Cloud computing: Silver lining for cooperative banks
"Our customers have increased expectations for better services, particularly in the areas of Internet and mobile banking. New, more sophisticated and intelligent technologies can empower change and create opportunities for our bank to deliver these services and at the same time manage growth, risk and efficiency," said B V Dwarakanath, Chairman of the Sree Charan Souharda Cooperative bank. By implementing the cost effective, state-of-the-art Core Banking Solution being delivered via the cloud, we will be able to operate on a centralized network twice as fast as the existing set up. This solution is also helping us reduce the burden of upfront capital expenditure and move to a pay-as-you-use model.1
“The implementation will help us add new customer services and also centralize mission-critical operations such as real-time transaction processing in six branches across Pondicherry,” said R Muralidharan, IT Administrator at the Pondicherry Co-operative Urban Bank. He added that the cloud solution will help us offer enhanced financial solutions to its customers including Internet banking, online money transfer, ATM Services and mobile banking. Muralidharan believes that as cooperative banks in India are constantly faced with newer regulations challenges, they are expected to strengthen their focus on IT-related compliance so that they can effectively compete with other private or nationalized banks and serve customers in a proactive manner. “The deployment of Core Banking Solution on IBM SmartCloud, will enable us to operate from a single location at greater efficiency.”2
These are the recent success stories of implementation of Cloud computing in two cooperative banks in India. This shows technology has pervaded all walks of life and banking is no exception. Banking today has moved out of the confines of a physical building and reached the doorstep of millions of customers. Alternate channels such as ATM, phone, internet and mobile banking are cost effective when compared to brick and mortar structures and serve to make banking accessible round the clock. However, competition is fierce with banks constantly striving for increased profit margins and a larger customer base.
Cooperative Banks need to compete against private banks with deep pockets and increase risk management products such as derivatives through effective deployment of IT solutions. And the cloud can help businesses meet demands for change and greater agility by facilitating the experimentation cycle, and improving on time-to-market delivery of new products and services.
Profile of sector: Cooperative Banks
The Co-operative banks has a history of almost 100 years. Cooperative Banks are registered under the Co-operative Societies Act of the Respective States (where formed originally) the banking related activities of the co-operative banks are also regulated by the Reserve Bank of India. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.3 There are more than 2,000 cooperative banks which have between them over 22,000 branches. The Co-operative banks are an important part of the Indian Financial System, based on the role assigned to them, the expectations to be fulfilled, their number, and the number of offices they operate. The co-operative movement originated in the West, but the importance that such banks have assumed in India is rarely paralleled anywhere else in the world. Their role in rural financing continues to be important even today, and their business in the urban areas also has increased phenomenally in recent years mainly due to the sharp increase in the number of primary co-operative banks. This exponential growth of Co-operative Banks is attributed mainly to their much better local reach, personal interaction with customers, and their ability to catch the nerve of the local clientele.
While the co-operative banks in rural...
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