Dr. Gauri Heble
Assistant Professor

Dr. V.N. Bedekar Institute of Management Studies Email : gauri.heble@gmail.com

Abstract : Countries the world over have now recognised the need for convergence and design of new and innovative business practices, especially in the field of banking to keep up with the changes taking place within the industry, both domestic and global. The Indian Banking industry is backbone of the Indian financial system. Several countries including India have now made substantial improvements and commitments in the banking sector. This is due to the many challenges that banks face today. Banks the world over have become aware of the changes that have to be incorporated within the banking industry to keep up with the competition and its ever-changing environment. A variety of reasons has forced the Indian banks to continuously reassess and reposition themselves in the international market. Increasing domestic competitive pressures have necessitated changes in many key areas ranging from robust risk management practices, skilled manpower, IT systems and sound marketing practices. This paper attempts to understand the process of implementation of Technology in Indian Banks. It also focuses on the resulting innovations in the Indian Banking Sector. It attempts to understand the changes that the Indian Banking sector has made to incorporate these technologies. It is imperative to understand that banks that are technologically advanced with large capital and skilled manpower will do better in a competitive world.

Banks the world over are interconnecting their systems in order to cater to a growing customer base and also to address competition by other banks. This involves not only branch level connectivity but also other geographic locations around the world. Banking has now become customer-centric where the customers are being offered instant techno-savvy services. Even though the Reserve Bank of India has formulated policies on technological development in commercial banks in India, a pressing need is felt to address the issues with the banks both at domestic and international level. Realising this, Indian banks have subsequently invested in technological developments such as mobile banking, net banking, ATMs, Tele banking, CRM software, credit and debit cards and data warehousing and data mining solutions. The Indian banking sector has great potential to grow. Liberalization has resulted in many foreign banks coming to India. These have opened up new channels of efficient delivery, new markets and an array of new products for customers. Technological up-gradation is essential for development and by doing so; the Banking sector has witnessed an increase in penetration in terms of geographical location and customers, cost effectiveness in terms of reaching out to maximum number of customers at lower cost, efficiency in terms of service and also increased productivity of human capital. According to a KPMG-CII report, the banking industry in India has the potential to become the fifth largest banking industry in the world by 2020 and third largest by 2025. The areas of growth include rural banking, investment banking and internet banking. Also, the traditional way of operations is slowly give way to modern technology. The Indian Banking sector is now providing an array of sophisticated world class services to its customers, including like round-the-clock accessibility through automated teller machines (ATMs), mobile and internet banking, depository services, plastic money,

Electronic fund transfer facilities and online money transfers. Globalisation and Liberlisation of the Indian Economy is forcing Indian banks to be at par with international standards. In the recent years, the banking system in India has become more and more complex and open. Economic susceptibility, on the national scene as well as the international market, can arise due to inadequate standards and insufficient regulations in banks and financial institutions. The Indian Banking industry has to evolve and design new methods and practices to keep up with the competition arising out of industry dynamics. Consequently, it becomes obligatory for the Banking Sector in India to draft and adhere to mandatory international standards and practices since unsatisfactory and outmoded practices can result into ineffective risk management, loss of business and financial instability. The banking sector has witnessed many reforms since Independence. The Liberalisation Era of the 1990s also resulted in many reforms in the banking sector.

Technology and Indian Banking
Technological developments in the Indian Banking Industry saw its beginnings in the early 80s when a high level committee was formed under the chairmanship of Dr. C Rangarajan. He was the Governor of the Reserve Bank of India at that time. The Committee was formed to draw up a plan for computerisation and mechanisation of the Banking Industry. This was to be done over a time period of five years from 1985-89. The Committee laid emphasis on on customer service and two models of branch automation. These were developed and then implemented. The first model was the Front Office mechanisation model. In this model, the front desk operations in the banks were computerised. Back office operations were still carried out manually. The second model was the Back Office Automation. This model resulted in mechanisation of General Ledger and all back

office operations. In this, the front office operations were done manually. In 1988, the second Rangarajan Committee was constituted to plan for computerisation in Banks. Under this Committee, all other areas like ATMs, funds transfer, electronic mail, ATMs etc were to be automated. The recommendations of this Committee included installation of ATMs at various locations such as airports and railway stations. This Committee also recommended computerisation of around 2500 large branches located in high activity centres and also Head, Zonal and Regional Offices of Banks. The year 1997 saw the second phase of reforms in the banking sector. The main objective of banking sector reforms now included increasing operational self- sufficiency as well as enhancement of the banking standards in India to keep up with international best practices. These reforms concentrated on technological up-gradation and manpower development. The use of Information technology in banks has resulted in several advantages to the banking sector. Up-gradation of technology has resulted in implementation of techniques for better control of risks. Communication channels have improved remarkably and there is enhanced connectivity between branches and also geographically distant and diversified markets. Customers are now being offered a wide array of services ranging from distinct and sophisticated products to improved market infrastructure.

