While large banks like HDFC, SBI and others have adopted a number of digital initiatives in the last few years, there are still some technology investments required to ensure seamless transactions at scale, analysts said.
Banks must invest more in technology to ensure smooth digital transactions as the heightened volume of digital transactions during the pandemic has resulted in episodes of widespread failures for banks’ digital transactions, said analysts.
Regulators have called for more technology investments by banks and financial institutions.
Reserve Bank of India Governor Shaktikanta Das in a press conference on Friday said that the financial landscape is going to become increasingly IT dependent as he called for banks to invest more on their technology stacks.
India’s telecom sector, in the efforts of enabling policies including more quantum of the spectrum, is set to establish new benchmarks in the next-generation network deployments and service delivery.
“Banks, NBFCs and other financial entities need to invest in technology. They need to strengthen systems so that public confidence is maintained…If you want to remain competitive in the coming years, the robustness of IT systems is the key,” said Das.
While large banks like HDFC, SBI and others have adopted a number of digital initiatives in the last few years, there are still some technology investments required to ensure seamless transactions at scale, according to analysts.
Bank heads like SBI chairman Rajnish Kumar have said earlier this year that mobile transactions will become the most preferred mode of transactions even ahead of Internet banking.
As banks juggle multiple areas of online services and compliance including new apps, bots, they are fighting a cost versus outcome battle feel technology experts.
“They are caught in a conundrum with so many areas of investment,” said chief executive, Greyhound Research, Sanchit Vir Gogia adding some areas may have received less focus.
The central bank on Thursday had asked HDFC Bank to halt launches of its digital business activity and not to add new credit card customers following repeated outages of its digital banking services. SBI’s digital platform YONO also suffered a system outage on Thursday. The bank informed customers that restoration work was underway. The central bank governor said that the RBI was studying the SBI outage.
He added, “We cannot put thousands or lakhs of customers who are using digital banking into any kind of difficulty for hours together, especially when we are ourselves giving so much emphasis on digital banking, the public confidence in digital banking has to be maintained.”
The banking sector spending on IT in India will total US$11 billion in 2020, an increase of 9.1 per cent from 2019, according to the latest forecast by Gartner, Inc.
“They (banks) have to invest more in technology to sustain the new initiatives with higher volume. Outages happened to other banks in India and globally. They have to constantly fight the cost vs outcome battle,” said Gogia.
He said HDFC Bank is “a very good technology shop but they are fighting so many battles” in terms of digital services offerings. https://telecom.economictimes.indiatimes.com