Excerpts:
Automation of processes by Indian banks has been on the slow track despite warnings by CVC and the apex bank. What are the reasons?

The reasons are multiple -- from the bank unions' resistance to the shortage of funds. The large size of some banks makes the automation or migration difficult as there is still a tendency to resist it. But of late, there has been an increased awareness among banks, who have realised the true importance of efficient systems in boosting bottomlines.

With the entry ofprivate sector banks, who have built up lean organisations through full automation of functions, the competition is tough.

Computerisation and the right selection of software has helped them to offer new range of services. These are able to attract large deposit base and are profitable also. Then there is the issue of Y2K, where you have to update or overhaul the systems to survive the millennium threat. So, the pressure on the margins will force the bigger and less automated banks to streamline functions through the use of IT.

The World Bank-funded project for automation has helped a great deal in technology upgradation and the results will be known in the near future. The world is moving towards Net banking, so we have to act urgently.

Do you think banking through internet could become a possibility in India soon?

PC penetration is high and it is becoming more affordable for the middle class. According to ISPs, there will be close to 1 million Net connections by next year. The pattern ofinternet connections and PC buying shows that even the aged, who constitute a large customer base, are showing tremendous interest in the latest developments.

The new ISP policy and the cyber law will further encourage Net banking. There is need to lay down proper legal and regulatory framework. But I am sure the present impediments like those on the payment side will be sorted out soon. Net banking is a global way of life which we can not escape.

What will happen to the traditional branch banking then?

Net banking will be complementary to branch banking, the traditional banking way in India. It will not in anyway threaten this or ATMs. But you have to look at the advantages. For example in the US, most corportes and big customers use the Net. A typical Net banking transaction costs only one/eighth of a branch banking transaction. However, branch banking may continue in India as labour is cheaper here.

How tough is competition in the banking solution segment?

Kindle was the mainchallenge with its product, Bank Master. It is not so now as the company is not doing well. Our products, Microbanker had 18 sales last year and richly-functional Flexcube continues to be a major hit. We have nearly 8,000 users and are planning enhancements to the product including the internet banking version, which will hit the market in end-1999.

How does the Citicorp name help you?

There are advantages as well as disadvantages. Citigroup holds about half of our equity stake through its venture fund and is one of the global banking majors, who rely heavily on technology. So it helps in giving a good introduction and we are utilising the strengths and reputation of our parent to the full extent.

Then the disadvantage: Big banks are apprehensive of doing business or sharing system information with us fearing competitive advantages to the Citigroup. But the truth is that despite being an affiliate, we charge them for our services.