The Future of
Banking
organized by
Vepa Kamesam
Former Deputy Governor, RBI
Currently Chairman,
Technology and Banking
The Quintessence Nature of Banking harmonizes
closely with Technology –
Tasks Common to
Both
Information
Banking Storage Technology
Processing
Transmission
g y
l o
Global Operations
no
c h
Te
nd
Pervasive Branch a
Network
ng
ki
a n
B
Mass Transaction
& Items Processing
Risk Resource
GNI SI AR
CRM
Management Management
BANK’S BUSINESS
INSTITUTE FOR DEVELOPMENT AND
RESEARCH IN BANKING TECHNOLOGY October 30, 2004 Vepa Kamesam, Chairman IDRBT
Financial Technology
Infrastructure
Data Center to host servers for:
CBS
ATM/Financial Switch
Internet Banking
DW/DM/CRM/MIS etc.
Back-office Application
E-mail Servers, Internet Server,
Elements of Technology as a
Differentiator
Scalability Efficient
Process Utility to Support
& utilisation,
enabling customer Skills
Flexibility mgmt
POS Terminal
Connected to
Cash dispenser
Branch
Banking
Branch 3
Branch 2
Branch 1
Head Office
Branch 4
Branch n Branch 5
Branch 6
INSTITUTE FOR DEVELOPMENT AND
RESEARCH IN BANKING TECHNOLOGY October 30, 2004 Vepa Kamesam, Chairman IDRBT
Technology Acquisition
• Inappropriate technology purchases can be the root of all
problems…
• The Bank management has to:
– Give thought to the utilization rate
– Avoid “knee-jerk” reactions (“they have done it…I should also
do it”)
– Be impartial in technology decisions (“I like that technology…I
want it”)
– Understand where the solution will fit AND where it won’t!
– Assess the strengths & weakness of solution
– And seek answer to “are we ready for it?”
Will
INSTITUTE be
FOR covered in
DEVELOPMENT detail
AND by Speaker Dr. T.V. Gopalakrishnan
RESEARCH IN BANKING TECHNOLOGY October 30, 2004 Vepa Kamesam, Chairman IDRBT
Currency Management and
Technology – Opportunities Galore
Currency Management - a formidable task in India
given…
the geographical size, the volume and value of notes and coins in
circulation, preference for cash and currency handling practices
...but technology offers immense opportunities to improve
performance
RBI’s The Clean Note Policy (1999)
Establishment of 2 state of the art currency presses
Technology driven anti counterfeit measures
48 fully automated Currency Verification & Processing Systems
21 Shredding and Briquetting Machines
The Opportunities –
• The proliferation of IT has also set the stage for
improving and managing risks in payment systems
– Electronic Trading Systems
– DVP/PVP
– RTGS
– Secured Netting Systems
– The growth of the Central Counterparty (CCP)
– Continuous Linked Settlement
INSTITUTE FOR DEVELOPMENT AND
RESEARCH IN BANKING TECHNOLOGY October 30, 2004 Vepa Kamesam, Chairman IDRBT
IT and Payment and
Settlement Systems Continuous
Linked
Central Settlement
Secured Counter
Netting party
Systems
Payment
Real Versus
Time Payment
Electronic Gross
Dealing Settlement
Platforms
Delivery
Versus
Demateria Payments
-lisation
Of
Securities
PKI-based RTGS
Security
RBI
INITIATIVES PDO-NDS & SSS
SFMS
IN PAYMENT
&
SETTLEMENT Compliance with
SYSTEMS BIS Core Principles
INFINET
Clearing
IDRBT Corporation
of India
INSTITUTE FOR DEVELOPMENT AND
RESEARCH IN BANKING TECHNOLOGY October 30, 2004 Vepa Kamesam, Chairman IDRBT
RBI Initiatives in Payment
and Settlement Systems (1)
The IDRBT
Network Externalities
TheIndian Financial Network (INFINET)
Messaging Solutions
Security
IDRBT CA
LUCKNOW
JAIPUR DELHI
KANPUR
CALCUTTA
BHOPAL
AHMEDABAD
GUWAHATI
MUMBAI
PATNA
GOA NAGPUR
BHUBANESHWAR
PUNE
BANGALORE
HYDERABAD
RBI
KOCHI
CHENNAI
IDRBT
HYDERABAD
4 X 2 Mbps 2 Mbps
THIRUVANANTHAPURAM
2 X 2 Mbps
CUG links
2 Mbps with 64 Kbps
ISDN Backup
G1 G1 G2 G2 G3 G3
Corporate Network
G2 G2 G2 INFINET
G1 G3 G1 G3 G1 G3
Inter Banks/FIs Network
G4
Shared ATMs Network
G4 G4 G5
Clearing Operations
G5 G5 G6 Network
Internet
G7
… … ……. … … ……. … …
…… ……
Branch-1
Branch-2
Branch-n Branch-1Branch-2 Branch-n Branch-1Branch-2 Branch-n
INSTITUTE FOR DEVELOPMENT AND
RESEARCH IN BANKING TECHNOLOGYOctober 30, 2004 Vepa Kamesam, Chairman IDRBT
PKI Hierarchy
CCA
IDRBT CA
IDRBT CA
Repository
RA RA RA
Subscriber Subscriber
Leased Line
Leased Line
Bank 1 Bank 2
ISDN
Leased Line
ISDN ISDN
Leased Line
ISDN
CashNet
Backup Link
INSTITUTE FOR DEVELOPMENT AND
RESEARCH IN BANKING TECHNOLOGY October 30, 2004 Vepa Kamesam, Chairman IDRBT
RBI Initiatives in Payment
and Settlement Systems (2)
A Real Time Gross Settlement System
Reduction of systemic risk in inter bank
payment systems
To be implemented by the year end
Settlement
Intra Day Accounts
Liquidity
SSS
StripIFTP
& Store RBI Payments and
Processes Actg. Entry
Interface
INFINET NSS
Resistance to change
Overlooking process
reengineering
Project management
Dedicated project teams
Change management
Policies
People Skills & Training
Basic Infrastructure –
telecom, power
Security
Privacy & confidentiality
Legal and regulatory
INSTITUTE FOR DEVELOPMENT AND
October 30,
issues
2004 Vepa Kamesam, Chairman IDRBT
RESEARCH IN BANKING TECHNOLOGY
Pre-requisites for Technology
Planning for
Disasters
Risk
Assessment
Gap
IS Audit Analysis
SRM
for
Awareness by Banks Policy &
Procedures
Training
Development
INFINET
PKI Implementation