritized and accordingly planned for implementation.
Banks take a long-term view of such initiatives, allocate budgets
accordingly and monitor these IT projects very judiciously.

Priority of Strategic Initiatives in IT

Most Banks are planning for IT initiatives that contribute significantly to strategic
positioning of services and cost reduction. Common trends were noticed across
segments with respect to prioritization of IT initiatives and implementation
timelines.

Initiative Priority Implementation Status

100% 100%

80% 80%
Percentage values

Percentage values

60% 60%

40% 40%

20% 20%

0% 0%
Application Portfolio
Optimization

Alternate delivery
channels

Green IT

Enterprise Risk
Management

Outsourcing

Cloud computing

Service Oriented
Architecture

Application Portfolio
Optimization

Alternate delivery
channels

Green IT

Enterprise Risk
Management

Outsourcing

Cloud computing

Service Oriented
Architecture

Key initiatives Key initiatives

High Medium Low Done <1 years 2 - 3 years 3 - 5 years Not Planned

Source: Current State to Future Growth Source: Current State to Future Growth

'Alternate delivery channels' rank the highest on priority aspect. However, few
banks are planning to implement this initiative over the next one year. The focus
on risk management and application portfolio optimization come as a strong
second with some respondents already having an ERM solution in place and a
majority looking at completing implementation over the next one to two years.
Green IT, which till last year was a hotly debated topic from an RoI perspective, is
the third most important focus area, with a large majority of Banks who have not
already undertaken initiatives, planning to do so over the next two to three years.

Cloud computing is still a medium-low priority, with most Banks not having
planned for exploring this area in the foreseeable future. It had been estimated
that globally, emergence of new technologies such as back office virtualisation,
cloud computing and Service Oriented Architecture (SoA) will reduce absolute
spending on IT. However, it seems that these concepts have still not taken firm
hold in the Indian banking environment.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 09

Strategic IT initiatives linkage to business

Almost all the Banks surveyed mentioned that IT initiatives are business driven.
Significant decision factor that influence expenditure in IT is RoI expressed in
terms of revenue to be earned, cost saving, cross sell opportunities and customer
benefit.

Almost all the Banks surveyed have stated that it would be optimal to undertake
two to three strategic initiatives in IT annually.

Key IT Solutions
As part of implementation of strategic IT initiatives, Banks are deploying IT
solutions to facilitate automation in transaction management, reporting and risk
management.

Implementation Status

Core CRM IAM Business GRC Self Service Internet Mobile Financial
Banking Intelligence Kiosk Banking Banking Inclusion

Public Banks H L L L M L H M H

Private Banks H H H M H H H H H

MNC Banks H H H H H H H H L

H Implemented/in progress M Immediate future L Near future/not planned

Source: Current State to Future Growth

Most banks across segments have already implemented core banking systems
and general ledger automation systems. Initiatives such as internet based
transaction banking, self service kiosks, mobile banking are either underway or
are planned in near term.

Initiatives in the area of financial inclusion are already underway in Public and
Private Banks. However, MNC Banks have planned them in a two to three year
window.

While initiatives in the areas of Governance-Risk-Compliance (GRC) and Identity

and Access Management (IAM) solutions are already underway or implemented
in MNC and Private Banks, Public Banks have planned to implement them at
least after one year

Business Intelligence and analytics initiatives are planned in the near term by
Public Banks and in a two to three year window by Private Banks.

The deployment of new technologies is gaining momentum, which has the

potential to bring far reaching impact in the Banking industry as a whole.

We have some interesting facts to consider regarding management's focus on

measuring value of these IT solutions, as we head into the next section.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
10 BANKING ON TECHNOLOGY - INDIA

IT Performance Measurement and Process Improvement

IT has been instrumental in maximizing business value. The areas where IT

has most effectively been able to contribute are:
Treasury
?
Retail
?
Cards
?
Wholesale (including merchant banking)
?
Payment and Settlements
?

It is imperative for Banks to measure IT performance and improve IT

delivery processes.

