Getting Tech Savvy

In one of our earlier issues, we identified the regional rural banks (RRBs)

and cooperative banks as one of the seven hottest micro-verticals. While RRBs

have traditionally gone by the parent bank's recommendations in most technology

deployment, cooperative banks present an interesting story, as each one is

different from the other. It remains a challenge for most vendors to understand

the needs, let alone address them.

So, what do these banks see as technology priorities? When Dataquest tried to

study the space, there was no better place than InfraManch, the annual customer

meet of InfrasoftTech, the leading vendor of core banking solutions for these

banks. The meet, which probably is the largest get-together of CXOs from the

Indian co-operative banks, of all sizes, was marked by discussions around

business challenges, opportunities and technology challenges faced by the

community.

The challenges that were highlighted: smaller banks do not see standardized &

well-known software packages and standard hardware vendors, as a business case

because of cost constraints; co-operative banks which are away from city centers

have grave issues of continuous power supply required for technology

implementation; lack of IT trained/IT conversant HR is a issue for co-operative

banks to take the big leap in technology; most banks are vary of undertaking

business process re-engineering without which automation is not useful. Hence

their expectation on customization, software rework, etc, is very high.

In addition, a major challenge is that in many cases decisions are taken by

the board members, many of which are not well-informed. While by and large the

segment is under-penetrated, interesting technology models also came to the

limelight during the event. Thane Janata Sahakari Bank, a large cooperative bank

in Thane, Maharashtra, actually provides core banking as an ASP service to other

banks. The core banking solution is licensed from InfrasoftTech. Another large

coop-Saraswat Coop Bank-has started marketing a core banking solution, based on

Infrasoft's product. Another bank revealed a story of operating in a location,

powered completely by solar power.

The event marked extremely useful discussions on how the cooperative banks

could play a more active role in the government's plan of financial inclusion.

The chairmen and CEOs of most co-operative banks are inclined to work on the

financial inclusion objectives of the government. Their contention is that the

UCBs understand the psyche of unbanked population and small customers and can

provide right support to them.

But traditionally, co-op banks have played where others have not been able to

enter because of lack of knowledge about customers/potential customers. A few

executives present feared that Unique ID will make it easier for the larger

banks to get into the turf of coop banks, as they would now have all the info.

But most felt that information is not the only advantage that cooperative

banks had over nationalized and larger banks. Cooperative banks thrive on loyal

customer base that is now offered the same facilities that private banks and

nationalized banks provide to customers.

Shyamanuja Das



Source: DQ