Azim Premji, chairman of Wipro Ltd, has called for banks to outsource all non-core processes and adopt quality tools like Six Sigma practices in order streamline key business processes and decrease costs.
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In his address to the media in Bangalore during the announcement of Vijaya Bank's Core Banking Solution initiative, Premji said, "Six Sigma is being used to boost on-time delivery of services and expedite cheque and loan processing. Studies indicate that its application can also shorten decision cycles and lead time of new account openings by an average of 30 per cent."
Drawing parallels with Wipro, Premji said that this (Six Sigma) is an area where his organisation has had quantum gains through reduction of transaction costs and improvements in quality.
"Originally, what used to be a manufacturing best practice is now being embraced by some of the globally leading banks," he said.
Elaborating on some emerging trends that can offer tangible business benefits to bank managements, Premji said, "Smart sourcing can be an effective method of leveraging technology. When banks outsource IT aspects and non-core processes, it helps them stay focussed on customer satisfaction and yet remain technology savvy. Banks should increasingly look at outsourcing operations such as telephone banking, Internet banking, debt and credit card processing and credit assessment services. Outsourcing technology related aspects also lead to considerable cost savings in the long run. IT infrastructure management, security management and network management are some of the other areas that can be outsourced."
Citing that use of CRM solutions will be on the increase, Premji said that retail banks can build customer service infrastructure that is able to utilise CRM data effectively in areas such as cross selling and measuring multi-channel profitability.
"In the next few years, banks will increasingly resemble an electronic network requiring considerable IT investments. This may even lead to banks sharing common IT infrastructure in the form of Data Centres and ATM infrastructure. While technology spending by banks is strongly advocated, I must caution that managements must clearly distinguish from layering technology over existing processes and using IT for strategic differentiation. While automation of business process is key, what is important is to integrate technology in core business areas to create a competitive positioning," Premji explained.
Premji also shared some of the emerging drivers for technology adoption by banks and trends in Indian banking. In order to make banking an enjoyable experience for customer, Premji advocated increased use of ATMs.
"ATMs and Internet banking have shown the way to develop customer intimacy. However, when we compare this with North America and Europe, which has over 2.5 lakh ATMs each and Japan with over 1.5 lakh ATMs, India, with its low numbers, has a long way to go. Internet banking is a potential area which public sector banks need to look at closely."
Quoting IDC estimates, Premji said, "Internet banking registrations have crossed 2 million and there are over 1 million active users. This represents only 15 per cent of the total Internet user population."