Measuring the success of IT performance improvement programmes

It was heartening to see that across all segments of Banks, IT performance was
measured using metrics that were hitherto considered the domain of business,
such as customer acquisition, growth in deposits, decrease in number of
customer complaints regarding delivery channels, increased usage of alternate
channels and decrease in footfalls at brick-and-mortar branches. It is also
heartening to see an increased focus on formal tooling and project management
techniques, in order to measure and adhere to IT compliance norms.

IT Performance Improvement Programs

A majority of the respondents have defined IT performance metrics, and have
been monitoring these quarterly and tracking the same over a period of at least a
year. However, only 40 percent have been measuring IT performance over the
past two years. This reflects the relative novelty of IT performance programs. We
expect to see heightened focus on such programs, resulting in increased
spending to support such initiatives. Costs may be incurred under the heads such
as tools for performance measurement, audits to assess compliance and
effectiveness of IT performance initiatives and people to manage these
programs.

Periodicity of measurement of performance initiatives History of tracking productivity initiatives

100% 100%
Percentage of Banks

Percentage of Banks

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
MNC Private Public MNC Private Public

Annually/Semi-annually Quarterly Less than 1 year More than 2 years

Source: Current State to Future Growth Source: Current State to Future Growth

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 11

Process Improvement Models

ISO 27001 seems to be the most actively adopted standard across the banking
sector. This speaks volumes about the overwhelming focus on information
security aspects in the sector, within the country. A large fraction of the private
sector banks, are actively adopting process improvement initiatives in line with
Six Sigma, which indicates a growing focus on enhancing operational efficiencies.
Although public sector banks have not adopted six sigma practices, these are
also considering initiatives in this area.

Public and private sectors are actively planning to adopt the standards such as BS
25999, to enhance their business continuity capabilities. However, MNC banks
do not seem to perceive significant value by adopting BS25999, given their
mature BCM capabilities.

Interesting insights emerge in the adoption of CMMi – DEV model. While MNC
banks have already adopted or have expressed keen interest to adopt the model,
Puclic sector banks have not indicated this as a focus area. This supports the
hypothesis that high degree of in-house developed systems are being used by
MNC Banks, whereas public sector banks prefer to deploy off-the-shelf packages
and do not often go along the route of in-house software development.

Adoption of IT Process improvement Models

100%

80%
Percentage of Banks

60%

40%

20%

Six Sigma CMMI v1.2 ISO 27001 BS 25999

Implemented In Process Planned Not Planned

Source: Current State to Future Growth

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
12 BANKING ON TECHNOLOGY - INDIA

Measuring IT Performance

Measuring IT Performance - MNC Banks IT projects monitoring retains its usual pre-
eminence within the area of IT performance
100% management.

75% ‘Cost per employee' is a metric that is being

Percentage of Banks

measured in most MNC banks and has been

actively been measured in Private and Public
50%
Banks. This can only be possible if core
transaction systems have been well integrated
25%
into business. Many Banks seem to have already
completed the journey of core systems rollout,
Project Delivery Cost per Cost per Percentage
and as a result, are well placed to put in place this
Metrics (time, employee transaction expense of next generation of performance metrics that are
budget, quality) company revenue
extremely relevant to business.

Not Tracked Once in 6 months Once in month Real time As expected, across segments banks are
measureing IT costs as percentage of revenue,
Measuring IT Performance - Private Banks
with MNC banks ahead in the curve.
100%
Only the Private Banks have put in place
75% mechanisms for real-time measurement of
Percentage of Banks

metrics such as production defects, hardware

50% uptime, and network uptime.

25%

Project Delivery Cost per Cost per Percentage

Metrics (time, employee transaction expense of
budget, quality) company revenue

Not Tracked Once in 6 months Once in month Real time

Measuring IT Performance - Public Banks

100%

75%
Percentage of Banks

50%

25%

Project Delivery Cost per Cost per Percentage

Metrics (time, employee transaction expense of
budget, quality) company revenue

Not Tracked Once in 6 months Once in month Real time

Source: Current State to Future Growth

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 13

Measuring Return on Investment in IT

Measuring Return on Investment (ROI) on any project is one of the ways of

justifying investment and reassuring stakeholders that the fundamental
assumptions/ conditions and goals made at the time of investment still hold
true.

