June 6 - 12, 20

Mr. Yaseen Anwar, Deputy Governor, State Bank of Pakistan has rightly pointed out that the future success of banking industry lies in the effective use of information technology and passing on its benefits to banks' customers in terms of cost, speed, and convenience.

It is interesting to not that in the baking scenario today, almost all major banks claim to be well equipped with automation and their online banking services are second to none, yet practically speaking the attitude of staff of some of the leading banks does not go well with the growth of IT application as they are still living in an era of nationalization.

Some of the staff responsible of dealing with on-line business behaves in a manner that they are doing some favor to the customers. In some cases instead of providing quick services, they frequently make excuses that system is down hence the customer should contact to some other branch of that bank. Hence being equipped with latest IT system is not sufficient and the improvement in attitude of the staff is equally important for brand development in the banking world. However, there are certainly some banks in the private sector doing at par with international standards of customer services, no doubt.

Mr. Anwar, speaking at 'IT & Banking Conference, 2011' jointly organized by SBP and Pakistan Software Export Board in Karachi, said that no bank today can survive without sound information technology infrastructure. The reason is that banks do not sell tangible products rather they sell 'customer experience' and 'customer possibilities', he said, adding that these experiences are driven by possibilities generated by the use of technology.

He said that in recent decades, technological innovation has continued its inroads into the banking sector. 'Not only has IT become a key factor for managing all types of banking operations, but also has become the key driver for financial inclusion both in terms of products and services,' he said and added that customers who were initially exposed to ATMs now find blurring of boundaries between the telephone and PC, and even television and the convergence of these media is making access to financial services far easier and better.

Use of information technology is now defining customer service standards of banks due to increased usage of phone banking, IVR systems, internet banking, ATMs, POS, credit cards and other host of transactions of different modes under the band of e-banking. 'Information technology has transformed our local banking sector and redefined the concept of banking and financial services.

Numerous banking services through the technology platform have not only enhanced business volumes of banks and increased access to unbanked geographical regions, it has also brought about operational and cost efficiencies, he observed and added that more recently, information technology has brought about another revolutionary change in how banking will be conducted in the future. By bringing about the possibility of branchless banking, the whole concept of brick and mortar branch is changing.

'The need for a customer to visit a branch where his/her account is parked is no more an obligation,' he said. Branchless banking has the potential of changing lives of those people who are still unbanked and without any financial services.

In Pakistan, banks have vast space to work in this area as 85 per cent of the population still remains unbanked and untapped today. 'Many banks are moving towards more sophisticated IT based solutions to run their businesses efficiently and facilitate financial services for customers, he said and added 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.

Mr. Anwar said that such systems have enabled the banks to perform efficient data analysis that help banks in developing their business strategies. 'Sophisticated IT systems are also helping banks in managing local human resource requirements of banks operating in multiple countries,' he added.

The minimum security standards must be adopted to ensure the safety, security and maintenance of e-banking transaction.

Banks must design foolproof data security processes. The State bank has 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.

The information technology advancement has helped banks in managing the complex capital adequacy framework and the banks in Pakistan are now better placed to measure, monitor, and control credit, market, and operational risks. 'More and more banks are moving towards an integrated platform for managing various transactions including Foreign Exchange, money market, fixed income, and derivatives.

Though banks in Pakistan have come a long way in implementing the information technology, our banking system is still quite far from the desired level both in terms of quality and quantity of IT based solutions provided to their customers. He said that although some foreign and large local banks have made significant progress in establishing superior e-banking platforms, yet on overall basis the effect is largely limited due to the limited outreach of these institutions.

CONCLUSION: If the success of the banking sector is to be measured in terms of its financial assets, it may be noted that the size of banking industry is running in trillions of rupees today. However, the real success of any industry is beyond monetary gains while we look at their core responsibility of lending a strong support to economic growth and to their depositors who are the real force behind their existence. It is unfortunate that banking sector mostly engaged in risk free lending to the government papers which contribute double edge effect on economic growth. Trend of investing into government papers trigger inflation as well as push up the interest rate which ultimately have adverse effects on economic growth as well as igniting inflation in the system.