Review of Literature
Arora(2003) has emphasised the significance of transformation in banks. Technology has an important role in facilitating transactions in the banking sector. The impact of technology implementation has resulted in the introduction of new products and services by various banks in India.

Mittal, R.K. & Dhingra, S(2007) studied the role that technology plays in the banking sector. They analyzed the investment scenario in technology in Indian banks. However, this study was conducted prior to the Information Technology Act when technology in Indian banks was very low.

Avasthi & Sharma (2000-01) have analyzed in their study that advances in technology are set to change the face of banking business. Technology has transformed the delivery channels by banks in retail banking. It has also impacted the markets of banks. The study also explored the challenges that banking industry and its regulator face. B. Janki (2002) analyzed that how technology is affecting the employees’ productivity. There is no doubt, in India particularly public sector banks will need to use technology to improve operating efficiency and customer services.

Agboola (2006) observed that payments are automated and absolute volume of cash transactions have declined under the impact of electronic transaction brought about by the adoption of ICT to the payment system particularly in the developed economies.

Shetty (2006) in his study found that globalization in banking is based on four important pillars viz. trade in goods and services; flow of capital and movement of human beings across boundaries; harmonization of regulatory framework in different countries; and developments in technology, particularly those in information technology.

Objectives of Study
The paper attempts to understand the process of computerization and resulting innovations in the Indian Banking Sector. It attempts to understand the changes that the Indian Banking sector has made and will have to make in the future to keep up with the dynamism in the international banking arena.

Research Design and Methodology
This study is purely based on secondary information collected from various books, articles, newspapers, journals and websites of various organizations. The Researcher has collected data for the study through the exploratory research design.

Significance of Study
The banking industry is backbone of Indian financial system. It faces many challenges today, including the challenge of keeping up with the technological developments taking place in banks throughout the world. Efficient Technology is imperative for successful functioning of the banking sector today. This is possible if an advanced banking system is developed to respond to the needs of a growing economy as well as a huge customer base around the world. Technology is now playing an increasingly important role in management of liquidity, securitization and management of risks in the banking sector. Information Technology implementations have resulted in interconnecting systems not only across branches but also diverse geographic locations around the world. The Reserve Bank of India has formulated many policies on adoption of Information Technology in the working of commercial banks in India. The Government is also laying emphasis on cashless transactions and digitalisation. In spite of this, an urgent need to address the various issues affecting the banking sector in this regard still remains.

Electronicfund transfer system is necessary due to a variety of reasons Banks have to unnecessarily bear high cost of physical handling and storage of paper instruments. Also, the volume of transactions nowadays is very large. NEFT and RTGS are two types of Electronic Fund Transfer.
NationalElectronic fund Transfer (NEFT): This is a nation-wide payment system which facilitates one- to-one funds transfer under which individuals, firms

and corporate can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. A bank branch has to be NEFT- enabled for being part of the NEFT funds transfer network.

RealTime Gross Settlement (RTGS)
RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a real time basis. This is the fastest money transfer system in banks as settlement in real time means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. Gross settlement means the transaction is settled on one to one basis without bunching with any other transaction.

Serviceslike Mobile and Internet banking & extension of facilities at ATM stations are being made available to As of February 2017, total number of ATMs in India increased to 207,402 & is further expected to double over next few years.
Indianbanks are improving their technology infrastructure to address growing competition and to enhance customer Banks are now focusing on new technologies like Customer Relationship Management (CRM), SMAC (Social, Mobile, Analytics
& Cloud), data warehousing and business process reengineering which will drive the next wave of technology in the Indian Banking Sector

Ason May 31, 2017, 9 million ‘Rupay’ debit cards have been issued to users. Under the Jan Dhan Yojana, as on May 31, 2017, 287.6 million new accounts were opened & around USD9,543.80 million were deposited with the banks under this scheme.

The Indian banking industry faces numerous challenges today. Systemic changes to keep up with international standards have necessitated adoption of new strategies and processes in order to remain competitive in this ever- changing and dynamic environment. Banks have to continuously adopt different policies and procedures to satisfy the ever changing needs of customers and to grab a better market share. This is possible only with development of sophisticated products with low cost technology. Banks have to keep implementing different technologies. The Indian Banking sector has to evolve and design new methods and practices to keep up with the competition arising out of industry dynamics and to develop an advanced banking system which responds effectively to the needs of a growing economy as well as a huge customer base around the world.

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Dhanwani,K. (2014), “Recent Trends in Indian Banking Industry”, Abhinav, Volume 02, Issue 03, p. 60-63.
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Shastri,V. (2003), “Recent Trends in Banking Industry: IT Emergence”, Analyst,(March), p. 45-46.
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Wenlinks:- www.rbi.org.in www.kpmg.com

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