IT Intitatives with highest RoI

100%

80%
Percentage of Banks

60%

40%

20%

MNC Public Private

Outsourcing/ Managed IT services Application consolidation/

portfolio optimization
Hardware consolidation

Source: Current State to Future Growth

Among the several strategic IT initiatives, the top three in terms of highest ROI
relate to IT application consolidation/ portfolio optimization, hardware
consolidation and outsourcing/ managed IT services.

While outsourcing/ managed IT services has been the area Banks have
traditionally seen a significant ROI, initiatives aimed at consolidation of
application (ie portfolio optimization) and Hardware are gaining ground.

Private Banks seem to have accrued maximum benefits from hardware

consolidation and Public Banks seems to have gathered maximum RoI from
application consolidation. MNC Banks have responded that RoI was attained from
outsourcing and management of IT services.

IT spend patterns in Indian banks

Across segments Banks spent substantial amount of money on IT.

Annual IT Spend as percent of Annual Revenue

50%

40%
Percentage of Banks

30%

20%

10%

<1 1-3 3-5 >5

Public Private MNC

Source: Current State to Future Growth

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
14 BANKING ON TECHNOLOGY - INDIA

Ratio of Capex vs. Opex

50%

40%
Percentage of Banks
30%

20%

10%

<50% 51 - 100% >100%

Public Private MNC

Outsourcing spend as percent of IT spend

40%
Percentage of Banks

30%

20%

10%

<5 5 - 10 10 - 20 >20

Public Private MNC

Source: Current State to Future Growth

As a percentage of total revenue, IT spends range between 2 and 5 percent. Of

total spend, around 30 percent spend in between 20 and 40 percent on capital
expenditure. While, around 40 percent of respondents spend between 60 and 80
percent on operational expenditure, another 40 percent spends between 20
percent and 40 percent on the same. Approximately 25 percent of the
respondents spend around 10 to 20 percent of total IT budgets on outsourcing
services. Approximately 17 percent of the respondents spend more than 40
percent of IT budgets on outsourcing.
In the MNC segment, a large percentage of the Banks spend up to 5 percent of
revenues on IT, this figure goes to between 1 and 3 percent for Public Banks and
sometimes above 5 percent for Private Banks. However, judging by quantum of
revenue, it may be said that Public Banks have been recently spending sizable
amounts on IT.

In the MNC Banks, between 20 and 40 percent of IT spend is on outsourcing

activities. This figure is in the 5 to 20 percent range for the Public Banks and
between 5 and 10 percent for the Private Banks.

Does this indicate that Private Banks have kept their core banking operations in-
house, to a greater extent that the Public and MNC Banks? This would also
appear to be the case, if the data presented in the previous sections with respect
to headcount of IT personnel is taken into account.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 15

Risk Management

During the past year, focus on reporting of risk and

compliance has increased significantly in line with global as
well as regional trends. Automated systems can help a
proactive risk management approach, while reducing
compliance costs.

Presently, near 50 percent of the respondents have manual

Risk measurement and monitoring framework
systems in place to monitor compliance norms. However,
100% considering regulatory requirements with respect to Basel II and
80% RBI initiatives for automation in 'Return' submission, Banks are
Percentage of Banks

gearing up for further automation in Risk management and

60%
Reporting.
40%

20%

0%
MNC Private Public

Does not exist Manual Automated

Source: Current State to Future Growth

Extent of IT alignment for regulatory reporting purposes

IT alignment of managing regulatory reporting
Most Banks have taken up projects to align internal reporting with
100% regulatory reporting requirements, thus easing the duplication
effort. There are tremendous synergies in this area that Banks
80%
could explore, especially given the increasing emphasis to move
Percentage of Banks

60% towards automated reporting systems.

