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The Rediff Business Special/Nikhil Faleiro

Convenience called cyberbanking

News: Secunderabad-based Global Trust Bank today launched several services on the Internet (ibank@gtb.com) to make transactions convenient for its customers. Ramesh Gelli, chairman, GTB, says, "The launch of our Internet banking is part of our strategy to provide our customers with world-class products and best service levels. For the first time in India, NSDL demat account-holders of GTB can look up their equity holdings and transaction details on the Net."

Beyond the news -- the big story: Banks in India are notorious for their rigid working hours and excessive off-days by way of holidays and strikes. There are glad tidings now, say observers. Things, apparently, will improve as more and more banks switch over to transactions through the Internet.

Internet banking. That is the banking industry's New Millennium Mantra. The first to start the trend was HDFC Bank (which recently absorbed TimesBank).

``The reason was simple,'' recalls Neeraj Swaroop, vice-president, retail banking, HDFC Bank. ``With the recent increase in the usage of the Internet amongst our customers, we felt that this was the right time to introduce the service. And its success can be seen from the fact that over 1,000 customers have registered for Internet banking within 15 days of the launch of the service.''

Analysts say the Internet is changing the nature of the banking industry. Retail customers are displacing corporate clients from the spotlight. The number of bank customers in India is expected to swell by nearly eight million in the next four years. In terms of potential annual business, it could be Rs 150 billion. To fully harness this potential, banks are launching novel instruments.

Ashwin Parekh, director, KPMG Consultancy Services, says, ``It was bound to happen as banks became scared of lending to corporates, in the context of rising non performing assets, defaults and scams. The retail customer is perceived as one who can provide the banks with a steady source of income.''

In fact, surveys commissioned by several banks have revealed that given a choice, customers prefer to do bank work at their own convenience. And the rising popularity of the Internet in India has come as a blessing for banks.

State Bank of India chairman G G Vaidya says, ``Banks which ignore technology will be wiped out. Today, survival itself is a big cost benefit for investing in technology.'' And so, the government-controlled monolith has decided to transform itself into a hi-tech organisation, to retain its lead over the aggressive private sector. Besides Internet banking, the SBI has launched services like quick-decision banking, 24-hour banking, etc. The bank has earmarked Rs 70 billion for infrastructure by March 2000 and Rs 150 billion in the next three years.

The SBI is not a case in isolation. In a trend-setting move, Calcutta-based Allahabad Bank has begun sanctioning educational loans on the Internet. It is planning to extend the facility to car and home loans. Of the 146 loan applications that the bank received in 1999-2000 for educational loans, 77 (more than 50 per cent) applications ceme through the Net. Haribhajan Singh, chairman, Allahabad Bank, says, ``The aim was to target students who live far away from the cities, like students in the IIM campuses. Judging by the response, the service has been a success. Our ultimate aim is to introduce overall Internet banking.''

ICICI Bank allows its metro customers to pay telephone bills via the Internet. It is planning to launch a host of services in 2000 including transfer of funds through the Net. ANZ Grindlays priority areas now are telebanking and PC banking.

Global Trust is technically equipped to offer online transactions, but has decided to introduce Net services in a phased manner to enable the customers to gain confidence and experience over a period of time.

In the first phase, the GTB customers will have the facility to inquire about their accounts and transactions -- both bank accounts and depository accounts, give instructions for transfer of funds between their accounts, make requests for demand drafts, open and renew term deposits and exchange email.

At a later stage, GTB proposes to offer corporate customers facilities like inquiry on loans, guarantees and letters of credit, instructions for opening of letters of credit, etc. Besides, the bank will offer customers the convenience of paying their credit card, electricity, telephone and other utility bills.

GTB chairman Gelli says, "The Internet revolution is spreading across the world at an incredible pace and is no longer a medium for information and Entertainment; it is emerging as an important medium of commerce. We are geared to be a part of the challenge. We have taken a number of measures to offer customers a secure Internet banking environment."

Bank consumers in India never had it so good, says Leo Puri, principal partner, McKinsey India. ``India could leapfrog over US banks in e-banking if only our banks grab the opportunity. There are signs that they have realised this. The day when the bank customer would be able to access his or her account in India from anywhere on this planet is not too far away."

Additional reportage: Our Correspondent in Hyderabad

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