Net Based Banking Implementation

Banking in India has undergone major transformation – thanks to Internet banking that we use today. But was the net banking like this ever since its inception?  No, it has gone through tremendous evolutions. This write up attempts to give some idea of its initial Avatar in India.

After achieving a major milestone of branches computerization in our bank it was time to go for the next one – internet based banking. We should not call it internet banking in its true sense since it was just the beginning of evolution of net based banking in India. The bank kick started the project in 1995. Initially it was planned to be offered only to the corporate segment due to the technical issues involved. The application ANZLink, named for us, was procured from a US company. It was customized by the bank’s IT wing  as per our requirements.

One of the tech savvy Chief Manager in Corporate Bank was entrusted the overall responsibility of the project for India region. Couple of months after the project initiation I also joined it as number 2. It was planned to be rolled out in two phases Customer Account related services offered in first phase and Trade Finance in second phase.

The services planned for phase 1 were account statements and fund transfers both within customer’s own accounts and third party payments by DD and TT. The account statements provided were as of close of previous business day and twice intraday account positions at fixed times. These were generated and packetized at bank site and were kept ready for the customer to pick up through internet based connectivity. It was the customer’s responsibility to dial up through the modem connected to the PC in their office, connect to bank site and pick up these packets.  This helped the customers optimally manage their funds.

Once picked up by the customer these daily were residing in the customer PC and built up historical data. Hence for any subsequent query they could refer to these statements offline instead of getting connected to bank site. The customers could also use these statements for the electronic account reconciliation. In case the customer was not using any package for bank account reconciliation but were willing to do so our project also assisted such customers in setting up the account reconciliation.

In second phase request for LC issuance and amendments were offered. Customer copies of issued LC / amendment were provided to the customer through the package. Other services included advise of bills presented under LC, bills discrepancies and customer’s authority for acceptance / rejection of the same.

Apart from these daily product wise trade finance outstanding, outward financed bills maturing in 3 days and the bills due for payment by the customer in next 3 days were advised to the customers. These helped customers manage their limits utilization and account funding as required.

Project Organisation

The central project office was based in Chennai supported by teams based in each region (North, East, West and South). The regional teams comprised of one Coordinator nominated from Corporate sales team and technical personnel. They were adequately trained on the application to handle installations, problem solving at customer sites, customer training and queries.

Hardware and Application

No dedicated hardware was needed either at bank or the client site. At bank end the software was installed on the branch’s server where banking application was in use. The client was required to make available one PC-AT, a modem and a telephone line.

The application had two components – main application installed at the server of every branch and a client component.  Once the subscription formalities were completed the net banking code used to be assigned by the central team and advised to the respective coordinator who would then arrange to have it updated in the customer record in the branch system. Once it was done the area technical team would generate the client component for the customer and take it on a floppy for installation at the customer site.

The area technical team and the coordinator would then visit the customer, install the client component on their PC, assist their administrator in setting up the users and take them through the dial-up and connection process. It was the responsibility of their administrator to setup transaction approvers in the system as per their transaction approvals hierarchy and signing authorities for operating the account.  And thus the customer was on-board the Net Banking.

Banking Philosophy Shift

This implementation brought a shift in the banking philosophy – a shift in ensuring the adherence of signing authority for the transaction. In normal banking it is monitored by the bank but in case of net banking since transaction was to be approved at the client site this monitoring shifted to them. In view of this changed position some legal documents were to be executed by the customer as part of subscription process.

Challenges

The project that was going smooth started seeing some major issues on time taken for the account statement extracts for the net banking customers. It was analysed to be due to the increased number of net banking customers. The time taken was growing up fast and had reached over an hour each round. This was a major constraint in adding more customers.

After thorough investigations and revising our technical process flows the problem got resolved thus reducing the transaction extract time from 90 minutes to 3-4 minute. This was a revolution and we never looked back after that.

Customers Experience

It was pleasing change for Corporate customers. After initial apprehensions they started using it for the fund transfers and LC issuance. The distance between the domiciled branch and the customers physical location had been wiped out. We had customers who were accessing their account at Mumbai from their works premises at far off places like Baroda, Surat and where not. Such account access used to be for all types of transactions including getting LC issued but except, off course, for Cash withdrawals. This is one of the many examples of remote access during that period.

Truly the stage had been set for the type of internet banking we see today. Net banking has come a long way evolving itself to what we see it today..