Technology can play a pivotal role in facilitating financial inclusion, says Shri R. Gopalan

(Extract from the key note address of Shri R. Gopalan, Secretary (Financial Services), MOF, GOI at the BANCON 2010)

December 03, 2010: As the goal before us is to outperform the global benchmarks in ensuring ever greater reach of the banking sector amongst the masses, we need to leverage technology in large measure to achieve this goal. Technology is a great enabler. Appropriate use of technology, as a tool, can have many positive fall-outs.

The Government believes that financial inclusion is not only essential, but also makes some business sense. Ambitious time-lines have been drawn and targets have been set for the banks to cover the hitherto un-banked habitations. Technology can play a pivotal role here. It has been the consistent experience that in the transformation from agrarian to industrial economy, financial inclusion has played a significant role. Given India’s vast population and its varied geography, this challenge cannot be met without appropriate technology.

Technology has also facilitated reduction in cost of banking transactions, both for the customers as well as for the banks. ATMs have allowed the banks to provide banking facilities to greater number of customers without the need for having brick and mortar branches and accompanying complement of staff. With the launch of the biometric-enabled ATMs, now it is possible for the illiterate or visually challenged segments of our population also to access banking services on a platform which is operational 24/7.

Technology can be a powerful tool for Risk Management and mitigation too. While RTGS has done away with the settlement risk prevalent in the system earlier, asset liability management and treasury management of banks has also improved. The Department of Financial Services has recently urged all banks to shift to a Core Banking based system of reporting of NPAs. This will completely do away with the possibility of understating NPAs.

Implementation of Core Banking Solution (CBS) across branches of banks has brought in its wake fundamental changes in the way customers are serviced, their transactions are handled and banks’ internal book-keeping and accounting tasks are carried out. Customers can now enjoy any time any where banking, use a number of e-channels, transfer funds virtually in seconds – all of which a dramatic improvement in customer service from what was obtaining just a few years back.

In spite of large scale infusion of technology into banking operations, intermediation cost is still high in India. We must realize that CBS is only the beginning of the journey and the next most critical challenges for the PSBs is to usher in ‘Business Process Re-engineering’ and ‘Change Management’ in a comprehensive manner in order for them to be able to reap optimum benefits out of CBS.

Banknet's 7th Annual Conference on Payment Systems will be organized on 19th January 2011 at Mumbai Plenary session will give an insight into emerging applications and approaches, Holistic view of the latest developments in the retail payments industry, Supporting financial inclusion measures etc. Banknet's Annual Conference on Payments is the largest payments event in India and has on average attracted around 300 senior executives. .... Read More

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