Banks have shown a fair interest in upgrading existing core

40%
transaction systems to automate the reporting process. Private
20% Banks have taken the first steps to deploy and optimally utilize
core transaction systems for the automation, followed by some
0% public sector banks.
Aligning internal Upgrading CBS Implementing Implementing
reporting with and other systems specific applications end - user driven
regulatory reporting to manage (Datawarehousing customizable
Banks are in the early stages of exploring specialized solutions
requirements automated etc.) to facilitate reporting tools such as Datawarehousing to further automate reporting through
reporting automation
specialized analyses of transaction data. As expected, end user
Not deployed Partially Deployed Deployed driven customized reporting tools are widely used across Banks,
Source: Current State to Future Growth possibly owing to the ease of deployment and use associated
with such applications.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
16 BANKING ON TECHNOLOGY - INDIA

The IT (Amendment) Act 2008 mandates implementation of

stringent mechanisms to reasonably protect sensitive
information. The Act further provides enable remedial/ penal
Some of the key areas of focus outlined in the IT
(Amendment) Act 2008 are data protection,
provisions to address non-compliance. All Bank are required
security procedures and practices, offensive to comply with the provisions of the IT Act.
messages, data authentication, information
monitoring, validity of electronic contracts, audit of Banks must align internal policies, procedures for protecting
digital documents, exemption of liability of sensitive information (eg customers’ personal information) and
intermediary in certain cases. deploy technology safeguards to prevent computer and cyber
crimes. In order to understand the readiness, with respect to the
tenets of the Act, it is recommended that the Bank undertakes a
detailed analysis with respect to the provision of IT Act.

It appears that a majority of the Banks are lagging in performing

Assessment of IT Act such gap analysis. As a result, it may take them that much more
time to understand the implications of various aspects of the
amended IT Act.

Banks that have undertaken such gap analysis have required top
6% 6% management directives to ensure business focus, and this has
69% 31% happened over the period of a quarter or more. A larger number
of Public Banks seem to have performed this gap analysis than
19%
Banks in the Private and MNC Banks.
Yes MNC
No Private
Public
Source: Current State to Future Growth

Initiatives undertaken by Banks across sectors to align to the IT Act

MNC banks Public sector banks Private sector banks

Payment systems upgrade, dual Security audit of IT, Security Operations Automation in reporting, identity and
authorization of transactions on internet Center deployment, multi-factor access management, enterprise backup
channels. authentication, synchronous replication of solution, password vault, log monitoring,
data to optimize RPO, RTO. data leakage prevention program.

It may be noted that public sector Banks seem to have focused a

lot of attention on getting multi-factor authentication in place,
while private sector Banks have invested in identity and access
management solutions in order to align to some of the tenets of
the IT (Amendment) Act 2008.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 17

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
18 BANKING ON TECHNOLOGY - INDIA

Conclusion
Our survey covered a representative sample of Banks across Public, Private
and MNC segments with a good mix in terms of size ranging from less than
500 employees to more than 10000. This also included participation from the
senior management of these banks providing rich content and valuable
insights. This uniquely positions the results of the survey to represent
emerging trends in Banking and Technology.

The key message of the survey results is that technology led innovation has
been a key factor in growth and value creation in the banking industry. While
Banks in India are treading the path of growth, there has been a heightened
regulatory and business led focus on risk management. Banks are deploying
technology for implementing differentiated strategy and risk management
frameworks (such as Basel II). Increasing IT investments in these areas will
also bring a proactive and transparent monitoring and compliance environment
within Banks.

We observed that emerging global trends to automate regulatory reporting is

also a point of focus in the Indian banking industry. This will not only be a great
help for the Regulator but also enhance customer confidence in Banks which is
the need of the hour after the global financial crisis.

With increasing focus on financial inclusion, Banks will have to take a leap
forward in order to service their obligations to the social sector. Systems and
frameworks will need to be made scalable in order for the Banks to seamlessly
align to any future requirements that may arise. Banks in general are
considering embarking upon various strategic IT initiatives such as Service
Oriented Architecture, Green IT and Cloud Computing. These initiatives are
expected to bring substantial business benefits across both top-line and
bottom-line. However these initiatives have varied degrees of prioritization in
terms of importance as well as implementation time lines. Prime concerns that
may not enable immediate off-take for these new initiatives, seem to be
around the ability to offer continual service and security.

These are interesting times for the Banking industry in terms of consolidating
customer confidence and using emerging technologies to provide value add
services in 24 X 7 model. We will see a new face of Banking and technology in
the times to come. We sincerely believe that these survey results will be
useful for the Banking fraternity to strategize their Banking and Technology
initiatives.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
 BANKING ON TECHNOLOGY - INDIA 19

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
20

Acknowledgement

At KPMG in India we constantly strive to present thought leadership that is useful and
relevant to a wide variety of stakeholders. We invite your feedback on this document.
Please send your feedback to [email protected].

This survey document has been released on the occasion of The Economic Times
Banking Technology Conclave 2010.

We thank all the respondents of the “Current State to Future Growth” survey, for their
valuable inputs. We would like to thank Times Grey Cell, for all the support offered during
the completion of the survey.

The KPMG team, who has contributed towards the content presented in this
publication, comprises Kumar Parakala, Abizer Diwanji, Vikram Jaiswal, Abhijeet Patil and
Melvin Barboza.

A special note of thanks to the Design Cell, KPMG in India for bringing the report
together to its present layout and design.

The editorial team for 'Banking on Technology - India' comprises of Nitin Khanapurkar,
Kunal Pande, Vishnu Sri Pillai, Glyn Crasto and Sweta Nalwaya.

© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
in.kpmg.com/btc

KPMG in India KPMG Contacts

Bangalore Kolkata Vikram Utamsingh

Maruthi Info-Tech Centre Infinity Benchmark, Plot No. G-1 Head - Markets
11-12/1, Inner Ring Road 10th Floor, Block – EP & GP, Sector V Tel: +91 22 3090 2320
Koramangala, Bangalore 560 071 Salt Lake City, Kolkata 700 091 e-Mail: [email protected]
Tel: +91 80 3980 6000 Tel: +91 33 44034000
Fax: +91 80 3980 6999 Fax: +91 33 44034199 Kumar Parakala
Head - IT Advisory
Chandigarh Mumbai Tel: +91 80 3065 4600
SCO 22-23 (Ist Floor) Lodha Excelus, Apollo Mills e-Mail: [email protected]
Sector 8C, Madhya Marg N. M. Joshi Marg
Chandigarh 160 009 Mahalaxmi, Mumbai 400 011 Abizer Diwanji
Tel: +91 172 393 5777/781 Tel: +91 22 3989 6000 Head - Financial Services
Fax: +91 172 393 5780 Fax: +91 22 3983 6000 Tel: +91 22 3090 2380
e-Mail: [email protected]
Chennai Pune
No.10, Mahatma Gandhi Road 703, Godrej Castlemaine Kunal Pande
Nungambakkam Bund Garden Director - IT Advisory
Chennai 600 034 Pune 411 001 Tel: +91 22 3090 1959
Tel: +91 44 3914 5000 Tel: +91 20 3058 5764/65 e-Mail: [email protected]
Fax: +91 44 3914 5999 Fax: +91 20 3058 5775

Delhi
Building No.10, 8th Floor
DLF Cyber City, Phase II
Gurgaon, Haryana 122 002
Tel: +91 124 307 4000
Fax: +91 124 254 9101

Hyderabad
8-2-618/2
Reliance Humsafar, 4th Floor
Road No.11, Banjara Hills
Hyderabad 500 034
Tel: +91 40 3046 5000
Fax: +91 40 3046 5299

Kochi
4/F, Palal Towers
M. G. Road, Ravipuram,
Kochi 682 016
Tel: +91 484 302 7000
Fax: +91 484 302 7001

The information contained herein is of a general nature and is not intended to address the circumstances of any particular © 2010 KPMG, an Indian Partnership and a member
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that firm of the KPMG network of independent member
such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one firms affiliated with KPMG International Cooperative
should act on such information without appropriate professional advice after a thorough examination of the particular (“KPMG International”), a Swiss entity. All rights
situation. reserved.

KPMG and the KPMG logo are registered

trademarks of KPMG International Cooperative
(“KPMG International”), a Swiss entity.

Printed in India